TEJON RANCH CO.
Post Office Box 1000
Lebec, California 93243
April 10, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Tejon Ranch Co. on Monday, May 12, 1997, at 9:30
A.M., Los Angeles time, in the Grand Salon I Room of the Park
Hyatt Los Angeles at Century City, 2151 Avenue of the Stars, Los
Angeles, California. Your Board of Directors and management look
forward to greeting those stockholders who are able to attend.
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,
Robert A. Stine,
President and Chief Executive Officer
TEJON RANCH CO.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
on
May 12, 1997
The Annual Meeting of Stockholders of Tejon Ranch Co. (the
"Company") will be held in the Grand Salon I Room of the Park
Hyatt Los Angeles at Century City, 2151 Avenue of the Stars, Los
Angeles, California on Monday, May 12, 1997, at 9:30 A.M., Los
Angeles time, for the following purposes:
1. To elect three 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: Otis Booth, Jr., Dan T.
Daniels, and Robert F. Erburu.
The Board of Directors has fixed the close of business on
April 1, 1997, 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 10, 1997
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.
TEJON RANCH CO.
Post Office Box 1000
Lebec, California 93243
PROXY STATEMENT
Annual Meeting of Stockholders
May 12, 1997
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 12, 1997.
It is anticipated that the mailing of this Proxy Statement
and accompanying form of Proxy to stockholders will begin on or
about April 10, 1997.
SOLICITATION OF PROXIES
At the Meeting, the stockholders of the Company will be
asked (1) to elect three 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 10,
1997.
RECORD DATE AND VOTING
Holders of shares of Common Stock of record at the close of
business on April 1, 1997, 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 three candidates receiving the highest number
of affirmative votes will be elected as directors. On all other
matters, each share has one vote.
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, 1997. 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 2,228,530 (5) 17.57%
Dan T. Daniels 2,228,530 (6) 17.57%
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 2,279,630 (10) 17.97%
Robert A. Stine -0- -0-
Raymond L. Watson -0- -0-
Phillip L. Williams -0- -0-
Officers
Matt J. Echeverria 300 (11) below 1%
John A. Wood 6,900 (11) below 1%
All officers and directors as a group 6,111,160 48.19%
(15 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 32,072 shares (0.25% 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 or its subsidiaries.
(4) Based upon information provided to the Company by the
stockholder on a Schedule 13G dated January 21, 1997, 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
32,072 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
32,072 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 32,072
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. Echeverria and Wood are held as
community property. Each officer and his spouse share
voting and investment power with respect to their shares.
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 has been further amended several times,
including amendments to reflect Chandis Securities Company's
disposition of its shares and its withdrawal from the Affiliated
Group and the addition to the Affiliated Group of 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 December 31, 1996, the
stockholders constituting the Affiliated Group owned 6,391,960
shares of Company Common Stock constituting 50.40% of the number
of shares outstanding.
On February 3, 1997, The Times Mirror Company and The Times
Mirror Foundation filed an amendment to the Schedule 13D with the
Securities and Exchange Commission stating that such entities are
no longer acting together with the other members of the
Affiliated Group as a group with respect to the ownership of
shares of the Company's Common Stock, and that each entity is
considering a sale of all or part of its shares in the Company
depending on market conditions and other factors. On February 4,
1997, Ardell Investment Company, M.H. Sherman Company, Donald
Haskell, and Sherman Foundation each filed a Schedule 13D with
the Securities and Exchange Commission stating that as a result
of letters received from The Times Mirror Company on January 31,
1997, notifying them of The Times Mirror Company's decision to
dissolve the group, they were no longer acting as a group with
respect to the ownership of shares of the Company's Common Stock.
Furthermore, they reported that they had not formulated any
definite plans or proposals with respect to their investment in
the Company, but that they may consider the acquisition of
additional shares of Common Stock of the Company or the
disposition of some or all of the Common Stock of the Company
each of them currently holds, depending on market conditions and
other circumstances.
ELECTION OF DIRECTORS
The Board of Directors now consists of ten directors, the
authorized number of directors having been increased in 1996 from
9 to 10. 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 four directors
(Class II) expire at the 1998 Annual Meeting, and the terms of
three directors (Class III) expire at the 1999 Annual Meeting.
