<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1 TO FORM 10-K
ON
FORM 10-K/A
(MARK ONE)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JULY 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 0-5303
BRE PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 94-1722214
<S> <C>
(State or other jurisdiction of incorporation (I.R.S. Employer Identification Number)
or organization)
<CAPTION>
ONE MONTGOMERY STREET
TELESIS TOWER, SUITE 2500
SAN FRANCISCO, CALIFORNIA 94104-5525
(Address of principal executive offices) (Zip Code)
(415) 445-6530
(Registrant's telephone number, including area code)
</TABLE>
------------------------
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Class A common stock, $.01 par value New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
</TABLE>
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
<TABLE>
<S> <C> <C> <C>
Yes X No
---- ----
</TABLE>
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K (SECTION 229.405 OF THIS CHAPTER) IS NOT CONTAINED HEREIN, AND
WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE
PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS
FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [ ]
At September 5, 1995, the aggregate market value of the registrant's shares of
Class A common stock, $.01 par value, held by nonaffiliates of the registrant
was approximately $346,976,000. At that date 10,970,865 shares were outstanding.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Excerpts of the BRE Properties, Inc. Annual Report to Shareholders for the year
ended July 31, 1995 (the "Annual Report") (Exhibit 13.1 hereto) are incorporated
by reference into Parts I and II of this report.
1
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
EXECUTIVE OFFICERS. See "Executive Officers of the Registrant" in Part I of
this report.
DIRECTORS. Registrant's Board of Directors (the "Board") consists of six
members, divided into three classes designated Class I, Class II and Class III.
Currently, there are two Class I directors, two Class II directors and two Class
III directors.
At the next annual meeting of shareholders, two Class II directors are to
be elected for a term of three years (expiring 1998) or until the election and
qualification of their successors. The persons proposed for reelection as the
Class II directors of the company are Mr. L. Michael Foley and Mr. John McMahan.
The following table sets forth certain information as to the nominees, as
well as the other current members of the Board, including their ages, principal
business experience during the past five years, the year they each first became
a director, Board committee membership and other directorships currently held in
companies with a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934 (the "Exchange Act") or subject to the
requirements of Section 15(d) of that Act or any company registered as an
investment company under the Investment Company Act of 1940.
2
<PAGE>
NOMINEES - CLASS II DIRECTORS
<TABLE>
<CAPTION>
Principal Business Experience During Past Director Board Committee
Name Five Years Age Since (1) Membership
- ---- -------------------------------------------- --- --------- ----------
<S> <C> <C> <C> <C>
L. Michael Foley Senior Vice President and Chief Financial 56 1994 Audit, Compensation
Officer, Coldwell Banker Corporation, since
1995. Consultant, L. Michael Foley &
Associates, 1994-95. Consultant, Sears
Roebuck and Co., 1993-94. Chairman and
Chief Executive Officer, Sears Savings
Bank, 1989-93. Senior Executive Vice
President, Coldwell Banker Real Estate
Group, Inc., 1986-93.
John McMahan President, John McMahan Associates, Inc., a 58 1993 Audit,
management consulting firm, and McMahan Compensation,
Real Estate Securities, Inc., a real estate Executive
investment firm, since 1994. President and
Chief Executive Officer, Mellon/McMahan
Real Estate Advisors, Inc., a real estate
advisory firm, 1990-94. Chairman,
Peregrine Real Estate Trust, and Trustee,
California Real Estate Investment Trust.
Trustee, Mellon Participating Mortgage
Trust, Inc., a real estate investment
trust.
</TABLE>
3
<PAGE>
CLASS III DIRECTORS - TERM EXPIRES IN 1996
<TABLE>
<CAPTION>
Principal Business Experience During Director Board Committee
Name Past Five Years Age Since (1) Membership
- ---- ----------------------------------------- --- --------- ----------
<S> <C> <C> <C> <C>
C. Preston Butcher President and Chief Executive Officer, 56 1985 Audit, Compensation
Lincoln Property Company, N.C., Inc.,
real estate developer, and President and
Chief Executive Officer, Lincoln
Property Company Management Services,
Inc., real estate management company,
for more than five years. Director, The
Charles Schwab Corporation.
Frank C. McDowell President and Chief Executive Officer of 47 June 1995 Executive
the company, since June 1995. Chief
Executive Officer and Chairman of
Cardinal Realty Services, Inc., 1992-95.
Senior Vice President, Head of Real
Estate, First Interstate Bank of Texas,
1988-92.
