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
CENTERPOINT PROPERTIES CORPORATION
- --------------------------------------------------------------------------------
(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)(1)
and 0-11
(1) Title of each class 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
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/ / Fee paid previously with preliminary materials.
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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.
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CENTERPOINT PROPERTIES CORPORATION
-----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
CenterPoint Properties Corporation (the "Company") will be held at the Lower
Level Conference Center, 401 N. Michigan Avenue, Chicago, Illinois on Thursday,
May 15, 1997 at 11:00 a.m., Central Daylight Time, for the following purposes:
1. to elect seven directors to serve until the next annual meeting of
stockholders or special meeting of stockholders held in place thereof
and until their respective successors are elected and have qualified;
2. to ratify the selection of Coopers & Lybrand as independent public
accountants of the Company for the year ending December 31, 1997;
3. to vote on the approval of an amendment to the Charter of the Company
to provide that the Company will take no action to preclude the
settlement of any transactions on the New York Stock Exchange; and
4. to transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 19, 1997 as
the record date for the determination of common stockholders entitled to vote at
the meeting. Only those stockholders whose names appear on record on the books
of the Company at the close of business on such date are entitled to notice of,
and to vote at, the Annual Meeting or any adjournment or adjournments thereof.
You are cordially invited to attend the meeting in person. Whether or not
you expect to attend the meeting, please sign and date the enclosed proxy and
return it as promptly as possible in the enclosed self-addressed,
postage-prepaid envelope. If you attend the Annual Meeting of Stockholders and
wish to vote in person, your proxy will not be used.
By Order of the Board of Directors
/s/ Paul S. Fisher
--------------------------------
Paul S. Fisher
SECRETARY
March 31, 1997
Chicago, Illinois
CENTERPOINT PROPERTIES CORPORATION
401 NORTH MICHIGAN AVENUE
SUITE 3000
CHICAGO, ILLINOIS 60611
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 1997
This proxy statement is furnished to holders of the Common Stock, par value
$.001 per share, of CENTERPOINT PROPERTIES CORPORATION (hereinafter called the
"Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be used at the Annual Meeting of Stockholders of the
Company to be held at the Lower Level Conference Center, 401 N. Michigan Avenue,
Chicago, Illinois on Thursday, May 15, 1997 at 11:00 a.m., Central Daylight
Time, and at any adjournment or adjournments thereof, for the purposes set forth
in the accompanying Notice of Annual Meeting of Stockholders.
If the accompanying form of proxy is executed and returned, it may
nevertheless be revoked at any time insofar as it has not yet been exercised.
The persons named in the accompanying form of proxy will vote such proxy for
election to the board of the nominees named below. It is anticipated that this
proxy statement and the enclosed proxy will be first mailed to record holders of
the Company's Common Stock on or about March 31, 1997.
The Board of Directors has fixed the close of business on March 19, 1997 as
the record date for the determination of stockholders entitled to receive notice
of and vote at the Annual Meeting of Stockholders. As of March 19, 1997, the
Company had outstanding 16,706,229 shares of Common Stock, par value $.001 per
share.
Each share of Common Stock is entitled to one vote on each matter presented
for ratification. A stockholder who abstains from a vote on any matter by
registering an abstention will be deemed present at the meeting for quorum
purposes but will not be deemed to have voted on that matter. Similarly, in the
event a nominee holding shares for beneficial owners votes on certain matters
pursuant to discretionary authority or instruction from the beneficial owners,
but with respect to one or more other matters does not receive instructions from
the beneficial owners and does not exercise discretionary authority (a so-called
"non-vote"), the shares held by the nominee will be deemed present at the
meeting for quorum purposes but will not be deemed to have voted on such other
matters.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Any proposal of a stockholder intended to be presented at the Company's
1998 Annual Meeting of Stockholders must be received by the Company for
inclusion in the proxy statement and form of proxy for that meeting no later
than December 1, 1997.
