<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Tejon Ranch Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
TEJON RANCH CO.
Post Office Box 1000
Lebec, California 93243
April 9, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Tejon Ranch Co. on Tuesday, May 4, 1999, at 9:30 A.M., Los Angeles time, in
Salon IV 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. The Annual Report to Stockholders is being mailed under separate cover.
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
<PAGE>
TEJON RANCH CO.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
on
May 4, 1999
The Annual Meeting of Stockholders of Tejon Ranch Co. (the "Company") will
be held in Salon IV of the Park Hyatt Los Angeles at Century City, 2151 Avenue
of the Stars, Los Angeles, California on Tuesday, May 4, 1999, 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: John L. Goolsby, Norman Metcalfe, Kent G. Snyder
and Martin J. Whitman.
The Board of Directors has fixed the close of business on March 23, 1999,
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,
RAYBURN S. DEZEMBER, Chairman of the Board
DENNIS MULLINS, Secretary
Lebec, California
April 9, 1999
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 4, 1999
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 4, 1999.
It is anticipated that the mailing of this Proxy Statement and accompanying
form of Proxy to stockholders will begin on or about April 9, 1999.
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.
RECORD DATE AND VOTING
Holders of shares of Common Stock of record at the close of business on
March 23, 1999, are entitled to notice of, and to vote at, the meeting. There
were 12,691,253 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.
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." Broker 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 18, 1999. The table also provides the stock ownership
of all directors and of the most highly compensated executive officers as of the
same date.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name and Address of Stockholder Ownership(1) of Class
------------------------------------- --------------- --------
<S> <C> <C>
Ardell Investment Company 1,055,828 (2) 8.32%
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
EQSF Advisers, Inc. 3,245,508 (3) 25.57%
767 Third Avenue
New York, NY 10017
Carl Marks Management Company, L.P. 756,000 (4) 5.96%
135 East 57th Street
New York, NY 10022
State of Wisconsin Investment Board 999,600 (5) 7.88%
P.O. Box 7842
Madison, WI 53707
Directors
-------------------------------------
Otis Booth, Jr. 3,472 (6) below 1%
Craig Cadwalader 2,222,530 (7) 17.51%
Dan T. Daniels 2,225,002 (8) 17.53%
Rayburn S. Dezember 3,472 (9) below 1%
John L. Goolsby -0- -0-
Norman Metcalfe 2,836 (6) below 1%
Robert C. Ruocco 758,472(10) 5.98%
Kent G. Snyder 977 (6) below 1%
Geoffrey L. Stack 1,771(11) below 1%
Robert A. Stine 41,000(12) below 1%
Martin J. Whitman 3,245,508(13) 25.57%
Executive Officers
-------------------------------------
Matthew J. Echeverria 19,300(14) below 1%
Allen Lyda 14,000(14) below 1%
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
Dennis Mullins 11,310(14) below 1%
James E. Taylor 3,000 below 1%
All officers and directors as a group 6,343,120 49.98%
(18 persons)
</TABLE>
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(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 26,072 shares (0.21% 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, who retired on September 30, 1998 as Chairman of the Board of
Directors of the Company, and Craig Cadwalader and Dan T. Daniels,
directors of the Company. Mr. Haskell is President of the Sherman
Foundation, is President and a director of Ardell Investment Company, is
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. Mr. Haskell also
owns personally 51,100 shares of the Company. Mr. Haskell disclaims
beneficial ownership of the shares owned by the Sherman Foundation for all
other purposes.
(3) Includes 3,045,508 shares owned beneficially and of record by Third Avenue
Value Fund and 200,000 shares owned beneficially and of record by Third
Avenue Small-Cap Value Fund. EQSF Advisers, Inc. has sole voting and
investment power with respect to these shares.
(4) Includes 521,000 shares owned beneficially and of record by Carl Marks
Strategic Investments, L.P., 185,000 shares owned beneficially and of
record by Carl Marks Strategic Investments II, L.P., and 50,000 shares
owned beneficially and of record by Uranus Fund Ltd. Carl Marks Management
Company, L.P. has sole voting and investment power with respect to the
shares owned by Carl Marks Strategic Investments, L.P. and Carl Marks
Strategic Investments II, L.P. Carl Marks Offshore Management, Inc., which
is under common control with Carl Marks Management Company, L.P., has sole
voting and investment power with respect to the shares owned by Uranus Fund
Ltd.
