SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142.12
TEJON RANCH COMPANY
- -----------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
TEJON RANCH COMPANY
- -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c) (1) (ii), 14a-6(i) (1), or 14a-6(j) (2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6 (i) (3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i) (4) 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:*
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* Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / 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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4) Date Filed:
<PAGE>
TEJON RANCH CO.
Post Office Box 1000
Lebec, California 93243
April 17, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Tejon Ranch Co. on Monday, May 13, 1996, at 9:30 A.M., Los Angeles time, in the
Oakhurst Room of the Beverly Hilton Hotel, 9876 Wilshire Boulevard, Beverly
Hills, California. Your Board of Directors and management look forward to
greeting those stockholders who are able to attend.
The Board of Directors has announced that Robert A. Stine will be
elected as President and Chief Executive Officer of Tejon Ranch Co. Mr. Stine
has an extensive background in real estate asset management, development and
construction, which is described in greater detail in the attached Proxy
Statement. Mr. Stine is expected to assume his new responsibilities on May 1,
1996.
The Notice of Annual Meeting and Proxy Statement containing information
concerning the business to be transacted at the meeting appear in the following
pages.
It is important that your shares be represented and voted at the
meeting, whether or not you plan to attend. Please sign, date, and mail the
enclosed proxy at your earliest convenience.
Your interest and participation in the affairs of the Company are
greatly appreciated.
Sincerely,
Matt Echeverria, Senior Vice President and
Acting Chief Executive Officer<PAGE>
TEJON RANCH CO.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
on
May 13, 1996
The Annual Meeting of Stockholders of Tejon Ranch Co. (the "Company")
will be held in the Oakhurst Room of the Beverly Hilton Hotel, 9876 Wilshire
Boulevard, Beverly Hills, California on Monday, May 13, 1996, at 9:30 A.M.,
Los Angeles time, for the following purposes:
1. To elect four directors.
2. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The names of the nominees for the Board of Directors of the Company for
election at the Meeting are: Craig Cadwalader, Clayton W. Frye, Jr., Donald
Haskell, and Raymond L. Watson.
The Board of Directors has fixed the close of business on April 2, 1996,
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting.
Your attention is invited to the accompanying Proxy Statement. To
ensure that your shares are represented at the meeting, please date, sign, and
mail the enclosed proxy, for which a return envelope is provided.
For the Board of Directors,
DONALD HASKELL, Chairman of the Board
DENNIS MULLINS, Secretary
Lebec, California
April 17, 1996
PLEASE MARK YOUR INSTRUCTIONS ON THE ENCLOSED PROXY, SIGN AND DATE THE PROXY,
AND RETURN IT IN THE ENCLOSED POSTAGE PAID ENVELOPE EVEN IF YOU PLAN TO
ATTEND THE ANNUAL MEETING. IF YOU ATTEND THE MEETING AND WISH TO DO SO, YOU
MAY VOTE YOUR SHARES IN PERSON EVEN IF YOU HAVE SIGNED AND RETURNED YOUR PROXY.
<PAGE>
TEJON RANCH CO.
Post Office Box 1000
Lebec, California 93243
PROXY STATEMENT
Annual Meeting of Stockholders
May 13, 1996
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Company for use at the Annual Meeting of
Stockholders to be held on May 13, 1996.
It is anticipated that the mailing of this Proxy Statement and
accompanying form of Proxy to stockholders will begin on or about April 17,
1996.
SOLICITATION OF PROXIES
At the Meeting, the stockholders of the Company will be asked (1) to
elect four directors, and (2) to transact such other business as may properly
come before the Meeting. Your Board of Directors is asking for your proxy
for use at the Meeting. Although management does not know of any other matter
to be acted upon at the Meeting, shares represented by valid proxies will be
voted by the persons named on the proxy in accordance with their best
judgment with respect to any other matters which may properly come before the
Meeting.
The cost of preparing, assembling, and mailing the Notice of Meeting,
this Proxy Statement and the enclosed proxy ballot will be paid by the
Company. Following the mailing of this Proxy Statement, directors, officers,
and regular employees of the Company may solicit proxies by mail, telephone,
telegraph, or in person; such persons will receive no additional compensation
for such services. Brokerage houses and other nominees, fiduciaries and
custodians nominally holding shares of record will be requested to forward
proxy soliciting material to the beneficial owners of such shares and will be
reimbursed by the Company for their charges and expenses in connection
therewith at the rates approved by the American Stock Exchange. It is
anticipated that the mailing of proxy materials will begin on or about April
17, 1996.
RECORD DATE AND VOTING
Holders of shares of Common Stock of record at the close of business on
April 2, 1996, are entitled to notice of, and to vote at, the Meeting. There
were 12,682,244 shares of Common Stock outstanding at the record date. A
stockholder giving a proxy may revoke it at any time before it is voted by
filing with the Company's Secretary a written notice of revocation or a duly
executed proxy bearing a later date. Unless a proxy is revoked, shares
represented by a proxy will be voted in accordance with the voting
instructions on the proxy and, on matters for which no voting instructions
are given, shares will be voted for the nominees of the Board of Directors as
shown on the proxy. On a matter for which the "WITHHOLD AUTHORITY"
instruction is given, shares will be voted neither "FOR" nor "AGAINST."
Stockholders cannot abstain in the election of directors, but they can
withhold authority. Stockholders who withhold authority will be considered
present for purposes of determining a quorum. The rules of the New York and
American Stock Exchanges permit member organizations ("brokers") to vote
shares on behalf of beneficial owners, in the absence of instructions from
beneficial owners, on certain "routine" matters, including the election of
directors and ratification of independent public accountants, but do not
permit such votes on "non-routine" matters. Situations where brokers are
unable to vote on non-routine proposals are referred to as "broker non-votes."