ELECTION OF DIRECTORS
(PROPOSAL 1)
At the meeting a Board of Directors is to be elected, each director to hold
office until the next annual meeting of stockholders or special meeting of
stockholders held in place thereof, and until his successor is elected and
qualified. Directors are elected by a plurality of the votes cast. The Board
of Directors does not contemplate that any nominee will be unable to serve as a
director for any reason; however, if that should occur prior to the meeting, the
proxy holders will select another nominee to stand for election in his place and
stead.
Following is a summary of the name, age and principal occupation or
employment for the past five years of each nominee for election as a director
and each executive officer of the Company.
NAME AGE POSITION
- ---- --- --------
Martin Barber 52 Chairman of the Board
John S. Gates, Jr. 43 President, Chief Executive Officer and
Director
Robert L. Stovall 64 Executive Vice President, Chief Operating
Officer and Director
Michael M. Mullen 42 Executive Vice President - Marketing and
Acquisitions and Chief Investment and
Development Officer
Paul S. Fisher 41 Executive Vice President, Secretary, Chief
Financial Officer and General Counsel
Rockford O. Kottka 46 Senior Vice President and Treasurer
Nicholas C. Babson 50 Director
Alan D. Feld 60 Director
John J. Kinsella 68 Director
Thomas E. Robinson 49 Director
MARTIN BARBER. Mr. Barber has been the Chairman of the Board of Directors
of the Company since its formation in 1984. He has been involved in commercial
real estate since 1969, when he acquired a substantial interest in Arrowcroft
Investments Limited, a commercial property development group, where he served as
Managing Director until 1972, when he sold his interest. At that time, he
founded Capital and Regional Holdings Limited. In 1978, he formed Capital and
Regional Properties plc (which became publicly-traded in the London stock market
in 1986) to engage in real estate and related activities in the United Kingdom,
and has served as its Chairman since that time. In 1984, together with Mr.
Gates, he formed the Company to engage in real estate activities in the United
States, and has also served as its Chairman since that time. Since 1984, Mr.
Barber has served as a Non-Executive Director, and currently is Chairman, of
Primesight, plc, a UK-based billboard company. In 1991, Mr. Barber was
appointed a Non-Executive Director of TransEuropean Properties (General Partner)
Limited, a co-mingled real estate fund comprised of European and U.S.-based
pension funds established to invest in European properties. In 1996, Mr. Barber
was appointed Non-Executive Director of PRICOA Property Investment Management
Ltd., a British real estate fund management company which is a wholly owned
subsidiary of The Prudential Insurance Company of America, and he is a board
member of the Association of foreign investors in U.S. Real Estate.
2
JOHN S. GATES, JR. Mr. Gates has been the President, Chief Executive
Officer and a Director of the Company since its formation in 1984. From 1977 to
1981, he was a leasing agent and an investment property acquisition specialist
with CB Commercial, a real estate brokerage and acquisition firm. In 1981, he
founded the Chicago office of Jones Lang Wooton, which advised foreign and
domestic institutions on property investment throughout the Midwest. He
received his Bachelors degree in Economics from Trinity College (Hartford). Mr.
Gates is a member of the Young Presidents Organization, Urban Land Institute,
National Realty Committee, National Association of Real Estate Investment
Trusts, National Association of Industrial and Office Parks and has served on
the Board of Directors of the Institute for Community Empowerment since 1981.
Mr. Gates is a member of the Board of Trustees of The Chicago Dock and Canal
Trust.
ROBERT L. STOVALL. Mr. Stovall has been an Executive Vice President and
the Chief Operating Officer and a Director of the Company since August 1993.
From 1975 until he joined the Company, he served as President and Chief
Executive Officer of FCLS Investors Group, Inc. ("FCLS"), a Chicago-based owner
and manager of warehouse/industrial real estate which he co-founded in 1975 and
the operations of which were consolidated in 1993 with those of the Company.