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 1997 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 third of the votes to which the
stockholder is entitled will be cast for each of the three
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 1997 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 I Directors Whose Terms Expire in Became
1997 and Principal Occupation or Employment(1) Director Age
Otis Booth, Jr.(2)(3) 1970 73
Private investments and ranching; Director of
Clipper Fund,
Inc. and Schooner Fund, Inc.
Dan T. Daniels(2)(4) 1982 55
President and Director, M.H. Sherman Company,
investments
Robert F. Erburu(3) 1975 66
Director of The Times Mirror Company, Cox
Communications, Inc., and Marsh & McLennan
Companies, Inc.
Continuing Directors and Principal Occupation or
Employment(1)
Craig Cadwalader 1994 56
President, Chief Operating Officer and
Director, Ardell Marina, Inc., yacht brokerage;
Director, M.H. Sherman Co.
Rayburn S. Dezember(2) 1990 66
Director of Wells Fargo & Co., CalMat
Los Angeles, Bolthouse Farms, Inc., and The
Bakersfield Californian
Clayton W. Frye, Jr.(3) 1975 66
Senior Associate of Laurance S. Rockefeller,
business and investment management; Director of
The Times Mirror Company, and King Ranch, Inc.
Donald Haskell(3)(4) 1967 69
Chairman of the Board, M.H. Sherman Company,
investments; President, Ardell Investment
Company, investments; Chairman of the Board,
Tejon Ranch Co.
Robert A. Stine(3) 1996 50
President and Chief Executive Officer, Tejon
Ranch Co.; Director of Rancho Santa Fe National
Bank
Raymond L. Watson 1994 70
Vice Chairman of The Irvine Company, farming
and real estate development; Director of The
Walt Disney Company, Pacific Mutual Life
Insurance Company, and Mitchell Energy and
Development Company
Phillip L. Williams(2)(4) 1987 74
Private investments and business advisor;
Director, IXC Communications, Inc.;
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. Stine served as the Chief
Executive Officer of The Collins Companies from 1986 to
April 1995. He became President and Chief Executive Officer
of the Company on May 1, 1996, and a Director of the Company
on May 13, 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. Cadwalader, Dezember, Stine and
Williams expire at the 1998 Annual Meeting, and the terms of
Messrs. Frye, Haskell and Watson expire at the 1999 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.
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 1996, there were four meetings of the Board of
Directors, two of the Audit Committee, two of the Compensation
Committee, and none of the Real Estate Committee or the Executive
Committee. During 1996 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. Booth.
During 1996, 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 $500 for
attendance at any meeting of a Committee.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors and executive officers and
persons who own beneficially more than 10% of the Company's
common stock to file reports of beneficial ownership and changes
in ownership with the Securities and Exchange Commission.
Sherman Foundation failed to timely file two reports with respect
to three transactions which occurred in March and April 1996 but
has since filed the reports.
EXECUTIVE COMPENSATION
The following table shows the aggregate compensation paid on
an accrual basis by the Company and its subsidiaries during 1996
and each of the two previous years to the two persons who acted
as chief executive officer during 1996, and to the four other
executive officers of the Company who were most highly
compensated in 1996.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
SECURITIES ALL OTHER
NAME AND PRINCIPAL UNDERLYING LTIP COMPENSATION
SALARY(1) BONUS(1) OPTIONS(2) PAYOUT (3)
YEAR ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert A. Stine 1996 183,333 (4) 36,665 100,000 0
President and 1995 0 0 0 0
Chief Executive 1994 0 0 0 0
Officer
Matt J. Echeverria 1996 165,000 25,000 0 1,650
Senior Vice 1995 144,232 25,000 0 1,442
President 1994 115,000 10,000 0 1,150
Acting CEO
through April
1996
Dennis Mullins 1996 135,000 12,500 0 1,350
Vice President, 1995 125,000 12,500 0 1,250
General Counsel 1994 117,500 12,500 0 0
and Secretary
David Dmohowski 1996 133,000 9,000 0 1,330
Vice President 1995 133,000 9,500 0 1,330
1994 129,000 9,500 0 1,290
John A. Wood 1996 101,500 39,495 0 1,015
Vice President 1995 101,500 37,462 0 80,000 (5) 1,015
1994 125,000 15,000 0 1,250
Allen E. Lyda 1996 115,000 20,000 0 1,150
Vice President, 1995 100,000 12,000 0 1,000
Treasurer and 1994 90,000 10,000 0 900
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. Stine received a
stock option during 1996.