CLASS I DIRECTORS - TERM EXPIRES IN 1997
Arthur G. von Thaden Chairman of the Board of the company. 63 1981 Executive
President and Chief Executive Officer of
the company from 1970 to June 1995.
Chief Executive Officer, BankAmerica
Realty Services, Inc., a real estate
investment advisory firm, from 1970 to
September 1987.
Malcolm R. Riley Partner, Riley/Pearlman Company, a 63 1990 Audit,
shopping center developer and manager, Compensation,
since 1986. President, Plaza Management Executive
Company, a wholly owned subsidiary of
Riley/Pearlman, since 1992, and
Chairman, La Cagnina/Riley & Associates,
since 1994.
</TABLE>
_____________________
(1) Years indicated are calendar years. For Messrs. von Thaden and Butcher,
includes service as a trustee of the company's predecessor, BankAmerica
Realty Investors.
Mr. Butcher is a managing general partner in approximately 240 partnerships
which act as the general partner of single purpose limited partnerships, each of
which owns a rental real estate property. To date, 14 of these single purpose
limited partnerships have filed for protection under the Federal bankruptcy
laws.
4
<PAGE>
During the fiscal year ended July 31, 1995, the Board held 14 meetings.
All of the directors attended 75% or more of the meetings of the Board and each
of the committees on which they served during fiscal 1995, except Mr. McMahan.
The Board of Directors has established an Audit Committee, an Executive
Committee and a Compensation Committee.
The Audit Committee reviews the annual financial statements with both
management and the independent auditors. Such review includes an assessment as
to whether the financial statements are complete and consistent with information
known to them and reflect appropriate accounting principles. The Audit
Committee meets annually with the independent auditors in preparation for, and
in review of, the annual audit. During fiscal 1995, the Audit Committee met
twice.
The Executive Committee has all powers of the Board in the management and
affairs of BRE, subject to limitations prescribed by the Board and by Delaware
law. The Executive Committee did not meet during fiscal 1995.
The Compensation Committee reviews the compensation of officers of BRE and
administers BRE's stock option plans. The Compensation Committee met once
during fiscal 1995.
Registrant's prior policy regarding compensation of directors was to pay
the Chairman of the Board (unless an employee of the company) an annual retainer
of $30,000 and to pay each other director who is not an employee an annual
retainer of $10,000. Directors (including the Chairman) who are not employees
receive an additional $1,000 for each Board meeting attended, and they are also
reimbursed for reasonable expenses incurred in attending Board and Committee
meetings. In addition, during the fiscal year ended July 31, 1995, Mr. McMahan
was paid $10,000 per month from January to July 1995 (a total of $64,000) for
serving as interim Chairman of the Board following former Chairman Carver's
resignation and for performing other strategic planning duties at the request of
the Board; and Mr. Foley was paid, as chairman of the CEO search committee,
$5,000 per month (totaling $30,000). On October 2, 1995, the Board adopted a
policy of paying retainer and meeting fees of non-employee directors solely in
stock options, subject to approval by BRE's shareholders of the Amended and
Restated Non-Employee Director Stock Option Plan.
Under the 1994 Non-Employee Director Stock Plan, for fiscal 1995 directors
who were not employees received a stock option to purchase 2,500 shares of
Common Stock at $30.50 per share, the closing market price on the date of grant.
This grant applied to the non-employee directors (i.e., all current directors
except Messrs. McDowell and von Thaden). On October 2, 1995, this plan was
amended to provide each non-employee director annual stock options for 12,500
shares of Common Stock in lieu of cash compensation plus options for an
additional 2,500 shares depending on performance. On October 16, 1995, pursuant
to the amended plan, the non-employee directors were granted options to purchase
12,500 shares at $33.25 per share, subject to shareholder approval of the
amended plan.
5
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Exchange Act requires the company's directors and
executive officers, and persons who own more than ten percent of a registered
class of its equity securities, to file with the Securities and Exchange
Commission and the New York Stock Exchange initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the company.
To registrant's knowledge, based solely on review of the copies of such
reports furnished to it and written representations that no other reports were
required during the fiscal year ended July 31, 1995, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
shareholders were complied with, except that Mr. McMahan inadvertently failed to
timely file a report showing a change in ownership of Common Stock arising from
the acquisition of 1,000 shares of Common Stock in November 1994.
6
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows the compensation for the past three fiscal years
of Registrant's Chief Executive Officer and each other executive officer with
salary and bonus of over $100,000 for the fiscal year ended July 31, 1995 (the
"named executive officers").