Mr. Stovall began his career as a real estate salesman in 1957 for the Great
Southwest Industrial District in Arlington-Grand Prairie, Texas. He joined J.L.
Williams and Co. Inc. ("Williams"), a Texas-based industrial developer, in 1961.
In 1967, he opened the Chicago branch office of Williams and became Executive
Vice President of the firm. In 1978, he formed Four Columns, Ltd. and purchased
Williams' Chicago operation and properties. In 1987, Four Columns, Ltd. was
merged with Stava Construction Company, another warehouse/industrial development
company, and FCLS/Stava Group was formed, where Mr. Stovall served as Chairman
until he joined the Company. Mr. Stovall is a 1955 honors graduate of Yale
University with a Bachelors of Arts degree in American Studies. Mr. Stovall is
a member of the National Association of Industrial and Office Parks. Mr.
Stovall is the father-in-law of Mr. Mullen.
MICHAEL M. MULLEN. Mr. Mullen has been the Executive Vice
President - Marketing and Acquisitions and Chief Investment and Development
Officer of the Company since August 1993. He was a co-founder of FCLS and
served as its Vice President-Sales, with responsibility for leasing,
built-to-suit sales and acquisitions since 1987. Mr. Mullen graduated from
Loyola University in 1975, with a Bachelor's degree in Finance. He is the
son-in-law of Mr. Stovall.
PAUL S. FISHER. Mr. Fisher has been an Executive Vice President of the
Company since August 1993, and the Secretary, Chief Financial Officer and
General Counsel of the Company since 1991. Between 1988 and 1991, Mr. Fisher
was Vice President, Finance and Acquisitions of Miglin-Beitler, Inc., a
Chicago-based office developer. From 1986 to 1988, Mr. Fisher was Vice
President, Corporate Finance, at The First National Bank of Chicago. From 1982
through 1985, he was Vice President, Partnership Finance, at VMS Realty, a
Chicago-based real estate syndication company. Mr. Fisher graduated from the
University of Notre Dame, SUMMA CUM LAUDE, with a Bachelor of Arts degree in
Economics and Philosophy in 1977. Mr. Fisher received his Juris Doctorate from
the University of Chicago School of Law in 1980. He serves on the board of the
Midwest Chapter of the Real Estate Investment Advisory Council.
3
ROCKFORD O. KOTTKA. Mr. Kottka has been the Senior Vice President and
Treasurer of the Company since 1989. From 1978 to 1989, Mr. Kottka served as
the Vice President and Controller of Globe Industries, Inc., a Chicago based
manufacturer of roofing and automotive acoustical materials. Mr. Kottka
graduated from St. Joseph's Calumet College in 1975 with a Bachelor of Science
degree in Accountancy. Mr. Kottka is a certified public accountant. He is a
member of the American Institute of Certified Public Accountants and the
Illinois CPA Society.
NICHOLAS C. BABSON. Mr. Babson has been an independent director of the
Company since December 1993, when he was appointed to fill one of four vacancies
existing as a result of an increase in the number of directors from three to
seven. Mr. Babson also serves as Chairman and Chief Executive Officer of Babson
Brothers Co., a worldwide manufacturer and distributor of dairy equipment based
in Naperville, Illinois. Mr. Babson joined Babson Brothers in 1973, following
two years service in the United States Army. Mr. Babson also serves as a member
of the Board of Directors of Bradner Central Company, a privately-owned,
national distributor of paper products, a member of the Board of Directors and
Past Chairman of the Equipment Manufacturers Institute and a member of the Board
of Trustees of the Farm Foundation and has served as a member and Past Chairman
of the National FFA Foundation. Mr. Babson is also a member of the Board and
Past President of the Shakespeare Repertory, a Chicago-based theater company.
Mr. Babson graduated from the University of the South with a Bachelor of Arts
degree in Political Science (1968).
