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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
MERIDIAN INDUSTRIAL TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
ANNE C. CUMBERLEDGE
- --------------------------------------------------------------------------------
(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):
-----------------------------------------------------------------------
(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:
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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>
[LOGO]
NOTICE OF ANNUAL MEETING,
PROXY STATEMENT, AND PROXY CARD
FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 1998
<PAGE>
[LOGO]
April 17, 1998
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Meridian Industrial Trust, Inc. (the "Company") to be held on May 15, 1998, at
8:30 a.m., local time, at the Hyatt Regency Hotel, Five Embarcadero Center, San
Francisco, California. Enclosed are a notice to stockholders, a proxy statement
describing the business to be transacted at the meeting, and a proxy card for
use in voting at the meeting.
At the annual meeting, you will be asked (i) to elect seven directors of the
Company, (ii) to ratify the selection of Arthur Andersen LLP as the independent
auditors for the Company for 1998, and (iii) to act on such other business as
may properly come before the meeting or any adjournment thereof.
We hope that you will be able to attend the annual meeting, and we urge you
to read the enclosed Proxy Statement before you decide to vote. Even if you do
not plan to attend, please complete, date, sign, and promptly return the
enclosed proxy card. It is important that your shares be represented at the
meeting.
Very truly yours,
Allen J. Anderson
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, DATE, SIGN, AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. IF YOU ATTEND
THE MEETING AND WISH TO WITHDRAW YOUR PROXY, YOU MAY VOTE IN PERSON, AND YOUR
PROXY WILL BE WITHDRAWN.
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
----------------
NOTICE TO STOCKHOLDERS OF ANNUAL MEETING
TO BE HELD ON MAY 15, 1998
------------------------
PLEASE TAKE NOTICE that Meridian Industrial Trust, Inc., a Maryland
corporation (the "Company"), will hold the 1998 annual meeting of its
stockholders (the "Annual Meeting") on May 15, 1998, at 8:30 a.m., local time,
at the Hyatt Regency Hotel, 5 Embarcadero Center, San Francisco, California, to
consider and vote on the following matters:
1. Election of seven directors of the Company to serve until the next
annual meeting of the Company's stockholders and until their respective
successors are duly elected and qualify;
2. Ratification of the selection of Arthur Andersen LLP as the Company's
independent auditors for the year ending December 31, 1998; and
3. Such other business as may properly come before the Annual Meeting or
any postponement or adjournment thereof.
These matters are fully discussed in the attached Proxy Statement. The
Company's 1997 Annual Report accompanies this notice and the Proxy Statement.
Only stockholders of record at the close of business on March 17, 1998, the
record date for the Annual Meeting, will be entitled to notice of, and to vote
at, the Annual Meeting or any postponement or adjournment thereof. The presence
in person or by proxy of stockholders entitled to cast a majority of all the
votes entitled to be cast at the Annual Meeting shall constitute a quorum.
Whether or not you plan to attend, please complete, date, sign, and return the
enclosed proxy card.
You may revoke your proxy at any time before it is exercised at the Annual
Meeting by filing with the Company a written revocation or a subsequently-dated
proxy or by attending that meeting and voting in person. You may vote by proxy
even if you are planning to attend.
We look forward to seeing you at the Annual Meeting.
BY ORDER OF THE DIRECTORS,
Robert A. Dobbin,
SECRETARY
San Francisco, California
April 17, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE,
SIGN, AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
INFORMATION CONCERNING SOLICITATION AND VOTING............................................................. 1
General.................................................................................................. 1
Voting Rights and Outstanding Shares..................................................................... 1
Revocability of Proxies.................................................................................. 2
GENERAL COMPANY INFORMATION................................................................................ 2
Management............................................................................................... 2
Board Committees......................................................................................... 2
Board and Committee Meetings............................................................................. 3
Executive Officers....................................................................................... 3
Compensation of Directors................................................................................ 5
Executive Compensation................................................................................... 6
Performance Graph........................................................................................ 10
Stockholdings of Principal Stockholders, Directors, and Management....................................... 11
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS....................................................... 11
Portfolio Purchase from Ameritech Pension Trust.......................................................... 11
Frankford Trade Center Transaction....................................................................... 12
PROPOSAL ONE--ELECTION OF DIRECTORS........................................................................ 13
General.................................................................................................. 13
Nominees................................................................................................. 13
PROPOSAL TWO--RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANT................................... 15
STOCKHOLDER PROPOSALS AND NOMINATIONS...................................................................... 15
MISCELLANEOUS.............................................................................................. 16
1997 ANNUAL REPORTS........................................................................................ 16
OTHER BUSINESS............................................................................................. 16
</TABLE>
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MERIDIAN INDUSTRIAL TRUST, INC.
----------------
PROXY STATEMENT
---------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy card (the "Proxy") is being solicited from the
stockholders of Meridian Industrial Trust, Inc., a Maryland corporation (the
"Company"), on behalf of the Company's board of directors (the "Board"). The
Proxy will be used for the purposes set forth herein at the annual meeting of
the Company's stockholders to be held at the Hyatt Regency Hotel, 5 Embarcadero
Center, San Francisco, California, at 8:30 a.m., local time, on May 15, 1998,
and at any postponement or adjournment thereof (the "Annual Meeting"). The
Company's principal executive offices are located at 455 Market Street, 17th
Floor, San Francisco, California 94105.
The Company has mailed this Proxy Statement, the accompanying Notice to
Stockholders of Annual Meeting, and the Proxy on or about April 17, 1998, to all
stockholders entitled to notice of, and to vote at, the Annual Meeting.
VOTING RIGHTS AND OUTSTANDING SHARES
Only stockholders of record at the close of business on March 17, 1998, (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting. At
the close of business on the Record Date, there were issued and outstanding and
entitled to vote 30,186,468 shares of the Company's common stock, par value
$.001 per share ("Common Stock"), and 2,272,727 shares of the Company's Series B
Convertible Preferred Stock, par value $.001 per share ("Series B Preferred
Stock"). (These shares of Series B Preferred and Common Stock are sometimes
collectively referred to below as "Shares.")
The presence at the Annual Meeting in person or by proxy of stockholders
entitled to cast a majority of all the votes entitled to be cast at the Annual
Meeting is necessary to constitute a quorum for the transaction of business.
Each outstanding Share is entitled to one vote on each matter to be voted upon
at the Annual Meeting.
For each matter presented for approval, each stockholder is entitled to one
vote for each Share held. If there are insufficient Shares present to constitute
a quorum or insufficient affirmative votes to approve any matter presented for
approval, the Annual Meeting may be postponed or adjourned one or more times to
permit further solicitation of proxies. The Annual Meeting could be so postponed
or adjourned without further notice to stockholders to a date that is not more
than 120 days after the Record Date.
Shares represented by properly executed and returned Proxies that have not
been revoked will be voted at the Annual Meeting in accordance with the
instructions on those Proxies. If a properly executed and returned Proxy
contains no instructions, it will be voted: (i) for election to the Board of the
nominees specified on the Proxy; (ii) for the ratification of the selection of
Arthur Andersen LLP as the Company's independent auditors for the year ending
December 31, 1998; and (iii) in the discretion of the proxy holders as to any
other matter that may properly come before the Annual Meeting. The Company's
directors do not know of any matter that will be presented for consideration at
the Annual Meeting other than the proposals described in this Proxy Statement.