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation Awards
------------ -------------------
Salary Bonus Restricted Share Options/ All Other
Name and Principal Position Year ($) ($) Awards ($)(1) SARs(#) Compensation (2)
- --------------------------- ---- --- --- ------------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Arthur G. von Thaden 1995 $262,500 $108,000 $ 68,200 35,000 $17,843
President and Chief 1994 260,417 -0- 21,113 35,000 21,559
Executive Officer until June 1993 247,883 95,000 19,125 35,000 22,034
5, 1995, then Chairman of
the Board
Frank C. McDowell 1995 $ 33,333 $ -0- $125,011 70,000 $ -0-
President and Chief 1994
Executive Officer (since 1993
June 5, 1995)
Byron M. Fox 1995 $169,792 $ 62,000 $ 52,700 5,000 $17,834
Executive Vice President, 1994 159,375 -0- 10,556 3,000 21,320
Acquisitions and Asset 1993 151,667 45,000 9,563 5,000 17,582
Management
Howard E. Mason, Jr. 1995 $108,833 $ 38,000 $ 34,100 5,000 $11,068
Senior Vice President, 1994 102,167 -0- 10,556 2,500 14,326
Finance 1993 98,000 30,000 9,563 3,000 10,611
Ronald P. Wargo 1995 $113,333 $ 48,000 $ 49,600 5,000 $11,573
Senior Vice President, 1994 103,333 -0- 14,075 4,000 15,572
Asset Management 1993 93,500 40,000 6,375 5,000 9,941
Ellen G. Breslauer 1995 $ 88,833 $ 30,000 $ 31,000 3,000 $ 8,712
Secretary and Treasurer 1994 82,417 -0- 7,038 2,000 11,479
1993 78,917 27,000 6,375 2,500 8,049
</TABLE>
7
<PAGE>
______________________
(1) The amounts reported represent the aggregate value of restricted share
awards at the date of award. In fiscal 1995, 1994 and 1993, the named
executive officers received the following numbers of restricted share
awards:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
von Thaden 2,200 600 600
McDowell 4,082 0 0
Fox 1,700 300 300
Mason 1,100 300 300
Wargo 1,600 400 200
Breslauer 1,000 200 200
</TABLE>
The restrictions imposed on restricted share awards severally lapse on the
fifth anniversary of the date of grant or, if earlier, upon normal retirement,
death or disability. The restrictions on Mr. McDowell's shares lapse on the
third anniversary of the grant date. In addition, the restrictions imposed on
Mr. von Thaden's and Mr. McDowell's restricted shares may lapse upon termination
of employment following a change in control of the company. See "-- Employment
Contracts and Termination of Employment and Change-in-Control Arrangements."
Dividends are paid on restricted shares at the same rate and at the same time as
on the Common Stock.
At July 31, 1995, the aggregate number and value of shares of restricted
stock (based on the market price of $31.50 at July 31, 1995) held by each of the
named executive officers was as follows:
<TABLE>
<CAPTION>
Number Value
------ -----
<S> <C> <C>
von Thaden 5,200 $163,800
McDowell 4,082 128,583
Fox 2,900 91,350
Mason 2,400 75,600
Wargo 2,400 75,600
Breslauer 1,500 47,250
</TABLE>
(2) Consists of BRE's contributions to its defined contribution retirement plan
(401(k) Plan) on behalf of the named executive officers. Also includes
$1,250 for Mr. Fox representing the company's allocation for him pursuant
to the Supplemental Retirement Plan which the company established
beginning with the fiscal year ended July 31,
8
<PAGE>
1995 in order to provide to all employees, other than Messrs. von Thaden
and Mason (see "Supplemental Retirement Benefits"), unfunded supplemental
retirement benefits equal to the benefits that would have been received
from company contributions to the 401(k) Plan absent the various
contribution limitations.
9
<PAGE>
OPTION GRANTS IN FISCAL 1995
The following table sets forth (i) all individual grants of stock options
made by the company during fiscal 1995 to each of the named executive officers;
(ii) the ratio that the number of options granted to each individual bears to
the total number of options granted to all employees of the company, (iii) the
exercise price and expiration date of these options; and (iv) the estimated
potential realizable values assuming certain stock price appreciation over the
ten-year option term.