(5) Based upon information provided to the Company by the stockholder on a
Schedule 13G dated January 16, 1999, and filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934.
(6) Includes shares underlying options that are currently exercisable as
follows: Mr. Booth 2,472 shares, Mr. Metcalfe 1,236 shares, and Mr. Snyder
977 shares.
(7) Includes 1,055,828 shares owned by Ardell Investment Company, 1,140,630
shares owned by M.H. Sherman Company, and 26,072 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 for all other purposes.
(8) Includes 1,055,828 shares owned by Ardell Investment Company, 1,140,630
shares owned by M.H. Sherman Company, and 26,072 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 for all other purposes. Also includes 2,472 shares
underlying options that are currently exercisable.
(9) The shares owned by Mr. Dezember are held by a family trust concerning
which he and his spouse share voting and investment power. Includes 2,472
shares respecting options that are currently exercisable.
(10) Includes 521,000 shares owned beneficially and of record by Carl Marks
Strategic Investments, L.P., 185,000 shares owned beneficially and of
record by Carl Marks Strategic Investments II, L.P., and 50,000 shares
owned
3
<PAGE>
beneficially and of record by Uranus Fund Ltd. Mr. Ruocco is a General
Partner of Carl Marks Management Company, L.P. and a Vice President of Carl
Marks Offshore Management, Inc., and shares voting and investment power for
both entities. Includes 2,472 shares respecting options that are currently
exercisable.
(11) The shares owned by Mr. Stack are held as community property; he and his
spouse share voting and investment power with respect to their shares.
Includes 1,727 shares underlying options that are currently exercisable.
(12) The shares owned by Mr. Stine are held by a family trust concerning which
he and his spouse share voting and investment power. Includes 40,000
shares underlying options that are currently exercisable or become
exercisable within 60 days.
(13) Includes 3,045,508 shares owned beneficially and of record by Third Avenue
Value Fund and 200,000 shares owned beneficially and of record by Third
Avenue Small-Cap Value Fund. Mr. Whitman is Chairman of the Board and CEO
of Third Avenue Trust, which contains Third Avenue Value Fund and Third
Avenue Small-Cap Value Fund as investment series, and of EQSF Advisers,
Inc., Third Avenue Trust's investment advisor, and has the power to vote a
majority of the shares of EQSF Advisers, Inc. Mr. Whitman disclaims
beneficial ownership of the shares owned by said entities for all other
purposes.
(14) The shares owned by Mr. Echeverria are held as community property; he and
his spouse share voting and investment power with respect to their shares.
The totals for Messrs. Echeverria, Lyda and Mullins include shares
underlying options that are currently exercisable as follows: Mr.
Echeverria 19,000 shares, Mr. Lyda 14,000 shares and Mr. Mullins 11,310
shares.
ELECTION OF DIRECTORS
The Board of Directors now consists of eleven directors, the authorized
number of directors having been decreased from 12 to 11 over the last twelve
months. The directors are divided into three classes based upon when their
terms expire. The terms of four directors (Class I) expire at the 2000 Annual
Meeting, the terms of three directors (Class II) expire at the 2001 Annual
Meeting, and the terms of four 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 1999 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 other directors of the Company.
Other than nominations made at the direction of the Board of Directors,
nominations 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 1999 Annual
Meeting are nominated as candidates for director by persons other than the Board
of Directors, the
4
<PAGE>
enclosed proxy may be voted in favor of any one or more of said nominees of the
Board of Directors or substitute 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 June 1987 include references to
Tejon Ranch Co., a California corporation and the Company's predecessor, which
became a wholly owned subsidiary of the Company as a result of a reincorporation
transaction consummated in June 1987.
<TABLE>
<CAPTION>
First
Nominees for Class III Directors Whose Terms Expire in 1999 Became
and Principal Occupation or Employment(1) Director Age
----------------------------------------------------------- -------- ---
<S> <C> <C>
John L. Goolsby 1999 57
Director of America West Holdings Corporation
and Nevada Power Company
Norman Metcalfe(4)(5) 1998 56
Real estate and investments; Director of First Sierra Financial, Inc.