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REVOCABILITY OF PROXIES
Any stockholder giving a Proxy pursuant to this solicitation has the power
to revoke that Proxy at any time before it is exercised either (i) by filing
with the Company, at its principal executive offices, either a written notice of
revocation or a duly executed Proxy bearing a later date, or (ii) by attending
the Annual Meeting and voting in person.
GENERAL COMPANY INFORMATION
MANAGEMENT
The Board, which currently consists of the seven individuals listed below,
directs the management of the Company's business and affairs. All the current
directors other than Mr. Anderson are Independent Directors (I.E., are not
officers, full-time employees, or members of the immediate families of officers
or full-time employees).
The Company's current directors (the "Directors") and executive officers and
their respective positions are as follows:
<TABLE>
<CAPTION>
NAME POSITION
- ---------------------------------------------------------- ------------------------------------------------------
<S> <C>
DIRECTORS
Allen J. Anderson......................................... Chairman of the Board, Chief Executive Officer, and
Director
C.E. Cornutt.............................................. Director
T. Patrick Duncan......................................... Director
Peter O. Hanson........................................... Director
John S. Moody............................................. Director
Kenneth N. Stensby........................................ Director
Lee W. Wilson............................................. Director
OFFICERS
Allen J. Anderson......................................... Chief Executive Officer
Milton K. Reeder.......................................... President and Chief Financial Officer
Dennis D. Higgs........................................... Executive Vice President and Chief Investment Officer
Gregory D. Skirving....................................... Senior Vice President--National Marketing
Brian R. Barringer........................................ Vice President
Peter B. Harmon........................................... Vice President--Regional Director
Timothy B. Keith.......................................... Vice President--Regional Director
Jaime Suarez.............................................. Vice President--Finance
Robert A. Dobbin.......................................... Secretary and General Counsel
</TABLE>
BOARD COMMITTEES
As is discussed below, the Board has four standing committees: an Audit
Committee, a Board Affairs Committee, a Compensation Committee, and an
Investment Committee.
AUDIT COMMITTEE. The Audit Committee makes recommendations concerning the
annual appointment of the Company's public accountants and reviews the
arrangements for and the scope of the audit conducted by those accountants. This
committee (i) reviews the Company's accounting functions and operations, (ii)
considers the adequacy and effectiveness of the system of accounting controls,
including any proposed corrective actions, (iii) reviews and monitors the
Company's policies regarding business ethics and conflicts of interest, (iv)
discusses with management and the independent accountants key
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accounting and reporting matters, and (v) reviews the Company's insurance
program and makes recommendations to the Board concerning that program. The
Audit Committee is composed entirely of Independent Directors. The Company's
independent accountants have unrestricted access to the Audit Committee. The
Audit Committee consists of Messrs. Hanson, Moody, and Wilson.
BOARD AFFAIRS COMMITTEE. The Board Affairs Committee serves as a nominating
committee for the full Board and reviews and makes recommendations to the Board
regarding the composition of Board committees. This committee also makes
recommendations to the full Board on organization and succession matters and is
responsible for evaluating the effectiveness of the Board, its committees, and
individual board members. This committee proposes to the full Board a slate of
directors for election at the Company's annual stockholders meeting and
identifies and proposes to the full Board candidates to fill any Board
vacancies. This committee also assesses and makes recommendations to the Board
with respect to corporate governance matters. The Board Affairs Committee
consists of Messrs. Cornutt and Duncan.
COMPENSATION COMMITTEE. The Compensation Committee reviews and makes
recommendations to the Board regarding the Company's employee and management
compensation and benefit policies, including salaries and incentive stock and
retirement plans. This committee also (i) reviews and approves the amount and
form of compensation and benefits for the Company's Chief Executive Officer and
other executive officers and (ii) administers the Company's Amended and Restated
Employee and Director Incentive Stock Plan (the "Stock Plan"). The Compensation
Committee consists of Messrs. Duncan, Moody, and Stensby.
INVESTMENT COMMITTEE. The Investment Committee is responsible for
reviewing, evaluating, and making recommendations to the full Board with respect
to (i) growth strategies, (ii) proposed transactions involving the Company's
acquisition or disposition of any material asset or material groups of assets, a
financing or refinancing of any such assets, an unsecured financing, or an
issuance of equity or debt securities, (iii) the financial implications of
matters involving financial policies, plans, and procedures, and (iv) the
financial implications of other proposed Company actions. In addition, this
committee has authority to approve any capital transaction involving up to $25
million that is consistent with the Company's business plan and any other
criteria established by the Board. The Investment Committee consists of Messrs.
Anderson, Hanson, and Stensby.
BOARD AND COMMITTEE MEETINGS
During 1997, the Board held eleven meetings, the Board Affairs Committee
held three meetings, the Audit Committee held two meetings, the Investment
Committee held thirteen meetings, and the Compensation Committee held five
meetings. Each Director except Messrs. Duncan, Moody, and Stensby attended at
least 75% of the aggregate of (i) the 1997 Board meetings held during the period
he was a Director and (ii) the 1997 meetings held by Board committees on which
he served during his period of service.
EXECUTIVE OFFICERS
The business experience of each of the Company's executive officers is set
forth below.
ALLEN J. ANDERSON, age 45, has served as the Chairman of the Board and Chief
Executive Officer of the Company since its formation in May 1995. From February
1994 until July 1995, Mr. Anderson served as Executive Vice President of Hunt
Realty Corporation, a private real estate investment corporation. Before joining
Hunt Realty Corporation, Mr. Anderson was a partner and National Director of
Institutional Investment Services for Arthur Andersen Real Estate Services Group
from August 1992 until February 1994. In 1987, Mr. Anderson founded and served
as President of Anderson Capital Advisors, a firm which represented investors in
real estate transactions of all types. Prior to founding Anderson Capital
Advisors, Mr. Anderson was President and Chief Executive Officer of Mercantile
Realty Services, a subsidiary of a Texas bank holding company that was
responsible for real estate held by the bank in a
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fiduciary capacity. Mr. Anderson graduated from the University of Wisconsin in
1973 with a B.A. degree in Real Estate Finance.
MILTON K. REEDER, age 41, has served as the President of the Company since
its formation in May 1995 and was appointed Chief Financial Officer in March
1996. From early 1991 to February 23, 1996, Mr. Reeder served as President and
Chief Executive Officer of each of Meridian Point Realty Trust IV Co. ("Trust
IV"), Meridian Point Realty Trust VI Co. ("Trust VI"), and Meridian Point Realty
Trust VII Co. ("Trust VII") (collectively, the "Merged REITs") and Meridian
Point Realty Trust '83 ("Trust '83" and, collectively with the Merged REITs, the
"Predecessor REITs"). Since early 1991, Mr. Reeder has served as President and
Chief Executive Officer of Sierra Capital Realty Trust '84 Co. ("Trust 84").