<TABLE>
<CAPTION>
Individual Grants
-----------------
% of Total Potential Realized Value
Options at Assumed Annual Rates of
Options Granted to Exercise or Stock Price Appreciation for
Granted Employees Base Price Expiration Option Term (2)
Name (#)(1) in Fiscal 1995 ($/Sh) Date 5% 10%
- ---- ------- -------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Arthur G. von Thaden 35,000 25.4% $31.00 8/28/04 $ 682,351 $1,729,211
Frank C. McDowell 70,000 50.7 30.63 6/04/05 1,348,193 3,416,585
Byron M. Fox 5,000 3.6 31.00 8/28/04 97,479 247,030
Howard E. Mason, Jr. 5,000 3.6 31.00 8/28/04 97,479 247,030
Ronald P. Wargo 5,000 3.6 31.00 8/28/04 97,479 247,030
Ellen G. Breslauer 3,000 2.2 31.00 8/28/04 58,487 148,218
</TABLE>
__________________________
(1) All options shown in the table were granted under the company's 1992
Employee Stock Plan (the "1992 Plan"), except for options for 50,000 shares
granted to Mr. McDowell. The exercise price is 100% of fair market value
on the date of grant. The options vest 50% on each of the first and second
anniversary dates of grant (except as described below for Mr. McDowell's
options) and expire ten years from the date of grant. The option price is
payable in cash or by delivery of previously acquired shares of Common
Stock, and the option holder may in certain circumstances elect to have
shares withheld to satisfy tax withholding requirements in connection with
the exercise of options. Options granted may become immediately
exercisable in certain events such as an optionee's retirement, death or
disability, or in connection with a merger, acquisition or "change in
control" as defined in the 1992 Plan. All options held by Mr. McDowell may
become immediately exercisable upon termination of employment following a
change in control of the company. Mr. von Thaden's options will become
fully vested on December 31, 1995. See "Employment Contracts and
Termination of Employment and Change-in-Control Arrangements." Mr.
McDowell exercised his options immediately upon grant with respect to
20,000 shares. See the following table. Mr. McDowell's options for the
remaining 50,000 shares vest in equal installments on June 22, 1998, 1999
and 2000. Any portion of these options
10
<PAGE>
then remaining unexercised will terminate on July 22, 2000, unless at any
time prior to that date the market price for the Common Stock has exceeded
$39.00 per share for ten consecutive trading days.
(2) Potential realizable value is calculated based on an assumption that the
price of the Common Stock appreciates at the annual rate shown (5% and
10%), compounded annually, from the date of grant of the option until the
end of the option term (ten years). The value is net of the exercise price
but is not adjusted for the taxes that would be due upon exercise. The 5%
and 10% assumed rates of appreciation are mandated by the rules of the
Securities and Exchange Commission and do not represent the company's
estimate or projection of future stock prices. Actual gains, if any, upon
future exercise of any of these options will depend on the actual
performance of the Common Stock and the continued employment of the
executive officer holding the option through its vesting period. At 5%
annual appreciation from $31.00 over a ten-year term, the stock price would
be $50.50. At 10% annual appreciation from $31.00 over a ten-year term,
the stock price would be $80.41. Using a base of $30.63, the stock price
would be $49.88 after five years and $79.43 after ten years.
11
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1995
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth (i) the number of shares received and the
aggregate dollar value realized in connection with each exercise of outstanding
stock options during fiscal year 1995 by each of the named executive officers;
(ii) the total number of all outstanding unexercised options held by the named
executive officers as of the end of fiscal year 1995; and (iii) the aggregate
dollar value of all such unexercised options based on the excess of the market
price of the Common Stock over the exercise price of the option.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Shares Value Number of Unexercised In-the Money
Name Acquired on Exercise Realized (1) Options at 7/31/95 Options at 7/31/95(2)
---- -------------------- ------------ ------------------ ---------------------
Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Arthur von Thaden 12,500 $ 1,563 118,000 52,500 $189,831 $17,500
Frank C. McDowell 20,000 0 0 50,000 0 43,750
Byron M. Fox 0 0 18,000 6,500 33,841 2,500
Howard E. Mason, Jr. 0 0 11,250 6,250 13,124 2,500
Ronald P. Wargo 0 0 17,800 7,000 24,674 2,500
Ellen G. Breslauer 0 0 12,400 4,000 20,243 1,500
</TABLE>
______________________
(1) Value realized is calculated by subtracting the total exercise price from
the market value of the underlying Common Stock on the date of exercise.
Because Mr. McDowell purchased 20,000 shares on the date of grant of his
options, the exercise price was equal to the market price at the time of
exercise. Mr. McDowell was granted a loan of $612,500 by the company
representing the full exercise price for the 20,000 shares. See
"Employment Contracts and Termination of Employment and Change-in-Control
Arrangements." As a result of his option exercise, Mr. McDowell increased
his holdings of Common Stock by 20,000 shares.