Kent G. Snyder 1998 62
Attorney at Law
Martin J. Whitman(2) 1997 74
Chairman of the Board and Chief Executive Officer of Third
Avenue Trust and EQSF Advisers, Inc., investment management;
Danielson Holding Corporation, insurance; and M.J. Whitman, Inc.,
stock brokerage; Distinguished Faculty Fellow, Yale University School
of Management; Director of Nabors Industries, Inc.
Continuing Directors and Principal Occupation or Employment(1)
--------------------------------------------------------------
Otis Booth, Jr.(3) 1970 75
Private investments and ranching; Director of Clipper Fund, Inc.
Craig Cadwalader(3) 1994 58
President, Chief Operating Officer and Director,
Ardell Marina, Inc., yacht brokerage; Director, M.H. Sherman Co.
Dan T. Daniels(2)(3)(4)(5) 1982 57
President and Director, M.H. Sherman Company, investments
Rayburn S. Dezember(2)(3)(4) 1990 68
Chairman of the Board, Tejon Ranch Co.; Director, Bolthouse Farms,
Inc., and The Bakersfield Californian
Robert C. Ruocco(4) 1997 40
General Partner, Carl Marks Management Company, L.P.,
investment management; Director of Sport & Health
Company, L.C., Seaman Furniture Company, Inc., and
Anchor Glass Container Corporation
Geoffrey L. Stack(3)(5) 1998 55
Managing Director, SARES.REGIS Group, real estate development
and management; Director of Arral & Partners
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
Robert A. Stine(2)(5) 1996 52
President and Chief Executive Officer, Tejon Ranch Co.;
Director of Rancho Santa Fe National Bank
</TABLE>
_________
(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. Goolsby served as President and Chief Executive Officer of The Howard
Hughes Corporation, a real estate development company, from 1990 until his
retirement in July 1998. Mr. Metcalfe served as Vice Chairman and Chief
Financial Officer of The Irvine Company, a real estate development company,
from March 1993 to December 1996. Mr. Stine served as the Chief Executive
Officer of Collins Development Company, a real estate development company,
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.
Since March 1990, Mr. Whitman has been the Chairman of the Board, Chief
Executive Officer and a Director (and, since January 1991, the President)
of Third Avenue Trust, an open-end management investment company registered
under the Investment Company Act of 1940 and containing multiple investment
series, and its predecessor, Third Avenue Value Fund, Inc. (together with
its predecessor, "Third Avenue Trust"). During that time Mr. Whitman has
also held the same positions at EQSF Advisers, Inc. ("EQSF"), Third Avenue
Trust's investment adviser. Until April 1994, Mr. Whitman also served as
the Chairman of the Board, Chief Executive Officer and a Director of Equity
Strategies Fund, Inc., previously a registered investment company. Mr.
Whitman is a Managing Director of Whitman Heffernan Rhein & Co., Inc., an
investment and financial advisory firm which he co-founded in 1987 and
which ceased operations in December 1996. Mr. Whitman has been a Director
and Chairman of the Board since August 1990 and Chief Executive Officer
since August 1996 of Danielson Holding Corporation, an insurance holding
company. Since 1974, Mr. Whitman has been the President and controlling
stockholder of M.J. Whitman & Co., Inc. (now known as Martin J. Whitman &
Co., Inc.) ("MJW&Co") which, until August 1991, was a registered broker-
dealer. From August 1994 to December 1994, Mr. Whitman served as the
Managing Director of M.J. Whitman, L.P. ("MJWLP"), then a registered
broker-dealer which succeeded to the broker-dealer business of MJW & Co.
Since January 1995, Mr. Whitman has served as the Chairman and Chief
Executive Officer (and, until June 1995, as President) of M.J. Whitman,
Inc. ("MJW"), which succeeded at that time to MJWLP's broker-dealer
business. Also since January 1995, Mr. Whitman has served as the Chairman
and Chief Executive Officer of M.J. Whitman Holding Corp., the parent of
MJW and other affiliates. Mr. Whitman is a Distinguished Faculty Fellow in
Finance at the Yale University School of Management.