Since the election of directors is regarded as a routine matter and is the only
item of business expected to be considered at the Annual Meeting, no broker
non-votes are anticipated. However, under circumstances where there are broker
non-votes, such non-votes will not be counted as present for purposes of
determining a quorum, have no effect on the outcome of matters requiring the
affirmative vote of a majority or super-majority of shares represented at the
Meeting and have the effect of a negative vote on matters requiring the
affirmative vote of the holders of a majority or super-majority of the shares
outstanding.
Stockholders vote cumulatively in the election of directors. Cumulative
voting means that each share is entitled to a number of votes equal to the
number of directors to be elected, which votes may be cast for one nominee or
distributed among two or more nominees. The four candidates receiving the
highest number of affirmative votes will be elected as directors. On all
other matters, each share has one vote.<PAGE>
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table lists the stockholders known to the Company to be the
beneficial owners of more than 5% of the shares of Company Common Stock
outstanding as of March 11, 1996. The table also provides the stock
ownership of all directors and of the most highly compensated executive
officers as of the same date.
Amount and
Nature of
Beneficial Percent
Name and Address of Stockholder Ownership(1) of Class
- ------------------------------- ------------ --------
Ardell Investment Company 1,055,828(2) 8.33%
P.O. Box 1715
Newport Beach, CA 92659
M.H. Sherman Company 1,140,630(2) 8.99%
P.O. Box 1715
Newport Beach, CA 92659
The Times Mirror Company 3,812,330(3) 30.06%
Times Mirror Square
Los Angeles, CA 90053
State of Wisconsin Investment Board 1,075,500(4) 8.48%
P.O. Box 7842
Madison, WI 53707
Directors
Otis Booth, Jr. 1,000 below 1%
Craig Cadwalader 2,231,530(5) 17.60%
Dan T. Daniels 2,231,530(6) 17.60%
Rayburn S. Dezember 1,000(7) below 1%
Robert F. Erburu 3,812,330(8) 30.06%
Clayton W. Frye, Jr. 3,822,330(9) 30.14%
Donald Haskell 2,282,630(10) 18.00%
Jack Hunt 8,825(11) below 1%
Raymond L. Watson -0- -0-
Phillip L. Williams -0- -0-
Officers
Charles J. Berling 1,000(12) below 1%
Matt J. Echeverria 300(11) below 1%
John A. Wood 6,900(11) below 1%
All officers and directors as a group 6,123,985 48.29%
(16 persons)
(1) In each case, the named stockholder has the sole voting and investment
power as to the indicated shares, except as set forth in the footnotes
below.
(2) Does not include 35,072 shares (0.28% of the number of shares outstanding)
owned of record and beneficially by the Sherman Foundation, a non-profit
public charity, three of the trustees of which are directors of Ardell
Investment Company and M.H. Sherman Company, those being Messrs. Donald
Haskell, Chairman of the Board of Directors of the Company, and Craig
Cadwalader and Dan T. Daniels, directors of the Company.
(3) Does not include 300,000 shares (2.37% of the number of shares
outstanding) owned of record and beneficially by The Times Mirror
Foundation, a private, non-profit, philanthropic foundation, all of the
directors of which are employees of The Times Mirror Company.
(4) Based upon information provided to the Company by the stockholder on a
Schedule 13G dated February 1996, and filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934.
(5) Includes 1,055,828 shares owned by Ardell Investment Company, 1,140,630
shares owned by M.H. Sherman Company, and 35,072 shares owned by Sherman
Foundation. Mr. Cadwalader is a director of Ardell Investment Company and
M.H. Sherman Company and a trustee of Sherman Foundation. Mr. Cadwalader
disclaims beneficial ownership as to all of the shares owned by said
entities.
(6) Includes 1,055,828 shares owned by Ardell Investment Company, 1,140,630
shares owned by M.H. Sherman Company, and 35,072 shares owned by Sherman
Foundation. Mr. Daniels is Vice President, Treasurer and a director of
Ardell Investment Company, President and a director of M.H. Sherman
Company, and Vice President, Secretary and a trustee of Sherman
Foundation. Mr. Daniels disclaims beneficial ownership as to all of the
shares owned by said entities.
(7) Mr. Dezember's shares are held by a family trust. Mr. Dezember and his
spouse share voting and investment power with respect to those shares.
(8) Includes 3,812,330 shares owned by The Times Mirror Company of which Mr.
Erburu is a director. Mr. Erburu disclaims beneficial ownership of all
such shares.
(9) Includes 10,000 shares owned by Mr. Frye personally, and 3,812,330 shares
owned by The Times Mirror Company, of which Mr. Frye is a director. Mr.
Frye disclaims beneficial ownership of the shares owned by The Times
Mirror Company.
(10) Includes 51,100 shares owned by Mr. Haskell personally, 1,055,828 shares
owned by Ardell Investment Company, 1,140,630 shares owned by M.H.
Sherman Company, and 35,072 shares owned by Sherman Foundation. Mr.
Haskell is President and a director of Ardell Investment Company, Chairman
of the Board and a director of M.H. Sherman Company, and has the power to
vote a majority of the shares of each company. He is also President and
a trustee of Sherman Foundation. Mr. Haskell disclaims beneficial
ownership of the shares owned by the Sherman Foundation.