(2) The market value of the Common Stock at July 31, 1995 was $31.50 per share.
12
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
MR. MCDOWELL
Effective as of June 5, 1995 (the "Commencement Date"), registrant entered
into a five-year employment agreement with Mr. McDowell. Certain material terms
of the agreement are as follows:
BASE SALARY AND ANNUAL INCENTIVE BONUS. Mr. McDowell will receive a
base salary of $300,000 per year and is eligible to receive an annual incentive
bonus of up to 100% of base salary based on achievement of predefined operating
or performance criteria (the "Annual Criteria") established by the Board, with
emphasis on funds from operations ("FFO").
STOCK LOAN. On the Commencement Date, Mr. McDowell received a loan
(the "Employment Stock Loan") of $612,500 to exercise options to purchase 20,000
shares of BRE Common Stock (at an exercise price of $30.625 per share) issued
on that date. The Stock Loan bears interest at 8.25% per annum, compounded
annually, with all principal and accrued interest payable in full on June 5,
2000 (the "Payment Date"); provided, however, that repayment of any principal
and accrued interest under the Employment Stock Loan (the "Loan Amount") will be
forgiven in accordance with the following formulas (the "Performance Formulas"):
(i) 20% of the Loan Amount will be forgiven if the gross book value of
registrant's equity investments in real estate, investments in limited
partnerships and mortgages have a value of $937 million or more on the Payment
Date, and a pro rata portion of the Loan Amount will be forgiven if such value
is between $791 million and $937 million; (ii) 20% of the Loan Amount will be
forgiven on the Payment Date if, on the second anniversary date of the
Employment Stock Loan, there has been an increase in funds from operations
("FFO") per share of Common Stock for the two year period ending April 30,
1997 which is at or above the 80th percentile of the Indexed REITs for a
comparable period, and a pro rata portion of the Loan Amount will be forgiven
if any such increase is within the 50th and 80th percentiles; (iii) 30% of the
Loan Amount will be forgiven if, on the Payment Date, there has been an increase
in FFO per share of Common Stock for the three year period ending April 30, 2000
which is at or above the 80th percentile of the Indexed REITs, and a pro rata
portion of the Loan Amount will be forgiven if any such increase is within the
50th and 80th percentiles; and (iv) 30% of the Loan Amount will be forgiven if,
as of the Payment Date, the average of the FFO multiples of Common Stock as of
December 31 of each of the five preceding years (computed in each case by
dividing the market price of Common Stock on the last trading day of the
calendar year by the preceding twelve months' FFO) is at or above the 80th
percentile of the average multiple of the Indexed REITs for the same five year
period, and a pro rata portion of the Loan Amount will be forgiven if such
multiple is within the 50th and 80th percentiles. In addition, the Loan Amount
will be forgiven by registrant upon termination of Mr. McDowell's employment
with registrant under the circumstances described below under "Certain Severance
Benefits."
STOCK OPTIONS AND RESTRICTED STOCK GRANTS. On the Commencement Date,
Mr. McDowell received options to purchase 50,000 shares of Common Stock at an
exercise price of $30.63 per share. One third of such options vest on each of
June 22, 1998, 1999 and 2000;
13
<PAGE>
provided, however, that any unexercised options terminate on July 22, 2000 if
the Market Value of the Common Stock has not exceeded $39.00 per share for ten
consecutive trading days during the five year employment term. On the
Commencement Date, Mr. McDowell was also awarded 4,082 Restricted Shares, all
of which shall vest on the third anniversary of the Commencement Date.
FUTURE AWARDS. Beginning with the fiscal year commencing August 1,
1996 and for each subsequent fiscal year, Mr. McDowell is entitled to receive
annual long term incentive awards which, assuming achievement of all applicable
performance goals, will provide Mr. McDowell with the financial equivalent of
(i) a forgivable performance based five-year loan to purchase 5,000 shares of
Common Stock and (ii) performance options to purchase 25,000 shares of BRE
Common Stock at Market Value on the date of award.
CERTAIN SEVERANCE BENEFITS. If, at any time during the five year
employment term, the employment of Mr. McDowell is terminated, he shall be
entitled to receive the benefits described below.
(a) TERMINATION OTHER THAN IN CONNECTION WITH A CHANGE IN CONTROL.