(2) Member of Executive Committee.
(3) Member of Audit Committee.
(4) Member of Compensation Committee.
(5) Member of Real Estate Committee.
The terms of Messrs. Booth, Daniels, Ruocco and Stack expire at the 2000
Annual Meeting and the terms of Messrs. Cadwalader, Dezember and Stine expire at
the 2001 Annual Meeting.
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 Executive Committee also functions as the
Nominating Committee as needed. In this
6
<PAGE>
role, it periodically searches for and considers qualified candidates to serve
on the Board of Directors. However, the nominees for director proposed by the
Board of Directors are selected by the entire Board.
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 either adjusts or
recommends to the Board of Directors 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 and opportunities. It receives and considers the
analyses of the Company's outside land use and development consultants. The
Committee directs management on the direction that the Company's real estate
activities should take.
During 1998, there were five meetings of the Board of Directors, one of the
Executive Committee acting as the Nominating Committee, two of the Audit
Committee, one of the Compensation Committee, and none of the Real Estate
Committee. During 1998 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. .
Director Compensation
On January 26, 1998, the Board of Directors increased the compensation
payable to directors who are not employees of the Company to an annual retainer
of $24,000, a fee of $1,000 for attendance at any meeting of the Board, a fee of
$500 per Committee meeting attended by such director on the day of a Board
meeting, and a fee of $1,000 per Committee meeting attended by such director on
a day when the Board is not meeting. The fees are payable if the meeting was
attended in person or by telephone conference call. The annual retainer is
payable one-half in cash and one-half in stock options, unless the director
elects to receive his entire retainer in stock options. If a director owns
beneficially, or is affiliated with a person or entity which owns beneficially,
5% or more of the outstanding shares of the Common Stock of the Company, then
that director may elect to receive his entire annual retainer in cash.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own beneficially more than 10%
of the Company's Common Stock to file reports of beneficial ownership and
changes in ownership with the Securities and Exchange Commission. Mr. Metcalfe
failed to timely file one such report as to one transaction, but promptly filed
the report when the oversight was called to his attention.
EXECUTIVE COMPENSATION
The following table shows the aggregate compensation paid on an accrual
basis by the Company and its subsidiaries during 1999 and each of the two
previous years to the Chief Executive Officer and to the four other executive
officers of the Company who were most highly compensated in 1998.
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
- ---------------------------------------------------------------------------- --------------------
NAME SECURITIES
AND UNDERLYING LTIP ALL OTHER
PRINCIPAL SALARY(1) BONUS(1) OPTIONS PAYOUTS COMPENSATION(2)
POSITION YEAR ($) ($) (#) ($) ($)
- ----------------------------- ------- ------------ ------------ ---------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Stine 1998 295,000 141,600 170,000 -- 5,175
President and Chief 1997 275,000 100,000 0 -- 5,075
Executive Officer 1996 183,333(3) 36,665(3) 100,000(4) -- 0
Matt J. Echeverria 1998 200,000 68,970 66,000 -- 4,216
Senior Vice President 1997 185,000 35,000 0 -- 4,116
1996 165,000 25,000 0 -- 4,266
Dennis Mullins 1998 150,000 67,500 34,000 -- 3,350
Vice President, 1997 143,000 15,000 0 -- 1,430
General Counsel and 1996 135,000 12,500 0 -- 1,350
Secretary
James E. Taylor 1998 155,000 62,729 16,000 -- 3,003
Vice President 1997 124,417(5) 10,000 0 -- 0
1996 8,500(5) 0 0 -- 0
Allen E. Lyda 1998 150,000 64,350 42,000 -- 3,353
Vice President, Treasurer 1997 138,000 20,000 0 -- 1,380
and Assistant Secretary 1996 115,000 20,000 0 -- 1,150
</TABLE>
- ---------
(1) Amounts shown include salary earned and received by executive officers.
The bonus amounts shown were accrued by the Company in the years shown but
were received by the officers in January and February of the following
year.
(2) The amounts in this column include the matching contributions made by the
Company under its 401(k) defined contribution plan, and contributions made
to the officers' Supplemental Executive Retirement Plans.
(3) 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.