From early 1991 through December 7, 1995, Mr. Reeder served as President and
Chief Executive Officer of Meridian Point Realty Trust VIII Co. ("Trust VIII")
(together with Trust '84 and the Predecessor REITs, the "Six REITs"). He has
also served as the Chief Financial Officer and Treasurer of the Six REITs from
1984 to 1991, Acting Chief Financial Officer of the Six REITs from July 1994 to
January 1995, and Executive Vice President of the Six REITs from 1989 until
1991. From 1991 to 1993, Mr. Reeder was a director of Meridian Point Properties,
Inc. ("MPP"), an employee leasing company that allowed the Six REITs to share
employee costs. From 1981 to 1991, he held various offices with Sierra Capital
Companies and its affiliates, the former managers of the Six REITs. Mr. Reeder
was with the accounting firm of Deloitte Haskins & Sells (now Deloitte & Touche)
as a tax specialist from 1979 to 1981. He is a certified public accountant. Mr.
Reeder is a member of the Financial Executives Institute, the Urban Land
Institute and the National Association of Real Estate Investment Trusts. He
graduated from the School of Business Administration at the University of
Michigan in 1979 with a Bachelor of Business Administration degree.
DENNIS D. HIGGS, age 42, served as Senior Vice President of the Company from
its formation in May 1995 until February 1997 and as Executive Vice President
from February 1997 to date. Mr. Higgs's responsibilities include the management
of all real estate activities of the Company, including acquisitions,
dispositions, leasing, and asset and property management. From 1991 to February
1996 Mr. Higgs served as an Executive Vice President of the Six REITs, and from
1986 to 1991 he held various offices with Sierra Capital Companies and its
affiliates, the former managers of the Six REITs. From 1983 to 1986, Mr. Higgs
was a developer in Los Angeles, California, with Ratkovich, Bowers & Perez, a
firm specializing in commercial, mixed-use development projects. He has been
active in real estate asset management, acquisition, development, and
disposition for the past eighteen years. Mr. Higgs is a member of the Urban Land
Institute and the National Association of Industrial and Office Parks and is a
licensed real estate broker. He graduated from the University of Oregon in 1978
with a B.A. degree in Business Administration.
GREGORY D. SKIRVING, age 51, has served as Senior Vice President of the
Company since February 1997. His responsibilities include the development and
implementation of a marketing plan designed to attract large corporate clients
for the Company. From 1990 through February 1997, Mr. Skirving was a Managing
Director of the Trammel Crow Company; in that position he was responsible for
sourcing and managing comprehensive real estate service agreements with major
U.S. corporations. From 1982 through 1990 Mr. Skirving was Partner and Chief
Operating Officer of Reynolds Properties, Inc., a development, leasing, and
property management company based in Denver, Colorado. Before 1982, he was
engaged in real estate brokerage with Iliff Thorn & Co. in Phoenix, Arizona, and
with LaSalle Partners in Denver, Colorado. Mr. Skirving graduated from Arizona
State University in 1973 with a B.S. degree in Economics.
BRIAN R. BARRINGER, age 31, has served as Vice President of the Company
since February 1998. In that position, Mr. Barringer is responsible for all the
Company's asset management, acquisition, development, and disposition activities
in the Boston/Northeast region. From 1994 to February 1998, Mr. Barringer was
Regional Acquisitions Manager for Cabot Partners in Boston, Massachusetts, and
in February 1998 he was appointed Vice President- Acquisitions of Cabot
Industrial Trust. Prior to that time Mr. Barringer was Leasing Agent for Trammel
Crow Company in McLean, Virginia, and Cleveland, Ohio, and Leasing Agent
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for Combined Properties, a shopping center owner and developer in Washington,
D.C. Mr. Barringer graduated from Harvard Business School with an M.B.A. in 1994
and from Harvard University with a B.A. in 1988.
PETER B. HARMON, age 37, has served as Vice President of the Company since
February 1996. In that position, Mr. Harmon is responsible for all the Company's
asset management, acquisition, development, and disposition activities in the
Chicago/Midwest region. He has been active in commercial real estate for over
thirteen years, approximately three years with Kemper Real Estate Management
Company (July 1992 through January 1996) and ten years with Jaymont Properties
(June 1982 through June 1992). Mr. Harmon attended the University of North
Dakota, is a CPM candidate, and is a member of National Association of
Industrial and Office Parks.
TIMOTHY B. KEITH, age 32, has been employed by the Company since February
1996 and has served as Vice President--Regional Director since September 1997.
In that position, Mr. Keith is responsible for all the Company's asset
management, acquisition, development, and disposition activities in the Texas/
Southeast region. Between April 1996 and September 1997, Mr. Keith served as
Vice President, Portfolio Manger and was responsible for acquisitions and
development in that same region. From July 1994 through February 1996, Mr. Keith
served as Investment Manager of Hunt Realty Corporation, a private real estate
investment corporation. From 1989 to 1994, Mr. Keith was a Real Estate
Consultant with the Arthur Andersen Real Estate Services Group and the Arthur
Andersen Real Estate Valuation Services Group in Dallas and New York City. From
1988 to 1989, Mr. Keith served a Director of Marketing Research for Iliff,
Thorn, & Co., a regional real estate brokerage company headquartered in Phoenix,
Arizona. From 1987 to 1988, Mr. Keith was an associate with Estes Development
Co., Commercial Division, a shopping center developer based in Phoenix. Mr.
Keith graduated from Westmont College in 1987 with a B.A. degree in Economics
and Business.
JAIME SUAREZ, age 40, has served as Vice President--Finance of the Company
since February 1997 and as Controller and Treasurer of the Company since its
formation in May 1995. From August 1993 until February 23, 1996, he served as
Finance Manager of MPP. From 1992 through July 1993, Mr. Suarez was a consultant
to MPP, Pacific Gas, and Electric and Pacific Telesis Group, and from 1984 to
1991, he was Controller of PacTel Properties, a subsidiary of Pacific Telesis
Group. He served as a Financial Analyst with Crocker National Bank from 1982 to
1983 and was with the public accounting firm of Ernst & Whinney (now Ernst &
Young) as an advanced staff accountant from 1980 to 1981. He is a certified
public accountant. Mr. Suarez graduated from the University of San Francisco
with a B.S. degree in 1979 and with a Masters in Business Administration in
1991.
ROBERT A. DOBBIN, age 51, has served as General Counsel and Secretary of the
Company since May 1995. He served as Secretary of the Six REITs from 1984 until
February 1996 and as Vice President of the Six REITs and Vice President and
Secretary of MPP from 1991 until February 1996. From 1984 to 1991, he held
various positions with Sierra Capital Companies and its affiliates, the former
managers of the Six REITs. Mr. Dobbin is an attorney and before 1984 was engaged
in the practice of law in both the private and public sectors. He served as an
officer in the U.S. Marine Corps from 1968 to 1972, graduated from Dartmouth
College with a B.A. degree in 1967, from Willamette University with a J.D.
degree in 1975, and from Georgetown University with a L.L.M. degree in taxation
in 1978.
COMPENSATION OF DIRECTORS
Each Independent Director receives an annual retainer of $18,000, a $1,000
fee for each Board meeting attended, a $500 fee for each committee meeting
attended ($1,000 if the committee meeting is not held in conjunction with a
Board meeting), $1,000 for each day spent in engaging in site visits or
attending to other Company business at the request of management, and
reimbursement of expenses incurred in attending those meetings and engaging in
those activities. Independent Directors are entitled to elect to receive all or
any portion of their annual retainer in shares of Common Stock. In the
alternative, they may
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choose to receive their annual retainer exclusively in cash. Mr. Anderson, who
is both a director and an officer of the Company, receives no director fees.