(11) The shares owned by Messrs. Hunt, Echeverria, and Wood are held as
community property. Each officer and his spouse share voting and
investment power with respect to their shares. Mr. Hunt resigned as
President and CEO, and his term as a director expired, on May 8, 1995.
(12) Mr. Berling resigned as an officer as of January 12, 1996.
In December 1978 a Schedule 13D was filed with the Securities and Exchange
Commission on behalf of a group comprised of Ardell Investment Company, M.H.
Sherman Company, The Times Mirror Company, Chandis Securities Company and The
Times Mirror Foundation (collectively, the "Affiliated Group") reporting the
formation of the group and the contemplated purchase by The Times Mirror
Company of additional shares of Common Stock of Tejon Ranch Co., the California
corporation now wholly owned by the Company, "to the end that...[such
shareholders] will ultimately increase their degree of control of..."
that corporation. Each outstanding share of Common Stock of that corporation
was converted into one share of Common Stock of the Company in connection with
a 1987 reincorporation transaction. As a result, the Schedule 13D has been
amended to reflect the conversion of the shares of Common Stock, and all
references describing the Schedule 13D below refer to the Company and its
Common Stock instead of the California corporation of which the members of the
Affiliated Group were stockholders at the time the Schedule 13D was filed.
The Schedule 13D also stated that the group has no present plans or
proposals with respect to the merger, reorganization, or liquidation of the
Company, the sale or transfer of any material amount of assets of the Company,
any change in the Company's Board of Directors or management, any change in the
present capitalization or dividend policy, or any other material change in the
Company's business or corporate structure, its Articles of Incorporation,
Bylaws, or securities. In February 1979, an amended Schedule 13D was filed
stating that The Times Mirror Company had purchased an additional 1,393,600
shares (as adjusted to give effect to a subsequent 10-for-1 stock split) and
that, absent a change of circumstances, it did not plan to purchase additional
shares. Since that date, additional amendments to the Schedule 13D have been
filed showing certain changes (among other things) in Company Common Stock
ownership of the stockholders constituting the Affiliated Group, reflecting
Chandis Securities Company's disposition of shares and withdrawal as a member
of the Affiliated Group and adding to the Affiliated Group Donald Haskell,
Chairman of the Board of Directors of the Company, and Sherman Foundation, a
non-profit public charity of which Mr. Haskell is President and a trustee. As
of March 11, 1996, the stockholders constituting the Affiliated Group owned
6,394,960 shares of Company Common Stock constituting 50.42% of the number of
shares outstanding.
ELECTION OF DIRECTORS
The Board of Directors now consists of nine directors, the authorized
number of directors having been decreased in 1995 from 10 to 9. The directors
are divided into three classes based upon when their terms expire. The terms of
three directors (Class I) expire at the 1997 Annual Meeting, the terms of two
directors (Class II) expire at the 1998 Annual Meeting, and the terms of four
directors (Class III) expire at the 1996 Annual Meeting. After the 1996 Annual
Meeting, there will be three Class II directors and three Class III directors.
The regular terms of directors expire at the third Annual Meeting following the
Annual Meeting at which the directors were elected, although directors
continue to serve until their successors are elected and qualified, unless the
authorized number of directors has been decreased.
The names of the nominees of the Board of Directors for election as
directors at the 1996 Annual Meeting (all of whom are presently directors) are
set forth in the table below, along with certain other information. The table
also includes information as to the other present directors of the Company.
Other than nominations made at the direction of the Board of Directors,
nomination of persons for election to the Board of Directors by stockholders
must be made pursuant to timely notice in writing to the Secretary of the
Company. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Company not later than
the close of business on the 10th day following the day on which the Notice of
Annual Meeting of Stockholders was mailed. Such stockholder's notice must set
forth: (i) as to each person whom the stockholder proposes to nominate for
election or reelection as a director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors or is otherwise required, in each case pursuant to the Securities
Exchange Act of 1934, as amended; and (ii) as to the stockholder giving the
notice, the name and address, as they appear on the Company's books, of such
stockholder, and the class and number of shares of the Company which are
beneficially owned by such stockholder.
Except as noted below, each proxy solicited by and on behalf of the Board
of Directors will be voted "FOR" the election of the nominees named below
(unless such authority is withheld as provided in the proxy) and one fourth of
the votes to which the stockholder is entitled will be cast for each of the
four nominees. In the event any one or more of the nominees shall become
unable to serve or refuse to serve as director (an event which is not
anticipated), the proxy holders will vote for substitute nominees in their
discretion. If one or more persons other than those named below as nominees
for the 1996 Annual Meeting are nominated as candidates for director by persons
other than the Board of Directors, the enclosed proxy may be voted in favor of
any one or more of said nominees of the Board of Directors or substitute
nominees to the exclusion of the other such nominees and in such order of
preference as the proxy holders may determine in their discretion.
All references to the Company in the table below and the remainder of
this Proxy Statement relating to periods prior to the effectiveness of the June
1987 reincorporation transaction referred to under "Stock Ownership of
Principal Stockholders and Management" include references to Tejon Ranch Co.,
the California corporation which became a wholly owned subsidiary of the
Company as a result of the reincorporation transaction.
First
Nominees for Class III Directors Whose Terms Expire in 1996 Became
and Principal Occupation or Employment(1) Director Age
- ----------------------------------------------------------------------------
Clayton W. Frye, Jr.(3) 1975 65
Senior Associate of Laurance S. Rockefeller,
business and investment management; Director of
The Times Mirror Company
Donald Haskell(3)(4) 1967 68
Chairman of the Board, M.H. Sherman Company,
investments; President, Ardell Investment Company,
investments; Chairman of the Board, Tejon Ranch Co.