ALAN D. FELD. Mr. Feld has been an independent director of the Company
since December 1993, when he was appointed to fill a vacancy on the Board of
Directors. Since 1960, Mr. Feld has been associated with the law firm of Akin,
Gump, Straus, Hauer & Feld, L.P.P. in Dallas, Texas. He currently serves as a
Senior Executive Partner of the firm and sole stockholder of a professional
corporation that is a partner of the firm. Mr. Feld graduated from Southern
Methodist University with a bachelor of arts degree in 1957. Mr. Feld received
his LL.B. degree from the Southern Methodist University in 1960. He has been a
member of the Texas State Bar since 1960 and a member of the District of
Columbia Bar since 1971. He was a member of the Board of Trustees of Brandeis
University from 1986 to 1996. He serves on the Board of Directors of Clear
Channel Communications, Inc., a New York Stock Exchange listed company, and is a
Trustee of the AMR AAdvantage Funds (Mutual Funds).
JOHN J. KINSELLA. Mr. Kinsella has been an independent director of the
Company since December 1993, when he was appointed to fill a vacancy on the
Board of Directors. Since 1987, Mr. Kinsella has served as President of the
Kinsella Development Company, Inc., a real estate development company located on
the northwest side of Chicago. From 1951 until 1986, Mr. Kinsella was
affiliated with the advertising firm of Leo Burnett Company, Inc. as a member of
its Board of Directors. Upon his retirement in 1986, Mr. Kinsella was
President, Chief Executive Officer and Chairman of its Board of Directors. Mr.
Kinsella graduated from Notre Dame University in 1950. He received his master's
degree from De Paul University in Chicago in 1952. Mr. Kinsella has served on
the business and civic boards of a variety of institutions, including the
American Advertising Association, the Field Museum and the Chicago Central Area
Association.
THOMAS E. ROBINSON. Mr. Robinson has been an independent director of the
Company since December 1993, when he was appointed to fill a vacancy on the
Board of Directors. In August 1994, Mr. Robinson became President of Storage
USA, Inc., a REIT headquartered in Columbia, Maryland, that is engaged in the
business of owning and operating self-storage warehouses. He also serves as a
director of Storage USA, Inc. and of Tanger Factory Outlet Center, Inc. Between
August 1993 and August 1994, Mr. Robinson was a senior executive of Jerry J.
Moore Investments, an owner and operator of community and neighborhood shopping
centers located in Texas. Prior to joining Jerry J. Moore
4
Investments, Mr. Robinson served as National Director of REIT Advisory Services
for the national accounting firm of Coopers & Lybrand from 1989 to 1993. From
1981 to 1989, Mr. Robinson served as vice president and general counsel for the
National Association of Real Estate Investment Trusts. Mr. Robinson received
his Bachelor's degree from Washington and Lee University, his Master's degree in
taxation from Georgetown University Law School, and his Juris Doctorate degree
from Suffolk University Law School.
BOARD OF DIRECTORS AND COMMITTEES
During fiscal year 1996, the Board of Directors held 5 regularly scheduled
meetings. Six of the seven directors attended all of the regular meetings while
one director did not attend one regular meeting. In addition, in accordance
with internal procedures adopted by the Board of Directors to readily approve,
among other things, the acquisition and sale of properties, the Board of
Directors held 11 special telephonic meetings which are called on short notice.
Each director other than Nicholas Babson and John Kinsella attended more than
75% of the aggregate of all regular and special meetings of the Board of
Directors and the meetings held by Board committees on which he served. Each
director serving on a Board committee attended all of the meetings held by the
committees on which he served.
The Board of Directors of the Company has standing Audit and Compensation
Committees. The Board of Directors does not have a standing nominating
committee, and the entire Board of Directors performs the function of such a
committee.