Each Independent Director has received an initial one-time grant of a
non-statutory option to purchase 5,000 shares of Common Stock and each quarter
receives a grant of a non-statutory option to purchase an additional 1,667
shares.
EXECUTIVE COMPENSATION
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION PHILOSOPHY
The Company's primary objectives in determining executive officer
compensation are (i) to enable the Company to attract and retain quality
executives by providing compensation packages that are competitive with
opportunities available to Company executives in the marketplace and (ii) to
align those executives' incentives with stockholder interests. In establishing
its executive compensation program, the Board retained independent compensation
consultants familiar with the real estate investment trust ("REIT") industry.
Among other things, those consultants advised the Board as to (i) compensation
structures that would assist the Board in achieving its goals, (ii) ranges of
executive officer base salaries and total annual cash compensation in place at
comparable REITs, and (iii) comparisons between stock option arrangements being
considered for the Company and stock option arrangements in place elsewhere in
the REIT industry.
To achieve its goals, the Board has designed the Company's executive
compensation program to include the following:
(a) Base salaries in the mid-range of base salaries for similar
positions at comparable REITs,
(b) Annual cash incentive opportunities that (i) together with base
salaries, will produce levels of total annual cash compensation that are at
the median of industry ranges of total annual cash compensation if target
performance levels are met, (ii) in conjunction with long-term incentives,
will produce total compensation at the upper quartile of industry ranges for
total compensation if maximum performance levels are met, and (iii) will
compensate executives for achieving goals that have been designed to enhance
long-term stockholder value, and
(c) Long-term incentives that relate directly to the enhancement of
stockholder value.
BASE SALARIES
With input from its independent consultants, the Board established a base
salary structure that takes into account competitive practices of (i) other
industrial REITs and (ii) REITs with market capitalizations similar to that of
the Company. This salary structure includes ranges of base salaries for Company
executive officer positions. Base salaries for Company executive officers have
generally been set at or below the midpoint of those ranges.
ANNUAL INCENTIVES
The Company's annual cash incentive awards program contains three elements.
The first of these elements consists of awards based on the Company's corporate
performance. This portion of the program relies on two benchmarks: (i) the level
of the Company's Funds from Operations in comparison to levels targeted by the
Board, and (ii) the Company's total return to stockholders in comparison to
total returns for equity REITs that comprise the Wilshire REIT Index. The second
of these elements consists of awards based on the level and quality of the
Company's real estate acquisitions. The third consists of awards based on the
Board's discretionary assessment of the performance of the individual executive
officers. The weighting given to these three elements varies among the officers
depending on their responsibilities.
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LONG-TERM INCENTIVES
The Company's long-term incentive program has been designed to provide
executive officers with long-term incentives that are aligned with the benefits
to be derived by stockholders from long-term increases in share value. This
program is administered through the issuance of options under the Stock Plan.
The Company's Compensation Committee administers the Stock Plan. The
exercise price for each option granted under the Stock Plan may not be less than
the fair market value of the Company shares covered by that option on the date
of the option grant. Option terms cannot exceed ten years, and options vest
pursuant to standards established by the Compensation Committee. The Stock Plan
permits the issuance of both incentive stock options and non-statutory options.
Please see "--Option Grants in Last Fiscal Year."
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Anderson's 1997 compensation package consisted of salary of $250,000, a
cash bonus of $250,000, a housing allowance of $60,000, 70,000 options issued
under the Stock Plan, and a $2,000 matching contribution to his account under
the Company's 401(k) plan.
The Board established Mr. Anderson's 1997 annual salary at $250,000, a level
that consistent with the principles discussed above, is in the mid-range of
salaries for comparable positions in the REIT industry as determined by the
Company's independent compensation consultant. The amount of the housing
allowance was determined by reference to the differential in housing prices
between San Francisco and Dallas and was designed to allow Mr. Anderson to
relocate from Dallas to San Francisco on a cost-neutral basis. Please see
"--Summary Compensation Table." The amount of Mr. Anderson's stock option awards
was based on the consultant's recommendations. 35% of Mr. Anderson's 1997 bonus
potential was based on the level of the Company's 1997 Funds from Operations, an
additional 35% was based on the Company's 1997 total return to stockholders, and
the award of the remaining 30% was at the discretion of the Compensation
Committee. The committee awarded Mr. Anderson 100% of his potential 1997 bonus
because (i) the Company's 1997 Funds from Operations represented a 16.67%
increase over the Company's 1996 Funds from Operations, (ii) the Company's 1997
total return to stockholders qualified under the bonus benchmark of placement in
the 80th percentile of the equity REITs comprising the Wilshire REIT Index, and
(iii) the committee concluded that the Company's 1997 growth and total return to
stockholders warranted an award of the full amount of the discretionary portion
of his potential bonus.
COMPENSATION COMMITTEE
John S. Moody
T. Patrick Duncan
Kenneth N. Stensby
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From January 1, 1997, to May 16, 1997, the Compensation Committee was
composed of Messrs. Moody and Stensby and James M. Pollak. From May 16, 1997, to
August 8, 1997, that committee was composed of Messrs. Moody and Stensby, and
from August 8, 1997, through December 31, 1997, it was composed of Messrs.
Duncan, Moody, and Stensby. No member of that committee is or was an officer of
the Company or any of its subsidiaries.
7
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned by the Company's
chief executive officer and its four other most highly compensated executive
officers (collectively, the "Named Executive Officers") during 1996 and 1997.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
------------------------------------------------ SECURITIES ALL
OTHER ANNUAL UNDERLYING OTHER
SALARY BONUS COMPENSATION OPTIONS COMPENSATION ($)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) (1)
- --------------------------------- --------- ---------- ---------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Allen J. Anderson ............... 1996 $ 214,482 $ 162,500 $ 86,167(3) 380,000 $ 500
Chief Executive Officer(2) 1997 $ 250,000 $ 250,000 $ 60,000(4) 70,000 $ 2,000
Milton K. Reeder ................ 1996 $ 161,738 $ 61,750 $ 2,400(5) 168,000 --
President and Chief Financial 1997 $ 190,000 $ 142,500 -- 45,000 $ 2,000
Officer
Dennis D. Higgs ................. 1996 $ 114,919 $ 169,625 $ 5,400(5) 144,000 --
Executive Vice President 1997 $ 172,500 $ 180,000 -- 45,000 $ 2,000
Gregory D. Skirving ............. 1996 -- -- -- -- --
Senior Vice President 1997 $ 124,583 65,000 -- 25,284 $ 1,300
Timothy B. Keith ................ 1996 $ 77,356 $ 46,600 $ 1,800(5) 50,000 --
Vice President--Regional 1997 $ 96,667 $ 90,000 -- 10,000 $ 2,000
Director
</TABLE>
- ------------------------
(1) Represents the Company's annual matching contribution to each employee's
account under the Company's 401(k) plan. The Company made matching
contributions (up to a maximum of $500 and $2,000 in 1996 and 1997,
respectively) on behalf or all employees who participated in that plan
during 1996 and 1997.
(2) Effective June 1, 1995, the Company and Hunt Realty Corporation ("HRC")
entered into a consulting agreement under which the Company agreed to
reimburse HRC for the services of Mr. Anderson and two other employees
through the effective date of the Merger. $24,839 of the amount paid by the
Company under this agreement was attributable to services rendered by Mr.
Anderson in 1996, and $7,524 of that amount was attributable to services
rendered by Mr. Keith in 1996.