Raymond L. Watson 1994 69
Vice Chairman of The Irvine Company; Director of The
Walt Disney Company, Pacific Mutual Life Insurance
Company, and Mitchell Energy and Development Company
Nominee for Class II Director Whose Term Expires in 1996
and Principal Occupation or Employment(1)
- --------------------------------------------------------
Craig Cadwalader 1994 55
President, Chief Operating Officer, and Director,
Ardell Marina, Inc., yacht brokerage; Director,
M.H. Sherman Co.
Continuing Directors and Principal Occupation or Employment(1)
- --------------------------------------------------------------
Otis Booth, Jr.(2)(3) 1970 72
Private investments and ranching; Director of Clipper
Fund, Inc. and Schooner Fund, Inc.
Dan T. Daniels(2)(4) 1982 54
President and Director, M.H. Sherman Company,
investments
Rayburn S. Dezember(2) 1990 65
Director of Wells Fargo & Co., Calmat Co., Bolthouse
Farms, Inc., and The Bakersfield Californian
Robert F. Erburu(3) 1975 65
Director of The Times Mirror Company,
and Cox Communications, Inc.
Phillip L. Williams(2)(4) 1987 73
Private investments and business advisor;
Vice Chairman Retired, The Times Mirror Company
(1) Except as set forth below, each of the directors has been engaged in his
principal occupation described above during the past five years. There
are no family relationships among any directors of the Company. Mr.
Dezember served as Chief Executive Officer of The Bakersfield Californian
from December 1991 to June 1992. Mr. Erburu served as Chief Executive
Officer of The Times Mirror Company from 1981 to June 1, 1995, and as
Chairman of its Board of Directors from 1986 to January 1, 1996. Mr.
Williams served as Vice Chairman of the Board of The Times Mirror Company
from 1987 to May 4, 1993. All directors are members of the Real Estate
Committee, which sits as a committee of the whole.
(2) Member of Audit Committee.
(3) Member of Executive Committee.
(4) Member of Compensation Committee.
The terms of Messrs. Booth, Daniels, and Erburu expire at the 1997 Annual
Meeting, and the terms of Messrs. Dezember and Williams expire at the
1998 Annual Meeting. No director's term expires at an Annual Meeting
unless his successor has been elected and qualified, or the authorized
number of directors has been decreased.
On April 10, 1996, the Company announced that Robert A. Stine would become
the president and Chief Executive Officer of the Company beginning May 1, 1996.
The Company has entered into an agreement with Mr. Stine which provides that he
will be elected to the Board of Directors. That election is expected to occur
by action of the Board of Directors after the Annual Meeting and after it
amends the By-Laws of the Company to increase the number of directors from 9 to
10. Mr. Stine served for approximately nine years, until April 1995, as the
Chief Executive Officer of The Collins Companies, a privately held, diversified
real estate company based in San Diego ("Collins"). Prior to serving as Chief
Executive Officer at Collins, Mr. Stine served in various other executive
positions at Collins, including Chief Operating Officer and Chief Financial
Officer. Mr. Stine, age 49, began his career as an executive with Coldwell
Banker before joining Collins in 1978. Since leaving Collins Mr. Stine has
acted as an independent real estate consultant to Collins and others. At this
time, Mr. Stine owns no shares of the Company's Common Stock.
Board of Directors and Committees
Standing committees of the Board of Directors include the Executive,
Audit, Compensation, and Real Estate Committees. The major functions of each
of these committees are described briefly below.
Except for certain powers which, under Delaware law, may be exercised
only by the full Board of Directors, the Executive Committee may exercise all
powers and authority of the Board of Directors in the management of the
business and affairs of the Company.
The Audit Committee recommends engagement of the independent accountants,
reviews the arrangement and scope of audit, considers comments made by the
independent accountants with respect to internal controls, reviews internal
accounting procedures and controls with the Company's financial accounting
staff, and reviews non-audit services provided by the Company's independent
accountants.
The Compensation Committee periodically reviews and recommends appropriate
adjustments to the compensation arrangements for executive officers.
The Real Estate Committee reviews all activities and issues related to the
Company's real estate assets. It receives and considers the analyses of the
Company's outside land use and development consultants. The Committee directs
management and the planning team on the direction that the Company's land use
planning activities should take.
The Company does not have a nominating committee. The nominees for
director proposed by the Board of Directors are selected by the entire Board.
During 1995, there were six meetings of the Board of Directors, two of
the Audit Committee, one of the Compensation Committee, one of the Real Estate
Committee, and none of the Executive Committee. During 1995 all incumbent
directors attended 75% or more of the aggregate total of such meetings of the
Board of Directors and committees of the Board on which they served, except Mr.
Williams.
During 1995, directors who are not employees of the Company each
received a quarterly retainer of $2,000, a fee of $1,000 for attendance at any
meeting of the Board and a fee of $500 for attendance at any meeting of a
Committee.