AUDIT COMMITTEE. The Audit Committee is comprised of two independent
directors. The Audit Committee is authorized to make recommendations to the
Board of Directors concerning the engagement of independent public accountants,
review with the independent public accountants the plans and results of their
audits, approve professional services provided by the independent public
accountants, consider audit and non-audit fees and review the adequacy of the
Company's internal accounting controls. Messrs. Kinsella and Robinson are the
members of the Audit Committee. The Audit Committee held 2 meetings during
1996.
COMPENSATION COMMITTEE. The Compensation Committee is comprised of three
directors, two of whom are independent directors. The Compensation Committee
exercises all powers of the Board of Directors in connection with the
compensation of executive officers, including incentive compensation and benefit
plans. The Compensation Committee also serves as the Company's Stock Option
Committee and, as such, is empowered to grant stock options in accordance with
the Company's Stock Option Plan to the directors and management of the Company,
other key employees and consultants. Messrs. Gates, Babson and Feld are the
members of the Compensation Committee. The Compensation Committee held 2
meetings during 1996.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file with the Securities and Exchange Commission (the
"SEC") and the New York Stock Exchange initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten-percent stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
5
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, the Company believes that, except as set forth below, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with during the fiscal
year ended December 31, 1996.
Robert L. Stovall, Executive Vice President, Chief Operating Officer and a
director of the Company, filed one Form 5, reporting an award of restricted
stock and stock options and the vesting of stock options, after the date
prescribed under Section 16(a) of the Securities Exchange Act of 1934. Messrs.
Barber, Babson, Feld, Kinsella and Robinson, directors of the Company, each
filed one Form 5, reporting an award of stock options, after the date prescribed
under Section 16(a) of the Securities Exchange Act of 1934.
RATIFICATION OF SELECTION OF ACCOUNTANTS
(PROPOSAL 2)
The Board of Directors of the Company has selected Coopers & Lybrand as the
independent public accountants of the Company for the fiscal year ending
December 31, 1997. The appointment of auditors is approved annually by the
Board of Directors and is subsequently submitted to the stockholders for
ratification. A representative of Coopers & Lybrand will be at the meeting to
answer questions concerning the Company's financial statements and will have an
opportunity to make a statement if he or she chooses to do so.
Unless specified to the contrary, unrevoked proxies will be voted to ratify
the selection of Coopers & Lybrand as the independent public accountants of the
Company.
APPROVING AN AMENDMENT TO THE CHARTER OF THE COMPANY TO PROVIDE
THAT THE COMPANY WILL TAKE NO ACTION TO PRECLUDE THE SETTLEMENT OF
TRANSACTIONS ON THE NEW YORK STOCK EXCHANGE
(PROPOSAL 3)
INTRODUCTION. In order for the Company to maintain its status as a real
estate investment trust (a "REIT") under the Internal Revenue Code, as amended
(the "Code"), the Charter of the Company contains certain provisions restricting
the ownership and acquisition of shares of the Company's capital stock. Under
these provisions, no holder may own, or be deemed to own by virtue of the
attribution provisions of the Code, more than 9.8% in value of the issued and
outstanding shares of the Company's Common Stock or Preferred Stock (the
"Ownership Limit"), subject to certain exceptions. If any stockholder purports
to transfer his shares to another person and either the transfer would result in
the Company failing to qualify as a REIT or such transfer would cause the
transferee to exceed the Ownership Limit, the purported transfer will be null
and void and the stockholder will be deemed not to have transferred his shares.
NEW YORK STOCK EXCHANGE POLICY. In June, 1996, the Company listed its
Common Stock and Debentures on the New York Stock Exchange (the "NYSE"). The
NYSE has a policy prohibiting companies listed on the NYSE from taking any
action that would preclude the settlement of transactions on the NYSE. In
connection with the Company's listing application with the NYSE, the Company
agreed that, notwithstanding the provisions of its Charter, the Company will
take no action that will
6
preclude the settlement of any transaction entered through the facilities of the
Exchange. In addition, the Company agreed, in connection therewith, to present
to its stockholders at its 1997 annual meeting an amendment to the Company's
Charter, as described below.