(4) In April 1997, the options granted to Mr. Stine in 1996 were amended to
lower the previously existing exercise price of $17.875 per share to $16.00
per share, the closing price of the Company's Common Stock on the American
Stock Exchange at the close of trading on the date of the amendment.
(5) The amounts shown include compensation as a consultant to the Company for
services performed in December 1996 and January through April 1997. Mr.
Taylor became an employee and an officer in May 1997.
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 initially was 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. The option was granted in May 1996 with an exercise
price of $17.875 per share, and the price was decreased to $16.00 per share in
April 1997. 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
one year if the Company terminates his employment without cause. In addition
such a termination would result in acceleration of the exercise dates of Mr.
8
<PAGE>
Stine's stock options. The agreement also provides for perquisites consisting
of a company car, country club membership and participation in the Company's
health, disability and life insurance programs and its retirement plan.
The Company has entered into agreements with Messrs. Echeverria, Mullins
and Lyda providing the employee with specified severance benefits in the event
the Company terminates his employment without cause, or the employee terminates
his employment for good cause, within two years following, or within three
months prior to, and in connection with or anticipation of, a change of control
of the Company. "Change of control" is defined to mean a liquidation of the
Company; a change in the identity of a majority of the directors on the Board,
with certain exceptions; or a transaction or series of transactions resulting in
the sale of substantially all of the Company's assets or the merger,
consolidation or reorganization of the Company, unless control of the Company or
a successor company that controls the Company's assets is substantially the same
after the transaction, as defined. The severance benefits generally consist of
the continuation (for up to 30 months, subject to certain limitations) of the
employee's salary, his average bonus over the three fiscal years preceding the
termination, and Company health and life insurance, as well as the continuation
for a substantially shorter period of time of applicable perquisites, including
Company car, country club membership and/or Company housing. These agreements
expire in July 1999, and no decisions have been made concerning the extension
and/or amendment of these agreements.
Stock Options
The Company has a 1992 Stock Option Plan providing for the granting of
options to purchase a maximum of 230,000 shares of Common Stock and a 1998 Stock
Incentive Plan providing for the granting of awards, including stock options,
with respect to a maximum of 800,000 shares of Common Stock. During 1998
options were granted to the officers named in the Summary Compensation Table
under the 1998 Stock Incentive Plan to purchase shares as shown in the table
below. No options were granted under the 1992 Stock Option Plan in 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF
TOTAL OPTIONS
GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR (per share)(1) DATE VALUE(2)
---- ------- ------------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Robert A. Stine 35,000 9.4% $23.875 1/25/08 329,000
135,000 36.2% $20.25 11/30/08 1,124,550
Matthew J. Echeverria 21,000 5.6% $23.875 1/25/08 197,400
45,000 12.1% $20.25 11/30/08 374,850
Dennis Mullins 12,000 3.2% $23.875 1/25/08 112,800
22,000 5.9% $20.25 11/30/08 183,260
James Taylor 16,000 4.3% $23.875 1/25/08 150,400
Allen E. Lyda 16,000 4.3% $23.875 1/25/08 150,400
26,000 7.0% $20.25 11/30/08 216,580
</TABLE>
- --------
(1) The options granted in 1998 become exercisable as to 10% shares of the
shares on the third anniversaries of the dates of grant, an additional 15%
of the number of shares on each of the fourth and fifth anniversaries and
an additional 30% of the number of shares on each of the sixth and seventh
anniversaries. If the option holder leaves the employ of the Company for
any reason other than death of disability, the options terminate three
months after such termination of employment and are exercisable during that
period only to the extent that they were exercisable on the date of
termination of employment. In the case of termination of employment as a
result of death or disability, the options terminate one year after such
death or disability and are exercisable during that period only to the
extent they were exercisable on the date of death or disability. The
exercise dates of the options accelerate in the event of a "change of
control," which is defined to include a merger, consolidation, transfer of
all or substantially all assets, or the issuance or transfer of stock or
other transactions or series of related transactions as a result of which
persons or entities other than the stockholders of the Company immediately
before the transaction or transactions own at least 80% of the voting stock
of the Company or its
9
<PAGE>
successor immediately after the transaction or transactions.