(3) $12,000 of this amount represents the excess of (i) the value of the shares
purchased by Mr. Anderson on the exercise of his portion of options issued
to Company executives before the Company's February 1996 merger with the
Merged REITs ("Pre-Merger Options") over (ii) the amount that he paid for
those shares. $41,667 represents a moving allowance. The balance of this
amount, $32,500, represents the amount of the housing allowance paid to Mr.
Anderson in the last fiscal year to compensate him for increased housing
costs associated with his move to the San Francisco area; the Company has
agreed to maintain this allowance for so long as the Company's principal
executive offices are located in that area.
(4) This amount represents Mr. Anderson's housing allowance (please see footnote
#3 above).
(5) These amounts represent the excess of (i) the value of the shares purchased
by each of these individuals on the exercise of his Pre-Merger Options over
(ii) the amount that he paid for those shares.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information for the Named Executive Officers
relating to stock options granted during 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1) POTENTIAL REALIZABLE
- ----------------------------------------------------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- -------------------------------------- ------------- --------------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Allen J. Anderson..................... 70,000 25.4% $ 22.00 2/28/07 $ 968,498 $ 2,454,363
Milton K. Reeder...................... 45,000 16.3% $ 22.00 2/28/07 $ 622,606 $ 1,577,805
Dennis D. Higgs....................... 45,000 16.3% $ 22.00 2/28/07 $ 622,606 $ 1,577,805
Gregory D. Skirving................... 25,284 9.2% $ 22.00 2/28/07 $ 349,821 $ 886,516
Timothy B. Keith...................... 10,000 3.6% $ 22.00 2/28/07 $ 138,357 $ 350,623
</TABLE>
- ------------------------
(1) In February 1997, the Company granted options under the Stock Plan ("Stock
Plan Options") to the Named Executive Officers as indicated in this table.
Stock Plan Options consist of both incentive stock options and non-statutory
stock options. The exercise price of these options is $22.00 per share. All
the options will have a ten-year term unless they terminate earlier in
accordance with the provisions of the Stock Plan. The options vest in
increments over a five-year period beginning with the grant date. These
options will become fully vested in the event of (i) the death or disability
of the executive, (ii) a termination of employment that is either (a)
initiated by the Company without "cause" or (b) initiated by the executive
for "good reason," or (iii) upon a "change of control" of the Company (in
each case as defined in the stock option agreement).
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information for the Named Executive Officers
relating to (i) their exercise of stock options in 1997 and (ii) the valuation
of unexercised stock options held by them.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
ACQUIRED ON VALUE (#) (#)
EXERCISE REALIZED -------------------------- --------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Allen Anderson.................... 85,000 265,000 $ 801,667 $ 2,348,333
Milton K. Reeder.................. 44,167 148,833 $ 406,667 $ 1,286,333
Dennis D. Higgs................... 35,000 109,000 $ 311,563 $ 873,063
Gregory D. Skirving............... -- 25,284 -- $ 88,494
Timothy B. Keith.................. 10,467 34,533 $ 97,133 $ 300,992
</TABLE>
9
<PAGE>
SEVERANCE AGREEMENTS
The Company has entered into a severance agreement with each Named Executive
Officer. These agreements (the "Severance Agreements") provide that each such
officer will be entitled to the severance benefits described below following a
"change of control" of the Company (as defined in the Severance Agreements) (i)
if the Company terminates that officer's employment for any reason within 18
months following the change of control, or (ii) if that officer terminates his
or her employment for any reason within six months following the change of
control. Under their respective Severance Agreements, each of Messrs. Anderson,
Reeder, and Higgs will be entitled to a cash payment in an amount equal to two
times his then current annual base salary plus an amount equal to his incentive
bonus earned during the preceding year ("Base Pay"). The Severance Agreements
for Messrs. Keith and Skirving provide for a cash severance benefit in an amount
equal to one year's Base Pay. Each Severance Agreement also provides that the
Company will pay the COBRA premiums for each officer and for any of his covered
eligible dependents to continue their participation in the Company's health
plans until the earlier of (i) 12 months from the date of the officer's
termination or (ii) the date the officer becomes ineligible for COBRA
continuation coverage prior to the expiration of such 12-month period. In
addition, each Severance Agreement provides that if any portion of the benefits
paid under the agreement (together with any other benefits paid to the officer)
constitutes an excess parachute payment pursuant to Section 4999 of the Internal
Revenue Code of 1986, as amended, and is subject to any excise taxes a result,
then the Company shall, in addition to providing such compensation, pay the
officer an additional amount in order to compensate the officer for any amounts
due as an excise tax.
PERFORMANCE GRAPH
On February 23, 1996, trading in shares of Common Stock began on the New
York Stock Exchange. The following graph and table compare the cumulative total
stockholder returns on the Common Stock for the period from February 28, 1996,
through December 31, 1997, with the cumulative total returns for the same period
under the Standard & Poor's 500 Stock Index and the NAREIT Equity REIT Total
Return Index maintained by the National Association of Real Estate Investment
Trusts, Inc. Total return values for the Common Stock and for those two indexes
represent cumulative total returns assuming (i) the investment of $100 in Common
Stock and in the securities covered by those indexes on February 28, 1996 and
(ii) the reinvestment of dividends. Company dividends paid in January 1998 for
the fourth quarter of 1997 are not included in the calculations. The stockholder
returns on the Common Stock shown in the following graph and table are not
necessarily indicative of future performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FEB-96 MAR-96 JUN-96 SEP-96 DEC-96 MAR-97 JUN-97 SEP-97 DEC-97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MDN $100.00 $110.74 $122.39 $118.44 $144.49 $161.32 $166.06 $183.33 $186.66
S&P 500 $100.00 $100.96 $105.49 $108.75 $117.82 $120.98 $142.10 $152.75 $157.14
NAREIT Equity REIT $100.00 $99.45 $103.88 $110.68 $131.54 $132.45 $139.04 $155.47 $158.19
</TABLE>
10
<PAGE>
STOCKHOLDINGS OF PRINCIPAL STOCKHOLDERS, DIRECTORS, AND MANAGEMENT
The following table sets forth information as of April 1, 1998, regarding
the beneficial ownership of shares of Common Stock by (i) each person that owns
more than 5% of such shares, (ii) each Director, (iii) each Named Executive
Officer, and (iv) all Directors and executive officers as a group. This table is
based on assumptions that are set forth in its footnotes.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENT
NAME(1) OWNED(2) OF CLASS(2)
- ------------------------------------------------------------ -------------------- -----------
<S> <C> <C>
The Prudential Insurance Company of America(3).............. 9,012,332 29.87%
Ameritech Pension Trust(4).................................. 8,888,598 27.96%
Cohen & Steers Capital Management, Inc.(5).................. 1,794,800 5.95%
Allen J. Anderson........................................... 224,700 (6)
C.E. Cornutt................................................ 27,036 (6)
T. Patrick Duncan........................................... 16,936 (6)
Peter O. Hanson............................................. 23,212 (6)
Dennis D. Higgs............................................. 100,505 (6)
Timothy B. Keith............................................ 31,055 (6)
John S. Moody............................................... 21,936 (6)
Milton K. Reeder............................................ 88,161 (6)
Gregory D. Skirving......................................... 7,071 (6)
Kenneth N. Stensby.......................................... 20,021 (6)
Lee W. Wilson............................................... 18,482 (6)
All the directors and executive officers as a group (15
persons).................................................. 626,828 2.05%
</TABLE>
- ------------------------
(1) Unless otherwise indicated in these footnotes, the persons and entities
listed in this table have sole voting and investment power over shares
attributable to them, subject to community property laws where applicable.