EXECUTIVE COMPENSATION
The following table shows the aggregate compensation paid on an
accrual basis by the Company and its subsidiaries during 1995 and each of the
two previous years to the two persons who acted as chief executive officer
during 1995, and to the four other executive officers of the Company who were
most highly compensated in 1995.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG
TERM
COMPENSATION
AWARDS ALL
NAME SECURITIES OTHER
AND UNDERLYING LTIP COMPEN-
PRINCIPAL SALARY(1) BONUS(1) OPTIONS(2) PAYOUTS SATION(3)
POSITION YEAR ($) ($) (#) ($) ($)
- -------------- ---- --------- -------- ---------- ------- ---------
Jack Hunt 1995 108,865 (4) 0 0 0
President and Chief 1994 240,000 35,000 0 8,500
Executive Officer 1993 225,000 35,000 0 8,307
Matt J. Echeverria 1995 144,232 25,000 0 1,442
Senior Vice President 1994 115,000 10,000 0 1,150
and Acting CEO 1993 110,000 15,000 0 1,100
John A. Wood 1995 101,500 37,462 0 80,000 (5) 1,015
Vice President 1994 125,000 15,000 0 1,250
1993 125,000 15,000 0 1,250
Charles Berling 1995 135,577 (6) 15,000 (6) 14,000 0
Vice President
David Dmohowski 1995 133,000 9,500 0 1,330
Vice President 1994 129,000 9,500 0 1,290
1993 125,000 9,500 0 1,200
Dennis Mullins 1995 125,000 12,500 0 1,250
Vice President, 1994 117,500 12,500 0 0
General Counsel and 1993 50,865 (7) 3,500 (7) 15,000 0
Secretary
(1) Amounts shown include salary earned and received by executive officers as
well as salary earned but deferred at the election of those officers. The
bonus amounts shown were accrued by the Company in the years shown but
were received by the officers in January of the following year.
(2) Of the above executive officers, only Mr. Berling received a stock option
during 1995. The stock options of Messrs. Hunt (37,000 shares, granted in
1992) and Berling lapsed when each of those officers left the Company in
1995 and 1996, respectively.
(3) The amounts in this column include the matching contributions made by the
Company under its 401(k) defined contribution plan. In addition, the
amounts in this column for Mr. Hunt include Company contributions of
$6,100 in 1994 and $6,082 in 1993 to his Supplemental Executive Retirement
Plan. A description of the latter plan is set forth below.
(4) The amount shown reflects compensation for the partial year from January
1, 1995, through May 8, 1995, when Mr. Hunt resigned as an officer of the
Company. This amount includes $14,712 paid in respect of accrued vacation
time.
(5) This payment, which was calculated by multiplying a fraction of salary
times years of service, was paid pursuant to a Long Term Incentive Plan
offered to all employees working in the farming operations of Laval Farms
Limited Partnership (formerly Tejon Agricultural Partners) to encourage
them to work as long as needed during the wind-down of the partnership.
(6) Amounts shown reflect compensation for the partial year from January 30,
1995, when Mr. Berling joined the Company, through December 31, 1995. Mr.
Berling resigned as an officer of the Company in January 1996.
(7) Amounts shown reflect compensation for the partial year from July 19,
1993, when Mr. Mullins joined the Company, through December 31, 1993.
The Company has entered into an agreement with Mr. Stine providing for him
to serve as President, Chief Executive Officer and a director. He is expected
to begin work on May 1, 1996. See "Election of Directors". Under the
agreement Mr. Stine will receive a salary at an annual rate of $275,000 per
year (subject to review after November 1997), a bonus of up to 50% of the base
salary (20% guaranteed for 1996) and the grant of an option to purchase 100,000
shares of the Common Stock of the Company at the fair market value on the date
the option is granted. The option will have a term of ten years and will
become exercisable as to 10% of the shares at the end of the first year, 15% of
the shares at the end of the second and third years and 30% of the shares at
the end of the fourth and fifth years. In addition, Mr. Stine will receive
relocation benefits, perquisites consisting of a company car and a country club
membership, and participation in the Company's health, disability and life
insurance programs and its retirement plan. The agreement also provides for
continuation of Mr. Stine's salary for two years if the Company terminates his
employment without cause within the first two years and continuation of his
salary for one year if the Company terminates his employment without cause
thereafter. In addition, such a termination would result in acceleration of
the exercise dates of Mr Stine's stock option.
Stock Options
In March 1992 the Board of Directors adopted a 1992 Stock Option Plan
providing for the granting of options to purchase a maximum of 230,000 shares
of the Company's Common Stock to employees, advisors, and consultants of the
Company. The 1992 Stock Option Plan was approved by the stockholders at the
1992 Annual Meeting.
The following table shows information concerning the only grant of a stock
option made in 1995 pursuant to the 1992 Stock Option Plan.
OPTIONS GRANTS IN LAST FISCAL YEAR
PERCENT OF
TOTAL OPTIONS GRANT
GRANTED TO EXERCISE OR DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR (per share) DATE VALUE(2)
- --------------- ---------- ------------- ----------- ---------- --------
Charles Berling 14,000 100% $11.88 1/30/05 $71,540
(1) The option granted would have become exercisable on January 30, 2004, but
has terminated as a result of Mr. Berling leaving the Company.
(2) Based on the Black-Scholes option pricing model adapted for use in
valuing executive stock options. The option granted to Mr. Berling
terminated on January 12, 1996, as a result of his resignation.
The following table shows the number of shares subject to exercisable and
nonexercisable stock options outstanding at December 31, 1995, and held by
executive officers named in the preceding Summary Compensation Table. The
stock option of Mr. Berling lapsed when he left the Company.