AMENDMENT TO CHARTER. The amendment to the Charter attached hereto as
Exhibit A (the "Amendment") provides that nothing in the Charter will preclude
the settlement of any transaction entered into through the facilities of the
NYSE or any other national securities exchange or automated inter-dealer
quotation system. The Board of Directors of the Company will still be
authorized to take any actions it deems necessary or advisable to protect the
Company and the interests of the stockholders in preserving the Company's status
as a REIT, so long as such actions do not prohibit the settlement of any
transactions entered through the facilities of the NYSE or any other national
securities exchange or automated inter-dealer quotation system.
VOTE REQUIRED. Pursuant to the Maryland General Corporation Law, the
affirmative vote of the holders of two-thirds of all votes entitled to be cast
is required to amend the Company's Charter.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE AMENDMENT TO THE COMPANY'S CHARTER.
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth information as of February 25, 1997 with
respect to the beneficial ownership of the Common Stock of the Company by (1)
each person who is known by the Company to own beneficially more than 5% of its
Shares, (2) each director of the Company, (3) the Company's Chief Executive
Officer and four other executive officers and (4) the Company's directors and
executive officers as a group.
SHARES BENEFICIALLY OWNED
-------------------------
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS
------------------------------------ ------------------------ ----------------
Cohen & Steers Capital Management, Inc.
757 Third Avenue
New York, New York 10017 2,022,800 14%
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109 1,689,138 11.6%
Davis Selected Advisers, L.P.
P.O. Box 1688
124 E. Marcy Street
Santa Fe, New Mexico 87501 1,172,450 8.1%
Capital and Regional Properties plc
22 Grosvenor Gardens
London, England SW1W 0DH 1,008,478 6.9%
7
SHARES BENEFICIALLY OWNED
-------------------------
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS
------------------------------------ ------------------------ ----------------
Martin Barber
(Director and Chairman)
22 Grosvenor Gardens
London, England SW1W 0DH 44,778(2) *
John S. Gates, Jr.
(Director, President and Chief
Executive Officer)
401 N. Michigan Avenue
Suite 3000
Chicago, Illinois 60611 458,356(3) 3.2%
Robert L. Stovall
(Director, Executive Vice President
and Chief Operating Officer)
401 North Michigan Avenue
Suite 3000
Chicago, Illinois 60611 142,339(4) *
Nicholas C. Babson
(Director)
1880 Country Farm Drive
Naperville, Illinois 60563 3,347(5) *
Alan D. Feld
(Director)
1700 Pacific Avenue
Suite 4100
Dallas, Texas 75201 4,347(6) *
John J. Kinsella
(Director)
1550 N. State Parkway
Chicago, IL 60610 3,506(6) *
Thomas E. Robinson
(Director)
Storage USA Inc.
10 Corporate Center
Suite 400
Columbia, Maryland 21004 3,408(6) *
Michael M. Mullen
(Executive Vice President -
Marketing and Acquisitions and
Chief Investment and Development
Officer)
401 North Michigan Avenue
Suite 3000
Chicago, Illinois 60611 90,941(7) *
8
SHARES BENEFICIALLY OWNED
-------------------------
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS
------------------------------------ ------------------------ ----------------
Paul S. Fisher
(Executive Vice President,
Secretary, Chief Financial Officer
and General Counsel)
401 N. Michigan Avenue
Suite 3000
Chicago, Illinois 60611 63,045(8) *
Rockford O. Kottka
(Senior Vice President and Treasurer)
401 N. Michigan Avenue
Suite 3000
Chicago, Illinois 60611 27,604(9) *
All directors and executive
officers as a group
(10 persons) 841,671 5.8%
- -----------------------
* Less than one percent
(1) Beneficial ownership is the direct ownership of Common Stock of the Company
including the right to control the vote or investment of or acquire such
Common Stock (for example, through the exercise of stock options or
pursuant to trust agreements) within the meaning of Rule 13d-3 under the
Securities and Exchange Act of 1934. The shares owned by each person or by
the group and the shares included in the total number of shares outstanding
have been adjusted in accordance with said Rule 13d-3.