(2) Assumes that the person, entity, or group in question has purchased or
otherwise acquired all the shares of Common Stock that he, she, or it is
entitled to purchase by May 31, 1998 and that no other person or entity
purchases or otherwise acquires any shares. For example, the entries for
Ameritech Pension Trust assume that Ameritech converts all its shares of
Series B Preferred Stock into shares of Common Stock on a
one-share-for-one-share basis (the current conversion rate).
(3) The address of The Prudential Insurance Company of America is Prudential
Plaza, 751 Broad Street, Newark New Jersey 07102-3777
(4) The address of Ameritech Pension Trust is 225 West Randolph Street, HQ13A,
Chicago, Illinois 60606.
(5) The address of Cohen & Steers Capital Management, Inc. is 757 Third Avenue,
New York, New York 10017-2013.
(6) Less than 1%
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
PORTFOLIO PURCHASE FROM AMERITECH PENSION TRUST
In May 1997 the Company contracted to purchase from State Street Bank and
Trust Company, as Trustee for Ameritech Pension Trust ("Ameritech"), (i) a
portfolio of twenty-two industrial buildings containing approximately 3,482,000
square feet of rentable space located in California, Illinois, Texas, Arizona,
and Missouri and (ii) the lender's interest in a participating mortgage loan
secured by seven-
11
<PAGE>
building industrial project in California. The aggregate contract purchase price
for these assets was $144.6 million.
On September 30, 1997 the Company completed the first phase of this
acquisition by acquiring (i) eleven of the buildings containing approximately
1,522,000 square feet of rentable space and (ii) the lender's interest in the
participating loan. The aggregate contract purchase price for the eleven
buildings was $61.3 million, and the contract purchase price for the loan was
$21.5 million. The total consideration of $82.8 million was paid in the form of
4,160,745 shares of Common Stock.
On October 22, 1997, the Company completed its acquisition of the remaining
eleven buildings containing approximately 1,960,000 square feet of rentable
space. The aggregate contract purchase price for these assets was $61.8 million.
This contract price was paid in the form of 3,104,477 shares of Common Stock.
In determining the amount of consideration to be paid for these assets, the
Company's management and the Investment Committee considered such factors as the
historical and expected cash flow of the properties, the nature of the tenancies
and terms of the leases in place, occupancy rates, opportunities for alternative
and new tenancies, current operating costs, physical condition and location of
the buildings, building design, the anticipated impact of the acquisition on the
Company's financial results, and capitalization rates at which it believes other
comparable properties had recently sold. The Company's analysis focused
primarily on the properties' expected future cash flow, their location (both in
terms of market or sub-market and the specific location within a market or
sub-market), and building design (features such as clear height, truck turning
radii, and cross-docking capabilities).
The issuance of Common Stock to Ameritech in connection with this
transaction was approved by the Company's stockholders at a special meeting held
on September 24, 1997.
FRANKFORD TRADE CENTER TRANSACTION
On September 18, 1997, the Company invested in Meridian-Argent VI, Ltd., a
Texas limited partnership formed for the development of up to three industrial
buildings totaling approximately 1.6 million square feet in the Frankford Trade
Center in Carrolton, Texas (the "Partnership"). Wholly-owned subsidiaries of the
Company hold a 1% general partnership interest and a 49% limited partnership
interest, and Argent Frankford L.P., a Texas limited partnership ("Argent"),
holds a 50% limited partnership interest. C.E. Cornutt, a director of the
Company, and Hunt Realty Corporation, which beneficially owned more than 5% of
the Company's outstanding voting stock at the time of the transaction, each hold
a 50% beneficial interest in Argent subject to a preferred return of and on
capital to the interest in which Hunt Realty Corporation holds its beneficial
interest.
Argent contributed to the Partnership 32.6 acres of land valued at
$2,657,000, and the Company's subsidiaries together contributed $2,657,000 in
cash to the Partnership. Wholly owned subsidiaries of the Company are obligated
to provide a construction loan to the Partnership in the amount of $12.5
million; Argent will provide development and construction management services to
the Partnership in return for a development fee equal to 4% of specified
construction costs.
Under differing sets of specified circumstances, one of the Company
subsidiaries would have either the option or the obligation to purchase Argent's
interest in the Partnership; the price for any such purchase would vary
depending on the circumstances but would be determined under a specified formula
applicable to the circumstances in question.
Argent has granted the Partnership a purchase option and a right of first
refusal with respect to two tracts of land adjacent to the land currently held
by the Partnership. These rights are scheduled to expire on September 30, 1998;
however, if either the option or the first refusal right were to be exercised
with respect to one of those two tracts, these rights would stay in effect for
the remaining tract until September 30, 1999. Under certain circumstances, the
Partnership could have (i) the right to develop one
12
<PAGE>
of both the adjacent tracts independently of Argent or (ii) the obligation to
develop one or both those tracts in partnership with Argent under terms similar
to the terms of the Partnership's partnership agreement.
As of March 31, 1998, construction of the first building was approximately
55% complete, and the Company had advanced $3,689,742 of the construction loan
for that building.
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
The Directors are elected annually and serve until the next annual meeting
of stockholders and until their successors are elected and qualified. The
Company's Bylaws provide that the number of Directors may, subject to the rights
of the holders of the Series B Preferred Stock, be increased or decreased by a
vote of a majority of the entire Board, so long as that number is not less than
three (which is the minimum number under the Maryland General Corporation Law)
nor more than fifteen. The number of positions on the Board has been fixed at
seven. The Board may in the future attempt to locate additional qualified
candidates for the Board. If it locates such a person or persons, pursuant to
the Company's Bylaws and subject to the rights of the holders of the Series B
Preferred Stock, it could by a majority vote of the entire Board increase the
number of Board positions by up to two positions and elect a new director or
directors to fill the resulting vacancy or vacancies. Any director so elected
would hold office until the next annual meeting of stockholders and until his or
her successor is elected and qualified.
The Company's Charter provides that a majority of the Directors shall be
Independent Directors. The Board has nominated the seven individuals named below
to serve as members of the Board. All those nominees except Mr. Anderson would
qualify as Independent Directors.
The Company's Bylaws provide a procedure for stockholder nomination of
persons for election to the Board of Directors. Please see "Stockholder
Proposals and Nominations".
The nominees listed below currently are Directors whose present terms expire
at the Annual Meeting. Each nominee has agreed to serve if elected, and
management has no reason to believe that any nominee will be unavailable to
serve. Unless otherwise instructed, the proxy holders will vote Proxies received
by them in favor of the election of the nominees named below. However, if any
nominee becomes unavailable for election for any reason, the Shares represented
by those Proxies will be voted for any substitute nominee designated by the
Board. Assuming that a quorum is present, a plurality of all the votes cast at
the Annual Meeting will be sufficient to elect a nominee as a Director. For
purposes of the election of Directors, abstentions will not be counted as votes
cast and will have no effect on the result of the vote, although they will be
counted in determining the presence of a quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NOMINEE LISTED BELOW,
AND, IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, PROXIES SOLICITED IN
CONNECTION WITH THIS PROXY STATEMENT WILL BE SO VOTED.