OPTIONS EXERCISES AND YEAR-END VALUE TABLE
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS IN-THE-MONEY
VALUE AT FY-END(#) OPTIONS AT FY-
SHARES ACQUIRED ON REALIZED EXERCISABLE/ END ($)(1)
NAME EXERCISE (#) ($) (1) UNEXERCISABLE EXERCISABLE/
UNEXERCISABLE
- ----------------- ------------------ --------- ------------- -------------
Matt J. Echeverria 0 0 0/19,000 0/0
John A. Wood 0 0 0/10,000 0/0
Charles Berling 0 0 0/14,000 0/40,180
David Dmohowski 0 0 0/16,000 0/0
Dennis Mullins 0 0 0/15,000 0/0
(1) Market value of underlying securities at year end, minus the exercise price
of options. The currently outstanding options reflected in the table above
(other than that of Mr. Mullins) were granted in 1992, do not become
exercisable until 2001 (subject to certain exceptions) and expire in 2002.
Mr. Mullins' option was granted in 1993, does not become exercisable until
2002 (subject to certain exceptions) and expires in 2003. Under the terms
of the option agreements, if the optionee leaves the employ of the Company
for any reason other than death or disability, his options will terminate
within three months after any such termination of employment and will be
exercisable during those three months only to the extent that they were
exercisable on the date of termination of employment. If the optionee's
employment terminates as the result of death or disability, the options
terminate one year after such death or disability and are exercisable
during that one year period only if the employee has completed at least
one full year of employment with the Company after the date of grant.
Under such circumstances the options are exercisable to purchase that
portion of the total number of shares subject to the options equal to such
total number of shares times the fraction of the number of full years of
employment completed after the date of grant divided by ten. The exercise
date of the outstanding options will also be accelerated in the event of
a change in control of the Company. "Change in control" is defined to
include a merger, consolidation, transfer of assets, issuance or transfer
of stock or other transaction or series of related transactions as a result
of which persons or entities other than the stockholders immediately before
the transaction or transactions would own at least 80% of the voting stock
of the Company or its successor after the transaction.
Pension Plan
The Company contributes each year to a Pension Plan for its salaried
employees the amount necessary to fund the Plan on a actuarially sound basis.
The amounts of these annual contributions are not included in the compensation
table above. Pension benefits to be received from the Plan upon retirement are
determined by an employee's five year final average annual compensation, length
of service with the Company and age at retirement, subject to certain
limitations imposed on a qualified retirement plan by the Internal Revenue
Code.
In 1991 the Company adopted a Supplemental Executive Retirement Plan
(the "SERP") in order to restore to executives designated by the Compensation
Committee of the Board of Directors the full benefits under the Pension Plan
which would otherwise be restricted by certain limitations now imposed under
the Internal Revenue Code. The SERP is unfunded, but the associated liability
will be reflected on the Company's financial statement. No benefits under the
Pension Plan or the SERP become vested until the earlier of (a) the
participant's attainment of age 65, or (b) the completion of five or more years
of vesting service (as defined under the Pension Plan referred to above). With
respect to the SERP, an executive can become vested upon the incurrence of a
total and permanent disability while employed by the Company as determined by
the Board of Directors or the Compensation Committee. The Compensation
Committee also has the power to grant a participant vested status with respect
to the SERP even if he does not meet the foregoing requirements.
The table below illustrates the amount of annual pension benefits payable
under the Plan (as increased by amounts payable to eligible executives under
the SERP) to persons in particular classifications who work to the normal
retirement age of 65.
Five Year Final Years of Service
Average Annual
Compensation
------------ 10 20 25 or More
----- ----- ----------
75,000 9,860 19,720 24,650
100,000 13,985 27,970 34,963
125,000 18,110 36,220 45,275
150,000 22,235 44,470 55,588
175,000 26,360 52,720 65,900
200,000 30,485 60,970 76,213
250,000 38,735 77,470 96,838
275,000 42,860 85,720 107,150
300,000 46,985 93,970 117,463
For purposes of pension benefits, earnings consist of compensation
determined in the manner reflected in the preceding Summary Compensation Table,
except that for pension benefit purposes, bonuses are included in the year paid
instead of in the year accrued and amounts under "Long Term Compensation
Awards" and "All Other Compensation" are not counted. The benefits presented
are straight life annuity amounts and are determined based on the benefit
formula required by the Plan, which conforms to the regulations of the Internal
Revenue Service and ERISA. The credited years of service under the Plan as of
December 31, 1995, for those named in the table above are Mr. Hunt - 13 years,
Mr. Wood - 17 years, Mr. Echeverria - 16 years, Mr. Dmohowski - 4 years, Mr.
Mullins - 2 years, and Mr. Berling - 0 years. All employees having one year
in service to the Company participate in the Plan. This includes all current
officers of the Company. Mr. Hunt's resignation will not affect his
participation in the Plan based on the number of years of service shown on the
date he resigned.
Compensation Committee Interlocks and Insider Participation
During 1995 Mr. Haskell rented a Company owned house, and Wood River
Ranch, a corporation in which Mr. Haskell is the sole shareholder, boarded
horses at the Company's quarter horse facility. Aggregate payments made to the
Company for rent and horse boarding and training, including reimbursements for
incidental expenses, during 1995 totalled $44,113. It is expected that this
arrangement will continue throughout 1996. The boarding and training fees
charged Wood River Ranch are comparable to customary rates in the horse
training and breeding business and are the same as fees charged to other horse
owners not affiliated with the Company. The rent which Mr. Haskell pays for
the house is not less than the rent which the Company charges persons not
affiliated with the Company for comparable residences.
Commencing December 1, 1993, Mr. Haskell leased Mr. San Olen, a quarter
horse, to the Company, which uses Mr. San Olen for breeding purposes. The
lease term runs until December 31, 1998, as the Company exercised the first of
its two options to extend the lease term for periods of three years each. The
rent paid by the Company is $1.00 per year triple net, plus one-half of all net
profits made from breeding Mr. San Olen with mares not owned by the Company.