(2) Includes options to purchase 43,200 shares of Common Stock under the
Company's Stock Option Plan exercisable within 60 days. Excludes the
shares owned by Capital and Regional Properties plc, of which Mr. Barber is
Chairman. Mr. Barber disclaims beneficial ownership of such shares.
(3) Includes options to purchase 79,871 shares of Common Stock under the
Company's Stock Option Plan exercisable within 60 days and 540 shares owned
by an IRA for the benefit of John S. Gates, Jr. Mr. Gates disclaims
beneficial ownership of 185 shares owned by an IRA for the benefit of his
wife.
(4) Includes options to purchase 58,291 shares of Common Stock under the
Company's Stock Option Plan exercisable within 60 days.
(5) Includes options to purchase 1,800 shares of Common Stock under the
Company's Stock Option Plan exercisable within 60 days.
(6) Includes options to purchase 2,400 shares of Common Stock under the
Company's Stock Option Plan exercisable within 60 days.
(7) Includes options to purchase 43,405 shares of Common Stock under the
Company's Stock Option Plan exercisable within 60 days and 2,000 shares
owned by his wife.
(8) Includes options to purchase 43,405 shares of Common Stock under the
Company's Stock Option Plan exercisable within 60 days.
(9) Includes options to purchase 10,865 shares of Common Stock under the
Company's Stock Option Plan exercisable within 60 days.
9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation awarded
to the Company's Chief Executive Officer and four other executive officers for
the years ended December 31, 1996, December 31, 1995 and December 31, 1994.
Annual Long Term
Compensation Compensation
------------------------------------------------ ---------------------------
Restricted Securities
Name and Other Annual Stock Underlying All Other
Principal Position Year Salary ($)(1) Bonus($) Compensation ($)(2) Award(s)($)(3) Options(#) Compensation($)
------------------ ---- ------------- -------- ------------------- -------------- ---------- ---------------
John S. Gates, Jr., 1996 $ 213,470 $ 95,472 $ -0- $71,213(4) 34,817 $ 5,086(13)(14)
Chief Executive 1995 205,200 4,640 -0- 146,766(5) 35,692
Officer 1994 200,000 -0- -0- 3,312(13)(14)
2,646(13)(14)
Robert L. Stovall, 1996 186,623 69,160 22,222 53,438(6) 17,804 4,750(14)
Executive Vice- 1995 179,375 3,542 -0- 110,990(7) 21,269 2,310(14)
President and Chief 1994 175,000 -0- -0- 2,310(14)
Operating Officer
Michael M. Mullen, 1996 163,310 112,050 22,222 -0- 8,674 4,750(14)
Executive Vice- 1995 133,530 48,251 -0- 39,500(8) 7,878 2,310(14)
President--Marketing 1994 115,500 -0- -0- 2,118(14)
and Acquisitions
Paul S. Fisher, 1996 163,310 68,400 -0- 45,000(9) 8,674 4,750(14)
Executive Vice- 1995 133,530 37,509 -0- 39,500(10) 7,878 2,310(14)
President, Secretary, 1994 115,500 -0- 78,013 1,516(14)
Chief Financial Officer
and General Counsel
Rockford O. Kottka, 1996 105,270 38,000 -0- 16,875(11) 4,348 4,200(14)
Senior Vice-President 1995 90,136 17,016 -0- 6,893(12) 3,590 1,717(14)
and Treasurer 1994 80,000 -0- 18,242 1,600(14)
- --------------------
(1) Includes amounts deferred at the election of the named executive officer
under the Company's 401(k) Plan.
(2) Includes (a) incentive cash awards paid to certain executive officers to
fund the purchase of shares of the Company's Common Stock and related tax
liabilities and (b) payments to certain executive officers to fund tax
liabilities arising from the sale of properties to the Company.