(3) The amounts in this column include the matching
contributions made by the Company under its 401(k) defined
contribution plan.
(4) The amount shown reflects compensation for the partial year
from May 1, 1996, when Mr. Stine became President and Chief
Executive Officer of the Company, through December 31,
1996.
(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.
</TABLE>
The Company has entered into an agreement with Mr. Stine
providing for him to serve as President, Chief Executive Officer
and a director of the Company. Under the agreement he is
entitled to a salary at an annual rate of $275,000 per year
(subject to review after November 1997), a bonus of up to 50% of
base salary and the grant of an option to purchase 100,000
shares of the Common Stock of the Company at the fair market
value of the shares on the date the option was granted ($17.875
per share). See "Stock Options." Although the agreement does
not provide for a term of employment, Mr. Stine will be entitled
to continuation of his salary for two years if the Company
terminates his employment without cause prior to May 1, 1998,
and to 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. The agreement also provides
for 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.
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 1996 pursuant to the 1992 Stock
Option Plan.
OPTIONS GRANTS IN LAST FISCAL YEAR
PERCENT OF
TOTAL
OPTIONS
GRANTED TO
EMPLOYEES EXERCISE GRANT
IN FISCAL OR BASE DATE
OPTIONS YEAR PRICE(per EXPIRATION PRESENT
NAME GRANTED share) DATE VALUE(1)
Robert A. Stine 100,000 100% $17.875 4/30/06 $631,000
(1) Based on the Black-Scholes option pricing model adapted for
use in valuing executive stock options.
The following table shows the number of shares subject to
exercisable and nonexercisable stock options outstanding at
December 31, 1996, and held by executive officers named in the
preceding Summary Compensation Table.
<TABLE>
OPTIONS EXERCISES AND YEAR-END VALUE TABLE
<CAPTION
VALUE OF
NUMBER OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS OPTIONS AT
ON VALUE AT FY-END(#) FY-END($)(1)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C>
Robert A. Stine 0 0 0/100,000 0/0
Matt J. Echeverria 0 0 0/19,000 0/0
Dennis Mullins 0 0 0/15,000 0/0
David Dmohowski 0 0 0/16,000 0/0
John A. Wood 0 0 0/10,000 0/0
Allen E. Lyda 0 0 0/14,000 0/0
(1) Market value of underlying securities at year end, minus
the exercise price of options.
</TABLE>
The currently outstanding options reflected in the table
above (other than those of Messrs. Stine and Mullins) were
granted in 1992, do not become exercisable until 2001 (subject
to certain exceptions) and expire in 2002. Mr. Stine's option
was granted in May 1996, and will become exercisable as to 10%
of the shares on the first anniversary of the grant, 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, a
termination of Mr. Stine's employment without cause would result
in acceleration of the exercise dates of his stock option. 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.
<TABLE>
<CAPTION>
Years of Service
Five Year Final Average
Annual Compensation 10 20 25 or more
<C> <C> <C> <C>
75,000 9,791 19,582 24,477
100,000 13,916 27,832 34,790
125,000 18,041 36,082 45,102
150,000 22,166 44,332 55,415
175,000 26,291 52,582 65,727
200,000 30,416 60,832 76,040
250,000 38,666 77,332 96,665
275,000 42,791 85,582 106,977
300,000 46,916 93,832 117,290
</TABLE>
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, 1996, for those named in the table above are
Mr. Stine - 0 years, Mr. Wood - 18 years, Mr. Echeverria - 17
years, Mr. Lyda - 6 years, Mr. Dmohowski - 5 years, and Mr.