(2) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The grant date present value of these options
was estimated with the following weighted average assumptions for 1998:
Risk-free interest rate of 5.39%; dividend rate of .26%; volatility factor
of the expected market price of the Company's common stock of .38; and a
weighted average expected life of the options of six years from the option
grant date.
The following table shows the number of options exercised in 1998 and the
number of shares subject to exercisable and nonexercisable stock options
outstanding at December 31, 1998, and held by executive officers named in the
preceding Summary Compensation Table.
OPTION EXERCISES AND YEAR-END VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
AT FY-END(#) AT FY-END($)(1)
SHARES ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) VALUE REALIZED($) UNEXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert A. Stine 0 0 25,000/245,000 $96,875/0
Matthew J. Echeverria 0 0 19,000/66,000 $73,625/0
Dennis Mullins 0 0 11,310/34,000 $55,136/0
James E. Taylor 0 0 0/16,000 0/0
Allen E. Lyda 0 0 14,000/42,000 $54,250/0
</TABLE>
- --------
(1) Market value of underlying securities at year end, minus the exercise price
of options.
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.
10
<PAGE>
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>
Five Year Final Years of Service
Average Annual -----------------------------------
Compensation 10 20 25 or More
- ---------------- ------- ------- ----------------
<S> <C> <C> <C>
100,000 13,047 26,093 32,616
150,000 21,297 42,593 53,241
160,000 22,947 45,893 57,366
200,000 29,547 59,093 73,866
250,000 37,797 75,593 94,491
300,000 46,047 92,093 115,116
350,000 54,297 108,593 135,741
400,000 62,547 125,093 156,366
450,000 70,797 141,593 176,991
500,000 79,047 158,093 197,616
</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, 1998, for those named in the table above are Mr. Stine - 2 years, Mr.
Echeverria - 19 years, Mr. Lyda - 8 years, Mr. Mullins - 5 years, and Mr. Taylor
- - 1 year. All employees having one year in service to the Company participate
in the Plan. This includes all current officers of the Company, except Douglas
M. Ford, who was named Senior Vice President - Real Estate in March 1999.
Compensation Committee Interlocks and Insider Participation
Donald Haskell served as Chairman of the Board of Directors and Chairman of
the Compensation Committee until his retirement in September 1998. During 1998
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 1998 totalled $46,672. 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 expired on December 31, 1998, and the Company is negotiating the term of a
lease extension. 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.
Beginning in 1997 and continuing through 1998 and into 1999, Messrs.
Echeverria and Lyda fed cattle for their personal accounts at Champion Feedlot
in Hereford, Texas, which is owned by a Company subsidiary. Total costs in 1998
for feed, miscellaneous supplies and veterinary services were $71,610 for Mr.
Echeverria and $28,912 for Mr. Lyda. Feed and other supplies and services were
sold to these officers at the same prices they were then sold to unaffiliated
feedlot customers. All accounts are current as of March 2, 1999. For nine days
in October, Mr Lyda incurred indebtedness to the feedlot in the amount of
$81,090, representing the cost of cattle purchased from third parties by the
feedlot for Mr. Lyda's account. Mr. Lyda had previously established a line of
credit with a local bank to finance this purchase, and the indebtedness was the
result of a normal delay in funding the loan. Mr. Lyda paid interest on the
11
<PAGE>
indebtedness at the rate of 9.5% per annum, the same rate that the feedlot
charges to unaffiliated customers, and all principal and interest was repaid in
nine days.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
The Compensation Committee previously recommended to the Board of Directors
and the Board adopted new policies applicable to determining the compensation of
executive officers commencing with 1998. Under the new policies base salaries
of executive officers are expected to remain relatively stable, with any
significant increase in compensation to depend upon achieving certain specific
performance goals. For 1998 executive salaries were increased by approximately
4-9% for the executives named in the Summary Compensation Table under "Executive
Compensation" except for Mr. Taylor, whose base salary remained unchanged.
Executives had the opportunity to earn bonus compensation for 1998 ranging from
20% to 50% of annual salary for Mr. Stine and 18% to 45% for the other named
executives. Sixty percent of the bonus for Mr. Stine was based upon the extent
to which the revenues and income of the Company achieved or exceeded previously
specified amounts and 40% was based upon the extent to which he achieved a
number of individual performance objectives relating to business development and
operations of the Company and the development of its executive team. The entire
portion of the bonus related to the Company's revenues and income and a
substantial portion of the bonus related to individual performance objectives
were earned by Mr. Stine.