(i) TERMINATION BY THE COMPANY WITHOUT CAUSE. If Mr. McDowell
is terminated without cause before June 5, 1996, he would receive a lump sum
payment equal to 1.5 times his then base salary, all vesting restrictions on the
4,082 Restricted Shares awarded on the Commencement Date would be eliminated and
the excess of the Loan Amount over the Market Value of 20,000 shares of Common
Stock on the date of termination would be forgiven, with the balance of the Loan
Amount payable immediately. If such termination occurs after June 5, 1996, Mr.
McDowell will receive a lump sum payment equal to his then base salary plus an
amount equal to the average of his annual bonus over the most recent two years
(or the previous annual bonus if only one annual bonus period has passed), all
vesting restrictions on the 4,082 Restricted Shares awarded to him on the
Commencement Date would be eliminated and the Loan Amount would be reduced based
on a pro rata application of the Performance Formulas (the "Performance
Adjustment"), taking into consideration the number of full months worked and
performance data through the last quarter ended 45 days or more prior to the
termination date.
(ii) TERMINATION DUE TO DEATH OR DISABILITY. Upon termination
due to death or disability, Mr. McDowell or his estate will receive a lump sum
payment equal to the estimated annual bonus he would have received for the
fiscal year in question (based on actual performance relative to Annual Criteria
for the fiscal year and Mr. McDowell's contribution to the date of death or
disability), calculated on a pro-rated basis to the date of termination. In
addition, the Employment Stock Loan will be forgiven based on the Performance
Adjustment, with any balance payable 15 days after termination.
(iii) VOLUNTARY TERMINATION OR TERMINATION FOR CAUSE. Upon
voluntary termination or termination for "cause," no further compensation will
be payable to Mr. McDowell and the outstanding balance of the Employment Stock
Loan, together with accrued but unpaid interest, will be payable in full within
15 days of termination.
14
<PAGE>
(b) TERMINATION FOLLOWING A CHANGE IN CONTROL.
(i) TERMINATION WITHOUT CAUSE OR BY MR. MCDOWELL FOR GOOD
REASON. If Mr. McDowell is terminated without cause within 12 months following a
Change in Control, or if Mr. McDowell terminates his employment for "Good
Reason" within 12 months after a Change in Control, he will receive the
following benefits: (a) a lump sum payment equal to (x) two times his then base
salary plus an amount equal to two times the average of his annual bonus over
the most recent two years, or his previous annual bonus if only one annual bonus
period has passed (based on his current base salary of $300,000 and assuming
average incentive compensation in the maximum amount of $300,000, this payment
would be $1,200,000) plus (y) the estimated annual bonus he would have received
for the fiscal year in question (based on actual performance relative to Annual
Criteria for the fiscal year and Mr. McDowell's contribution to date),
calculated on a pro-rated basis to the date of termination; (b) all unvested
stock options held by Mr. McDowell would vest and be exercisable for a period of
three months; (c) all vesting restrictions on the Restricted Shares would be
eliminated; and (d) the Employment Stock Loan will be forgiven based on the
Performance Adjustment, with any balance payable upon termination.
(ii) TERMINATION DUE TO DEATH OR DISABILITY. Upon termination
due to death or disability following a Change in Control, Mr. McDowell or his
estate will receive the same benefits described in subparagraph (a)(ii) above.
(iii) VOLUNTARY TERMINATION WITHOUT GOOD REASON OR TERMINATION
FOR CAUSE. Upon voluntary termination of employment by Mr. McDowell without Good
Reason within 12 months following a Change in Control, Mr. McDowell will
receive a lump sum payment equal to his then base salary plus an amount equal to
the average of his annual bonus over the most recent two years, or the previous
annual bonus if only one annual bonus period has passed ($600,000 assuming a
$300,000 base salary and maximum incentive bonus). The outstanding balance of
the Employment Stock Loan will be due on such termination. Upon termination for
"cause" within 12 months following a Change in Control, no further compensation
will be payable to Mr. McDowell and the outstanding balance of the Employment
Stock Loan, together with accrued but unpaid interest, will be payable in full
within 15 days of termination.
Any of the foregoing amounts payable to Mr. McDowell following a Change in
Control are subject to reduction to the extent such payments would constitute
"parachute payments" as defined in Section 280G of the Internal Revenue Code of
1986.