NOMINEES
The following table indicates each nominee's age, current position, and
business experience during the past five years or more:
ALLEN J. ANDERSON. Biographical information for Mr. Anderson is set forth
above in "General Company Information: Executive Officers."
C.E. "DOC" CORNUTT, age 48, has been President of Argent Property Company, a
real estate development company, since February 1997. From 1993 to February
1997, Mr. Cornutt served as President of Hunt Realty Corporation and its parent
company, Hunt Capital Corporation, and Chairman of a subsidiary of
13
<PAGE>
that corporation, Hunt Refining Company, an independent refining company. From
1983 to 1993, Mr. Cornutt served as the Chief Financial Officer of Hunt Oil
Company, an independent oil company based in Dallas, Texas with worldwide
operations. From 1973 to 1983, Mr. Cornutt served as Executive Vice President of
Woodbine Development Corporation, a private real estate company active in all
phases of land development and construction and management of hotels, office
buildings, and industrial properties. Mr. Cornutt graduated from Abilene
Christian University in 1971 with a B.S. degree in Business Administration.
T. PATRICK DUNCAN, age 49, joined USAA Real Estate Company ("USAA") in
November 1986 as Controller and, since July 1992, has served as Senior Vice
President of its real estate operations. Mr. Duncan's responsibilities include
the direction of all acquisitions, sales, management, and leasing of real estate
for USAA and certain affiliated companies. In addition, he is responsible for
USAA's real estate investment fund raising and advisory services. Before joining
USAA, Mr. Duncan was an audit manager for the CPA firm of Deloitte & Touche and
Controller of the Trammell Crow Company in Dallas, Texas. Mr. Duncan is a
certified public accountant and holds a Texas real estate brokers license. He is
a member of the Texas and Arizona State Boards of Accounting, the Texas and
Arizona State Societies of Certified Public Accountants, the International
Council of Shopping Centers, the Urban Land Institute, The National Association
of Real Estate Investment Trusts, and the Pension Real Estate Association. Mr.
Duncan serves as director of USAA Investment Income I and II, USAA Real Estate
Partnership III and IV, and USAA Equities Advisor Inc. Mr. Duncan is also Vice
Chairman of the Board of the Daughters of Charity, a community organization that
provides health care to the poor. He is also a board member of the San Antonio
Northside Chamber of Commerce. Mr. Duncan graduated from the University of
Arizona in 1972 with a B.S. degree in Accounting and Finance.
PETER O. HANSON, age 64, has been the President of James E. Hanson, Inc., an
industrial real estate development, property management, and realty brokerage
firm, since 1966. Since 1984 he has served as President of Property Investors
Associates, Inc., a subsidiary of James E. Hanson, Inc. that is the general
partner of five public real estate partnerships. He has been a director of seven
privately-held corporations and general partner of eleven privately held real
estate partnerships. He currently serves as a director of New American Network.
Mr. Hanson is a member of the Society of Industrial and Office Realtors and
served as its National President in 1985. He is also a member of the New York
Metropolitan Real Estate Brokers Association and in 1970 was its President. Mr.
Hanson holds a B.A. from Colgate University. Until February 1996, he served as a
director of Trusts VI and VII and of MPP, and was Chairman of Trust VI. He
currently serves as a trustee of Trust 83.
JOHN S. MOODY, age 48, is a director and the Chairman and Chief Executive
Officer of Cornerstone Properties, Inc., a publicly held REIT that became
self-advised in June 1995. From April 1991 to June 1995, Mr. Moody was President
and Chief Executive Officer of Deutsche Bank Realty Advisors, where he was
responsible for a $2 billion real estate portfolio. Deutsche Bank Realty
Advisors was a wholly-owned subsidiary of Deutsche Bank AG and acted as the real
estate advisor to all Deutsche Bank-sponsored real estate in North America.
Before joining Deutsche Bank, Mr. Moody was President and Chief Executive
Officer of Paine Webber Properties, a real estate syndication, advisory and
asset management company for a $3 billion portfolio of apartments, office
buildings, and shopping centers. Mr. Moody is an experienced real estate
developer and previously practiced law, specializing in real estate matters. He
is a graduate of Stanford University and received his J.D. from the University
of Texas School of Law. His professional affiliations include the Association of
Foreign Investors in U.S. Real Estate and the Urban Land Institute.
KENNETH N. STENSBY, age 58, was President and Chief Executive Officer of
United Properties, a large Minneapolis-based diversified real estate company,
from 1974 until his retirement in January 1995. Before joining United
Properties, Mr. Stensby was a Vice President at Northland Mortgage Company,
where he represented institutional investors as a mortgage banker from 1967 to
1971. He also served as a mortgage
14
<PAGE>
analyst for Connecticut General Life Insurance Company from 1961 to 1967. Mr.
Stensby is past President of the National Association of Industrial and Office
Parks and was a director of First Asset Realty Advisors, a pension advisory
subsidiary of First Bank of Minneapolis. Mr. Stensby graduated from Carleton
College with a B.A. in economics in 1961.
LEE W. WILSON, age 58, has been the President and owner of L.W. Wilson &
Co., Inc., a member firm on the Pacific Stock Exchange, since 1975 and a
specialist on the Pacific Stock Exchange from 1967 to 1997. In 1977, he served
as the Chairman of the Board of Governors of the Pacific Stock Exchange and in
1976 was Chairman of the Board of Directors of Pacific Securities Depository
Trust Company. Until February 1996, Mr. Wilson served as a director of Trusts
84, IV, VI and VII and MPP and was Chairman of Trusts 84 and VII.
PROPOSAL TWO
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANT
The firm of Arthur Andersen LLP has provided independent public accounting
services to the Company since its inception in 1995. The Board has recommended
to the stockholders that they ratify the selection of Arthur Andersen LLP to
examine the Company's financial statements for the year ending December 31,
1998. If the stockholders do not ratify the selection of Arthur Andersen LLP as
the Company's independent public accountant, or if circumstances arise that make
the continuation of Arthur Andersen LLP as the Company's independent public
accountant impossible or inappropriate for the year ending December 31, 1998,
that selection will be reconsidered by the Audit Committee and the Board. A
representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting to respond to appropriate questions and to make a statement if he or she
so desires.
Assuming that a quorum is present, the affirmative vote of a majority of all
the votes cast at the Annual Meeting is necessary for approval of the
ratification of the selection of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1998. For purposes
of the vote on this proposal, abstentions will not be counted as votes cast and
will have no effect on the result of the vote, although they will be counted in
determining the presence of a quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL, AND, IN THE
ABSENCE OF INSTRUCTIONS TO THE CONTRARY, PROXIES SOLICITED IN CONNECTION WITH
THIS PROXY STATEMENT WILL BE SO VOTED.
STOCKHOLDER PROPOSALS AND NOMINATIONS
The Bylaws of the Company provide a procedure for stockholder proposals and
stockholder nominations of persons for election to the Board of Directors. That
procedure provides that any stockholder intending to present a proposal or
nomination for election of one or more Directors at the Annual Meeting must
deliver a written notice to the Company's Secretary at the Company's principal
executive offices not less than 60 days nor more that 90 days before the first
anniversary of the preceding year's annual meeting, provided that if the date of
the annual meeting is advanced more than 30 days or delayed more than 60 days
from that anniversary date, that notice must be so delivered not earlier than
the 90th day before that meeting and not later than the close of business on the
later of (i) the 60th day before that meeting or (ii) the tenth day following
the day on which public announcement of that meeting's date is first made.