For executives in charge of particular operating divisions, 40% of the
bonus for 1998 was based upon Company revenues and income, 30% was based upon
their own division's revenues and income and 30% was based upon achieving a
number of individual performance objectives. For Mr. Lyda, whose performance
does not relate to any particular division of the Company, 70% of the bonus was
based upon the Company's revenues and income and 30% was based upon achieving
individual performance objectives, and for Mr. Mullins, whose performance also
does not relate to any particular division of the Company, those percentages
were 50% and 50%.
The Compensation Committee also recommended, and the Board has adopted, a
long-term compensation plan that contemplates the granting of options on a
periodic basis in the discretion of the Board of Directors pursuant to the
Company's 1998 Stock Incentive Plan. The Committee believes that stock options
are a desirable form of long-term compensation because they more closely align
the interests of the executives with those of the stockholders. The Committee
recommended, and the Board approved, the granting of options to purchase an
aggregate of 100,000 shares of Common Stock of the Company to the five executive
officers named in the Summary Compensation Table in January 1998 and options to
purchase an additional 228,000 shares in December 1998. See "Stock Options"
above. As in past years, the number of shares subject to options granted to
each executive reflects a subjective, long-term evaluation of the executive as
well as the nature of his duties and level of experience.
The percentage of total compensation represented by salary, bonus and stock
options for 1998 was determined by the Committee and the Board. Among the
factors considered by the Committee and the Board was a study provided by an
independent consultant as well as input from individual members of the Committee
and the Board. No specific formulas were used to determine the relative mix of
the three forms of compensation.
Dan T. Daniels, Rayburn S. Dezember,
Norman Metcalfe, Robert C. Ruocco
Members of the Compensation
Committee
12
<PAGE>
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>
- ----------------------------------------------------------
1994 1995 1996 1997 1998
- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TEJON RANCH -17.59% 21.34% -2.54% 71.76% -18.31%
- ----------------------------------------------------------
DJ EQUITY MKT 0.77% 38.37% 23.46% 34.06% 27.34%
- ----------------------------------------------------------
DJ REAL ESTATE -4.89% 23.58% 34.09% 18.96% -22.54%
- ----------------------------------------------------------
</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.
13
<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 (including the financial statements and financial statement schedules but
without exhibits) filed with the Securities and Exchange Commission may be
obtained without charge by calling or writing Corporate Secretary, Tejon Ranch
Co., Post Office Box 1000, Lebec, California 93243, (661) 248-3000.
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
1999 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 2000 Annual Meeting, stockholder proposals are
required to be delivered to the Company on or before December 10, 1999.
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,
RAYBURN S. DEZEMBER, Chairman of the Board
DENNIS MULLINS, Secretary
April 9, 1999
14
<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 9, 1999, and hereby
appoints RAYBURN S. DEZEMBER 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 March 23, 1999, at the Annual
Meeting of Stockholders to be held on May 4, 1999, 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.
(Continued on reverse side)
PLEASE SIGN AND DATE ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING ENVELOPE
- -------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
TEJON RANCH CO.
Annual Meeting of Stockholders
May 4, 1999 9:30 a.m.
Park Hyatt Los Angeles at Century City
Salon IV
2151 Avenue of the Stars
Los Angeles, CA 90067
<PAGE>
- --------------------------------------------------------------------------------
[X] Please mark
your votes
as indicated
WITHHELD
FOR FOR ALL
1. Election of Four Directors (Class III) [_] [_]
(except as written to the contrary below)
John L. Goolsby, Norman Metcalfe, Kent G.
Snyder, and Martin J. Whitman
(Instruction: to withhold authority to vote for any
individual nominee write in 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 voted for the election of
directors.
Date _________________________________________
______________________________________________
Signature(s)
______________________________________________
Signature(s)
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 4, 1999 9:30 a.m.
Park Hyatt Los Angeles at Century City
Salon IV
2151 Avenue of the Stars
Los Angeles, CA 90067