Mullins - 3 years. All employees having one year in service to
the Company participate in the Plan. This includes all current
officers of the Company, except Mr. Stine.
Compensation Committee Interlocks and Insider Participation
During 1996 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 1996 totalled $52,553. It is
expected that this arrangement will continue throughout 1997.
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 is 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.
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 completion of the physical
improvements at the Grapevine Center during 1996 and execution
of a lease for a motel at the Grapevine Center.
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, except
that Mr. Wood's bonus was based upon income from the Company's
farming operations. 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 continuing basis as
a part of their compensation, but it does intend to review from
time to time the adequacy of all stock options outstanding.
In April 1996 the Company entered into an employment
agreement with Mr. Stine providing for an annual salary of
$275,000 (subject to review but not before November 1997) plus a
bonus ranging from 0 up to 50% of annual salary. The bonus was
guaranteed at 20% of base salary for 1996, which meant that Mr.
Stine received $36,667 for the eight months in 1996 after he
joined the Company. For 1997 and thereafter Mr. Stine's bonus
will be determined by the Board of Directors or the Compensation
Committee, and it is expected that the criteria to be used in
determining the amount of the bonus will be the same as those
set forth above for other executives of the Company. The amount
of Mr. Stine's salary and bonus and the number of shares subject
to the terms of his option were determined by negotiation
between Mr. Stine and the Company, although the Company received
advice from an outside consulting firm and it took into account
amounts paid to chief executive officers by other companies of
comparable size.
Mr. Echeverria served as Acting Chief Executive Officer of
the Company until Mr. Stine joined in the Company on May 1,
1996. In addition, Mr. Echeverria continued to manage the
Company's cattle operations. The increase in Mr. Echeverria's
salary and the amount of his bonus for 1996 reflect the
Committee's favorable evaluation of his performance in both
roles.
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.
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Tejon Ranch Co. 100.00 98.01 85.51 70.47 85.51 83.33
DJ Equity Market 100.00 108.61 119.41 120.33 166.50 205.57
DJ Real Estate 100.00 90.23 105.63 100.46 124.15 166.48
-- Assumes $100 Invested on December 31, 1991
-- Total Return Assumes Reinvestment of Dividends
-- Fiscal Year Ending December 31
</TABLE>
<TABLE>
1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C>
TEJON RANCH -1.99% -12.75% -17.59% 21.34% -2.54%
DJ EQUITY MKT 8.61% 9.95% 0.77% 38.37% 23.46%
DJ REAL ESTATE -9.77% 17.07% -4.89% 23.58% 34.09%
</TABLE>
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.
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 1997 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 1998 Annual Meeting, stockholder proposals are required to be
delivered to the Company on or before December 11, 1997.
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 10, 1997
<PAGE>
TEJON RANCH CO. PROXY
This is solicited on behalf of the Board of Directors.
This undersigned acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement, each dated April 10,
1997 and hereby appoints DONALD HASKELL and ROBERT A. STINE as
Proxies (each with full power to act in the 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 1, 1997, at the annual meeting of stockholders
to be held on May 12, 1997, 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 12, 1997 9:30 a.m.
Park Hyatt Los Angeles
at Century City
Grand Salon I Room
2151 Avenue of the Stars
Los Angeles, CA 90067
<PAGE>
Withheld
For For All
1. election of Three Directors (Class I) / / / /
(except as written to the contrary below)
Otis Booth, Jr., Dan T. Daniels, and
Robert F. Erburu
(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 12, 1997 9:30 a.m.
Park Hyatt Los Angeles
at Century City
Grand Salon I Room
2151 Avenue of the Stars
Los Angeles, CA 90067
<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:
<TABLE>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Tejon Ranch Co. 100.00 98.01 85.51 70.47 85.51 83.33
DJ Equity Market 100.00 108.6 119.41 120.33 166.50 205.57
DJ Real Estate 100.00 90.23 105.63 100.46 124.15 166.48
</TABLE>
Form of Proxy
Front Printed material indicating notice of Annual
Meeting and voting record date.
Reverse Printed material includes two boxes for purpose
of marking votes and includes signature lines.