The leasing of horses for breeding purposes typically involves the payment of a
substantial rent by the lessee. The Company believes that this agreement is
favorable to the Company compared to other such horse lease arrangements.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
In determining appropriate compensation for the executive officers of the
Company, the Compensation Committee's decisions, while not tied to any specific
financial performance criteria, are based upon an analysis of each executive's
performance in balancing the short-term operating objectives of the Company
with the overriding goal of protecting and enhancing the value of the Company's
major asset - its land.
The Company is different from most companies in that its asset value is
very large, but its earning capacity from current operations in limited. As
a result, the Compensation Committee policies focus on the goals of achieving
an optimum level of income from the Company's current operations while at the
same time preserving and enhancing the development potential of the Company's
land. The larger future value of the Company to the stockholders rests in the
development of portions of the land for a variety of future uses. It will be
decades before that development process is complete. The Compensation
Committee believes that the management of this tradeoff between current returns
and future asset value is a particularly important criterion for evaluation of
the President and the other executive officers of the Company. The existence
of these two competing goals makes it very difficult to measure precisely the
ultimate financial benefit for the Company's stockholders of management
decisions made at the present time.
Because the development of the Company's land will take many years,
retention of key executives is an extremely important goal. The importance
of this long-term retention is reflected in the design of the incentive stock
option plan approved by the stockholders in 1992, under which options do not
become exercisable until nine years after the options are granted, and are
exercisable only if the officer has remained with the Company for that period
(subject to certain exceptions).
Consistent with the foregoing criteria, a number of factors are evaluated
in specific compensation decisions. These include the performance of the
executive in his or her areas of responsibility, the overall financial results
of the Company, and the level of compensation necessary to retain, over the
long-term, highly qualified executives.
The Committee does not rely principally on specific, pre-determined
criteria to measure the performance of Company executives or the performance
of the Company itself. The Committee members evaluate the various factors
to be considered and reach a consensus based primarily upon their individual
and collective judgment, rather than mathematical calculations. The
performance of an executive in his or her area of responsibility can on
occasion include specific pre-determined goals but usually depends in more
substantial part on the Committee's overall evaluation. In measuring the
financial results of the Company, the Committee looks primarily to net income,
although often that is significantly affected by such uncontrollable factors
as bad weather, drought, the overall economy and commodity market conditions,
and the Committee focuses on those aspects of financial performance that
executives can control.
The extent to which the development potential of the Company's land has
been enhanced over a particular period of time is determined in part by the
achievement of particular planned goals, such as the preparation and filing of
an amendment to the Kern County General Plan with respect to 2,600 acres of
Company land adjacent to Interstate 5 and the Laval Road interchange, which was
achieved during 1994.
In determining overall levels of compensation the Committee obtains
information as to compensation levels at other companies through their public
reports, private surveys and direct communication. The Committee believes
that, because of the Company's very large undeveloped land holdings and limited
earnings, there is no group of comparable companies that it can rely upon in
determining appropriate levels of compensation. Nonetheless the Committee
makes judgments as to overall compensation in part by taking into account what
other companies of comparable size are doing, whether or not they have
extensive land holdings. The Committee does not attempt to set the
compensation for Company executives at any particular level as compared to
other companies, but merely evaluates what other companies are paying as one
factor along with others to be considered. Historically, the Committee's
practice has generally been to avoid large fluctuations from one year to the
next in compensation adjustments unless the change in an executive's job
responsibilities or specific performance warrants a large change.
Salary and bonus levels reflect a long-term evaluation of a particular
executive as well as the nature of his or her duties and level of experience.
The relative amounts of salary and bonus for a particular executive reflect the
Committee's judgment as to the proper weighing of these components of
compensation, taking into account the position held by the executive,
historical patterns of the Company and, to a lesser extent, the practices of
other companies of comparable size. No specific formulas are used to determine
these amounts. Stock options are considered by the Committee to constitute
primarily an incentive to remain with the Company for the long term. The
Committee does not intend to grant options to executives on a regular and
ontinuing basis as a part of their compensation, but it does intend to review
from time to time the adequacy of all stock options outstanding.
The increase in Mr. Hunt's annual salary for 1995 reflected the Committee's
favorable view of his contribution to the Company's 1994 financial performance
and his continuing efforts to enhance the long term potential of the Company's
land. The increase in salary and bonus for 1995 for Mr. Echeverria reflects
both the Committee's favorable evaluation of his performance in managing the
Company's cattle operation in 1994 and prior years as well as his taking on
the additional responsibilities of Acting Chief Executive Officer in May 1995
when Mr. Hunt resigned.
Donald Haskell, Dan T. Daniels, Phillip L. Williams
Members of the Compensation Committee
PERFORMANCE GRAPH
The following graph is a comparison of cumulative total shareowner returns
for the Company, the Dow Jones Equity Market Index, and the Dow Jones Real
Estate Index for the period shown.
1990 1991 1992 1993 1994 1995
----- ----- ----- ----- ----- -----
Tejon Ranch Co. 100.00 66.71 65.38 57.04 47.01 57.04
DJ Equity Market 100.00 132.44 143.83 158.14 159.36 220.51
DJ Real Estate 100.00 111.89 100.95 118.18 112.40 138.91
--Assumes $100 Invested on December 31, 1990
--Total Return Assumes Reinvestment of Dividends
--Fiscal Year Ending December 31
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
TEJON RANCH -33.29% -1.99% -12.75% -17.59% 21.34%
DJ EQUITY MKT 32.44% 8.61% 9.95% 0.77% 38.37%
DJ REAL ESTATE 11.89% -9.77% 17.07% -4.89% 23.58%
The stock price performance depicted in the above graph is not necessarily
indicative of future price performance. The Performance Graph will not be
deemed to be incorporated by reference in any filing by the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates the Performance Graph by
reference.