Any such notice from a stockholder to the Company's Secretary must contain
(i) the name and address of that stockholder as they appear on the Company's
books (and, if the nomination or proposal in question is made on behalf of a
beneficial owner of Shares, the name and address of that beneficial owner) and
(ii) the number of shares of each class of the Company's stock held by that
stockholder (and, if appropriate, that beneficial owner). If the stockholder's
notice to the Company's Secretary proposes to nominate one or more individuals
for election or re-election as Director, that notice must also include for
15
<PAGE>
each such individual all information relating to that person that is required to
be disclosed in solicitations of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934 (including that individual's written consent to being named
in the proxy statement as a nominee and to serve as a director if elected). If
the stockholder's notice to the Secretary proposes to bring other business
before the meeting, that notice must include a brief description of (i) that
business, (ii) the reasons for conducting that business at the meeting, and
(iii) any material interest in that business held by that stockholder (and by
the beneficial owner, if any, on whose behalf the proposal is made). If a
stockholder proposal or nomination is not made in accordance with the procedure
set forth above, the Chairman of the Annual Meeting shall have the power and
duty (i) to determine and declare at the Annual Meeting whether the proposed
business or nomination was properly brought before the Annual Meeting in
accordance with the procedures set forth in the Bylaws and (ii) if not, to
direct that the business not be transacted or that the defective nomination be
disregarded.
Any stockholder desiring management to consider a proposal for inclusion in
the Company's proxy statement relating to the annual meeting of stockholders to
be held in 1998 must submit the proposal by certified mail, return receipt
requested, to the attention of the Company's Secretary at the Company's
principal executive office by December 18, 1998.
MISCELLANEOUS
This proxy statement and the accompanying Proxy are being solicited by the
order of the Directors, and all costs related to this solicitation will be borne
by the Company. Proxies may be solicited by mail, telephone, or telegram or in
person. The Company will request banks, brokerage houses, and other
institutions, nominees, or fiduciaries that hold Shares in their names to
forward the solicitation materials to the beneficial owners thereof, and the
Company will reimburse those persons for their reasonable expenses in so
forwarding these materials. Directors, Company officers, and regular Company
employees may, without additional compensation, solicit Proxies by telephone or
telegram or in person.
1997 ANNUAL REPORTS
The Company's 1997 Annual Report, including audited financial statements for
the period May 18, 1995 to December 31, 1995, and for calendar years 1996 and
1997, are being forwarded to each stockholder of record as of March 17, 1998,
together with this Proxy Statement.
A COPY OF THE COMPANY'S 1997 ANNUAL REPORT ON FORM 10-K IS AVAILABLE WITHOUT
CHARGE TO THOSE STOCKHOLDERS WHO WOULD LIKE MORE DETAILED INFORMATION CONCERNING
THE COMPANY. IF YOU DESIRE A COPY OF THAT DOCUMENT, PLEASE SEND A WRITTEN
REQUEST TO INVESTOR RELATIONS, MERIDIAN INDUSTRIAL TRUST, INC., 455 MARKET
STREET, 17TH FLOOR, SAN FRANCISCO, CALIFORNIA 94105 (TELEPHONE: 415-281-3900).
OTHER BUSINESS
At this date, management knows of no other matters proposed to be brought
before the Annual Meeting. If any other business should properly come before the
Annual Meeting for stockholder action, the named proxies will vote the Shares
represented by the Proxies in their discretion.
BY ORDER OF THE DIRECTORS,
Robert A. Dobbin,
SECRETARY
San Francisco, California
April 17, 1998
16
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
PROXY
SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF MERIDIAN INDUSTRIAL TRUST, INC.
FOR THE MAY 15, 1998, ANNUAL MEETING OF
STOCKHOLDERS AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The undersigned stockholder of Meridian Industrial Trust, Inc., a Maryland
Corporation ("Meridian"), hereby (a) acknowledges receipt of the Notice to
Stockholders of the Annual Meeting of Stockholders of Meridian to be held on
May 15, 1998, and of the accompanying Proxy Statement; (b) appoints Allen J.
Anderson and Milton K. Reeder, as Proxies for the undersigned, or any of
them, each with full power of substitution; (c) authorizes the Proxies to
represent the undersigned at the annual meeting and to cast on behalf of the
undersigned all votes that the undersigned is entitled to cast as the holder
of those shares of Meridian Common Stock or Meridian Series B Preferred Stock
held of record by the undersigned at the close of business on March 17, 1998,
at the annual meeting and at any adjournment or postponement thereof; and (d)
revokes any proxies previously given.
[Logo] MERIDIAN INDUSTRIAL TRUST
ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 1998
8:30 A.M.
HYATT REGENCY HOTEL
FIVE EMBARCADERO CENTER
SAN FRANCISCO, CA 94111
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN
THE ENCLOSED ENVELOPE OR CALL 1-800-OK2-VOTE.
THANK YOU FOR YOUR PROMPT REPLY.
<PAGE>
/ X / PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
The votes entitled to be cast by the undersigned will be cast as instructed
below. If this proxy is executed but no instruction is given, the votes
entitled to be cast by the undersigned will be cast "FOR" each of the
nominees for director and "FOR" proposal 2 as described in the Proxy
Statement and in the discretion of the Proxies on any other matter that may
properly come before this meeting at any adjournment or postponement thereof.
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
LISTED AND FOR PROPOSAL 2.
- -------------------------------------------------------------------------------
FOR WITHHELD AS TO ALL
1. Election of / / / /
seven Directors
Nominees for Director:
1. Allen J. Anderson 5. John S. Moody
2. C.E. Cornult 6. Kenneth N. Stensby
3. T. Patrick Duncan 7. Lee W. Wilson
4. Peter O. Hanson
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
2. A proposal to ratify the selection of Arthur Andersen LLP as Meridian's
independent auditors for fiscal year ending December 31, 1998.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the Proxies are authorized to vote on such other
business as may properly come before the meeting or any adjournment(s) or
postponement(s) thereof.
Please sign and date this proxy and return it as promptly as possible in the
envelope provided. Joint owners should each sign. Signature(s) should
correspond exactly with the name(s) printed on this proxy. Attorneys,
executors, administrators, guardians, and officers signing in a
representative capacity should give full title.
- ---------------------------------------------
- ---------------------------------------------
SIGNATURE(S) DATE
RETURN AND SIGN THE PROXY CARD IF YOU ARE NOT VOTING BY PHONE
[Logo] MERIDIAN INDUSTRIAL TRUST
Dear Stockholder:
Meridian Industrial Trust introduces to you the ability to vote by
telephone - a new and convenient way to vote your shares. By casting your
vote over the phone, you will not need to return the proxy card. Your
electronic vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card.
To vote your shares over the phone, you must use the control number
printed in the box above, just below the perforation. The series of numbers
that appear in the box above is your personal code to access the system.
To vote over the phone: On a touch-tone telephone, call 1-800-OK2-VOTE
(1-800-652-8683) 24 hours a day, 7 days a week.
If you choose to vote your shares by phone, please do not mail back your
proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