MR. VON THADEN
On December 19, 1994, registrant entered into an agreement with Mr. von
Thaden contemplating his retirement on December 31, 1995. Pursuant to that
agreement, registrant agreed to the acceleration of vesting of all stock options
and restricted stock held by Mr. von Thaden as of the retirement date, and to
allow exercise of such options for up to three years following that date (but
not beyond the original term of any such option). Mr. von Thaden relinquished
the position of Chief Executive Officer and became Chairman of the Board on June
5, 1995, when Mr. McDowell became the Chief Executive Officer, and Mr. von
Thaden will now retire on December 31, 1995, resulting in acceleration of the
existing 4,000 shares of restricted
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stock and stock options for 17,500 shares of Common Stock, although he remains a
director of registrant. Registrant agreed to maintain Mr. von Thaden's
compensation and benefits through December 31, 1995 at the same levels as
existed on December 19, 1994.
SUPPLEMENTAL RETIREMENT BENEFITS
In 1988, BRE established an unfunded plan to provide supplemental
retirement benefits to Mr. von Thaden and Howard E. Mason, Jr. This plan
generally provides for the payment of supplemental benefits to each of Mr. von
Thaden and Mr. Mason in an amount equal to the greater of (i) the excess of the
benefits he would have received under the defined benefit pension plan of
BankAmerica Corporation (assuming his employment with BRE's predecessor,
BankAmerica Realty Services, Inc. had continued until retirement at his BRE
earnings levels) over the benefits he is entitled to receive under the 401(k)
Plan or (ii) the benefits he would have received from company contributions to
the 401(k) Plan absent the various contribution limitations. These supplemental
benefits are payable upon termination of employment in any actuarially
equivalent form.
The established supplemental benefits payable to Mr. von Thaden on his
proposed retirement on December 31, 1995 are $11,600 (under a five year certain
and life annuity) or a lump sum of $100,100. Assuming retirement prior to age
65, the maximum estimated supplemental benefits payable to Mr. Mason are $1,540
(under a five year certain and life annuity), or $13,500 (as a single lump sum
payment). Assuming retirement at age 65, the estimated supplemental benefits
payable to Mr. Mason are $1,380 (under a five year certain and life annuity), or
$11,600 (as a single lump sum payment).
See footnote 2 at page 8 herein regarding the company's Supplemental
Retirement Plan adopted beginning with the fiscal year ended July 31, 1995.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 5, 1995, information
regarding the beneficial ownership of Common Stock by each director of the
company, by each named executive officer and by all directors and executive
officers as a group. The amounts shown are based upon information provided by
the individuals named.
<TABLE>
<CAPTION>
Percentage of Outstanding
Current Position Shares of Common Stock Shares Owned Beneficially
Name With Company Beneficially Owned (1) (1)(2)
---- ------------ ---------------------- ------
<S> <C> <C> <C>
Arthur G. von Thaden Director and Chairman 168,035 (3) 1.5%
Frank C. McDowell Director, President and Chief 24,082 (4) *
Executive Officer
C. Preston Butcher Director 3,250 (5) *
L. Michael Foley Director 4,250 (6) *
John McMahan Director 3,250 (7) *
Malcolm R. Riley Director 2,250 (8) *
Byron M. Fox Executive Vice President 31,083 (9) *
Howard E. Mason, Jr. Senior Vice President, 26,536 (10) *
Finance
Ronald P. Wargo Senior Vice President 26,956 (11) *
Ellen G. Breslauer Secretary and Treasurer 24,364 (12) *
All directors and executive 314,056 (13) 2.9%
officers as a group (ten persons)
</TABLE>
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_____________________
(1) The amounts and percentages of Common Stock beneficially owned are reported
on the basis of regulations of the Securities and Exchange Commission
governing the determination of beneficial ownership of securities. Except
as otherwise indicated, each individual has sole voting and sole investment
power with regard to the shares owned.
(2) Except where otherwise indicated, does not exceed 1%.
(3) Mr. von Thaden - includes 378 shares held by Mr. von Thaden's wife in her
Individual Retirement Account, as to which Mr. von Thaden has no voting or
investment power. Also includes 150,500 shares that may be purchased upon
the exercise of stock options that are currently exercisable or that will
become exercisable on or before November 2, 1995. See also "Employment
Contracts and Termination of Employment and Change-in-Control
Arrangements - Mr. von Thaden." Also includes 4,000 shares held as
restricted shares.
(4) Mr. McDowell - includes 4,082 shares held as restricted shares and 20,000
shares which Mr. McDowell acquired June 5, 1995 upon exercise of stock
options granted to him at the time of his employment that are collateral
for a $612,500 recourse loan from the Company. See "Employment Contracts
and Termination of Employment and Change-in-Control Arrangements - Mr.