The Dow Jones Real Estate Index, for the most part, includes companies
which, unlike the Company, are principally engaged in the active phases of
commercial land development and which have revenues substantially greater than
those of the Company. The Company is unaware of any industry or line-of-
business index that is more nearly comparable.
<PAGE>
OTHER
Financial Information. The Company's Annual Report to Stockholders
accompanies this Proxy Statement. Copies of the Company's Annual Report on
Form 10-K (without exhibits) filed with the Securities and Exchange Commission
may be obtained by calling or writing Corporate Secretary, Tejon Ranch Co.,
Post Office Box 1000, Lebec, California 93243, (805) 248-6774.
Independent Accountants. Representatives of Ernst & Young LLP, the
independent public accountants for the fiscal year most recently completed,
will be at the Meeting, will have an opportunity to make a statement if they
wish, and will be available to respond to appropriate questions from
stockholders.
Stockholder Proposals. A stockholder's proposal will be considered at the
1996 Annual Meeting of Stockholders only if the stockholder provides timely
notice of such proposal in writing to the Secretary of the Company. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Company not less than 30 days nor more
than 60 days prior to the meeting as originally scheduled, but if less than 40
days notice or prior public disclosure of the date of the meeting is given or
made to the stockholders, then the notice must be received not later than the
close of business on the 10th day following the day on which the Notice of
Annual Meeting of Stockholders was mailed. A stockholder's notice to the
Secretary must set forth as to each matter the stockholder proposes to bring
before the Annual Meeting (i) a brief description of the business desired to
be brought before the Annual Meeting, (ii) the name and record address of the
stockholder proposing such business, (iii) the class and number of shares of
the Company which are beneficially owned by the stockholder, and (iv) any
material interest of the stockholder in such business. To be considered for
inclusion in the proxy statement for the 1997 Annual Meeting, stockholder
proposals are required to be delivered to the Company on or before December 18,
1996.
Other Business. Management does not know of any matter to be acted upon
at the Meeting other than those described above, but if any other matter
properly comes before the Meeting, the persons named on the enclosed proxy will
vote thereon in accordance with their best judgment.
Stockholders are urged to sign and return their proxies without delay.
For the Board of Directors,
DONALD HASKELL, Chairman of the Board
DENNIS MULLINS, Secretary
April 17, 1996
<PAGE>
TEJON RANCH CO. PROXY
This Proxy is solicited on behalf of the Board of Directors.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated April 10, 1996 and hereby appoints
DONALD HASKELL and MATT ECHEVERRIA as Proxies (each with full power to act in
he absence of the other, and each with full power of substitution), to
represent and to vote all shares of Common Stock of Tejon Ranch Co. held of
record by the undersigned on April 2, 1996, at the annual meeting of
stockholders to be held on May 13, 1996, or any adjournment or postponement
thereof.
In their discretion, the proxies are authorized to vote upon such other
business as properly may come before the meeting.
PLEASE SIGN AND DATE ON REVERSE SIDE AND RETURN IN THE
ACCOMPANYING ENVELOPE (Continued on reverse side)
FOLD AND DETACH HERE
TEJON RANCH CO.
Annual Meeting of Stockholders
May 13, 1996 9:30 a.m.
Beverly Hilton Hotel
Oakhurst Room
9876 Wilshire Boulevard
Beverly Hills, CA 90210
<PAGE>
Withheld
For For All
1. Election of Three Directors (Class III) / / / /
(except as written to the contrary below)
Clayton W. Frye, Jr., Donald Haskell and
Raymond L. Watson
Withheld
For For All
2. Election of One Director (Class II) / / / /
Craig Cadwalder
(Instructions: to withhold authority to vote for any
individual nominee write the nominee's name in the
space below)
-------------------------------------------------------------------
This Proxy, when properly executed, will be
voted in the manner directed herein by the
undersigned. If no direction is made, this
proxy will be vested for the election of
directors.
Signature _______________________________________________Date_________________
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
FOLD AND DETACH HERE
TEJON RANCH CO.
Annual Meeting of Stockholders
May 13, 1996 9:30 a.m.
Beverly Hilton Hotel
Oakhurst Room
9876 Wilshire Boulevard
Beverly Hills, CA 90210
<PAGE>
TEJON RANCH CO.
Narrative Description of Graphic and Image
Information in Registrant's Proxy Materials
Description of Graphic or Image Information
Proxy Statement
Page 12 Contains line graph comparing five year total cumulative
return on $100 invested in Tejon Ranch Co., Dow Jones Equity
Market and Dow Jones Real Estate showing the data points set
forth below:
1990 1991 1992 1993 1994 1995
------ ---- ---- ---- ---- ----
Tejon Ranch Co. 100.00 66.71 65.38 57.04 47.01 57.04
DJ Equity Market 100.00 132.44 143.83 158.14 159.36 220.51
DJ Real Estate 100.00 111.89 100.95 118.18 112.40 138.91
Form of Proxy
Front Printed material indicating notice of Annual Meeting and
voting record date.
Reverse Printed material includes four boxes for purpose of marking
votes and includes signature lines.
<PAGE>