McDowell."
(5) Mr. Butcher - includes 1,000 shares held by Mr. Butcher's wife as her
separate property and 1,000 shares held by Mr. Butcher and his wife as
community property, as to which he has shared voting and investment power.
Also includes 1,250 shares that may be purchased upon the exercise of stock
options that are currently exercisable or that will become exercisable on
or before November 2, 1995.
(6) Mr. Foley - includes 3,000 shares owned by a family trust of which Mr.
Foley and his wife are trustees, as to which he has shared voting and
investment power, and 1,250 shares that may be purchased upon the exercise
of stock options that are currently exercisable or that will become
exercisable on or before November 2, 1995.
(7) Mr. McMahan - owned in joint tenancy by Mr. McMahan and his wife, as to
which he has shared voting and investment power. Also includes 1,250 shares
that may be purchased upon the exercise of stock options that are currently
exercisable or that will become exercisable on or before November 2, 1995.
(8) Mr. Riley - includes 500 shares owned in joint tenancy by Mr. Riley and his
wife, and 500 shares owned in a family partnership as to which he has
shared voting and investment power. Also includes 1,250 shares that may be
purchased upon the exercise of stock options that are currently exercisable
or that will become exercisable on or before November 2, 1995.
(9) Mr. Fox - includes 22,000 shares that may be purchased upon the exercise of
stock options that are currently exercisable or that will become
exercisable on or before November 2, 1995. Also includes 2,600 shares held
as restricted shares, and 5,000 shares which Mr. Fox acquired August 28,
1995 upon exercise of stock options that are
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collateral for a $159,063 recourse loan from the company. The interest
rate on the five-year loan is 8.25%, equal to the initial dividend yield on
the shares so purchased. The loan may be forgiven in whole or in part upon
the achievement of company performance goals related to growth in assets,
funds from operations per share and stock price similar to those applicable
to forgiveness of Mr. McDowell's loan as described in "Employment Contracts
and Termination of Employment and Change-in-Control Arrangements - Mr.
McDowell."
(10) Mr. Mason - includes 150 shares held by the estate of the late Mrs. Mason
and 700 shares held by the estate as custodian for itself and Mrs. Mason's
sisters. With respect to these 850 shares, Mr. Mason has no voting or
investment power. Also includes 676 shares held by Mrs. Mason's estate.
Also includes 15,000 shares that may be purchased upon the exercise of
stock options that are currently exercisable or that will become
exercisable on or before November 2, 1995. Also includes 2,400 shares held
as restricted shares.
(11) Mr. Wargo - includes 21,300 shares that may be purchased upon the exercise
of stock options that are currently exercisable or that will become
exercisable on or before November 2, 1995. Also includes 2,800 shares held
as restricted shares.
(12) Ms. Breslauer - includes 798 shares held by Ms. Breslauer's husband in his
Individual Retirement Account, as to which Ms. Breslauer has shared
investment power and no voting power. Also includes 6,294 shares held by
Ms. Breslauer and her husband as community property, for which she has
shared voting and investment power. Also includes 14,900 shares that may
be purchased upon the exercise of stock options that are currently
exercisable or that will become exercisable on or before November 2, 1995.
Also includes 1,800 shares held as restricted shares.
(13) Includes 228,700 shares that may be purchased upon the exercise of stock
options that are currently exercisable or that will become exercisable on
or before November 2, 1995. Also includes 17,682 shares held as restricted
shares.
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PRINCIPAL SHAREHOLDER OF BRE
The following table indicates the only person known by registrant to be the
beneficial owner of more than 5% of the company's shares of Common Stock as of
September 5, 1995 and the percentage of all outstanding shares of Common Stock
that such shares represented at that date, based on information furnished by
such holder or contained in filings made with the Securities and Exchange
Commission.
Number of Shares Percentage
Name and Address of Common Stock of Shares
- ---------------- --------------- ---------
State Farm Insurance Companies 2,409,479 22%
One State Farm Plaza
Bloomington, Illinois 61701
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is made to the information contained in Note H of Notes to
Financial Statements, on page 23 of the 1995 Annual Report under the caption
"Transactions with Related Parties," which information is incorporated herein by
reference to excerpts of the Annual Report. See also Note 9 on pg. 18 herein
regarding a $159,063 loan to Mr. Fox.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BRE PROPERTIES, INC.
Dated: November 28, 1995 /s/
-----------------------------
Howard E. Mason, Jr.
Senior Vice President, Finance
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