(3) Restricted shares awarded under the Company's Restricted Stock Incentive
Plan will vest eight years from the date of the grant; however, restricted
shares awarded under the plan may vest earlier as follows: (i) if total
shareholder return averaged over a consecutive sixty day trading period
commencing no earlier than two years from the date of the grant is greater
than a target established by the Compensation Committee at the time of the
respective award, all of the restricted shares awarded for such year will
vest; (ii) upon the death, disability or retirement of a participant, the
number of vested shares will be determined by dividing the number of months
which have elapsed from the date of such award by 96; or (iii) in the event
of a change of control of the Company, all of the restricted shares
previously awarded will vest.
(4) Represents 3,165 shares of restricted Common Stock having a market value of
$103,653 based upon a closing price of $32-3/4 of the Company's Common
Stock as reported on the New York Stock Exchange on December 31, 1996.
10
Dividends are paid on the restricted shares of Common Stock to the same
extent as on any other shares of the Company's Common Stock.
(5) Represents 7,487 shares of restricted Common Stock having a market value of
$245,199 based upon a closing price of $32-3/4 of the Company's Common
Stock as reported on the New York Stock Exchange on December 31, 1996. A
total of 4,410 shares of such restricted Common Stock, which were awarded
pursuant to a separate restricted stock grant agreement, were 100% vested
as of January 1, 1995. Dividends are paid on the restricted shares of
Common Stock to the same extent as on any other shares of the Company's
Common Stock.
(6) Represents 2,375 shares of restricted Common Stock having a market value of
$77,781 based upon a closing price of $32-3/4 of the Company's Common Stock
as reported on the New York Stock Exchange on December 31, 1996. Dividends
are paid on the restricted shares of Common Stock to the same extent as on
any other shares of the Company's Common Stock.
(7) Represents 5,663 shares of restricted Common Stock having a market value of
$185,463 based upon a closing price of $32-3/4 of the Company's Common
Stock as reported on the New York Stock Exchange on December 31, 1996. A
total of 3,419 shares of such restricted Common Stock, which were awarded
pursuant to a separate restricted stock grant agreement, were 100% vested
as of January 1, 1995. Dividends are paid on the restricted shares of
Common Stock to the same extent as on any other shares of the Company's
Common Stock.
(8) Represents 2,000 shares of restricted Common Stock having a market value of
$65,500 based upon a closing price of $32-3/4 of the Company's Common Stock
as reported on the New York Stock Exchange on December 31, 1996. Dividends
are paid on the restricted shares of Common Stock to the same extent as on
any other shares of the Company's Common Stock.
(9) Represents 2,000 shares of restricted Common Stock having a market value of
$65,500 based upon a closing price of $32-3/4 of the Company's Common Stock
as reported on the New York Stock Exchange on December 31, 1996. Dividends
are paid on the restricted shares of Common Stock to the same extent as on
any other shares of the Company's Common Stock.
(10) Represents 2,000 shares of restricted Common Stock having a market value of
$65,500 based upon a closing price of $32-3/4 of the Company's Common Stock
as reported on the New York Stock Exchange on December 31, 1996. Dividends
are paid on the restricted shares of Common Stock to the same extent as on
any other shares of the Company's Common Stock.
(11) Represents 750 shares of restricted Common Stock having a market value of
$24,563 based upon a closing price of $32-3/4 of the Company's Common Stock
as reported on the New York Stock Exchange on December 31, 1996. Dividends
are paid on the restricted shares of Common Stock to the same extent as on
any other shares of the Company's Common Stock.
(12) Represents 349 shares of restricted Common Stock having a market value of
$11,430 based upon a closing price of $32-3/4 of the Company's Common Stock
as reported on the New York Stock Exchange on December 31, 1996. Dividends
are paid on the restricted shares of Common Stock to the same extent as on
any other shares of the Company's Common Stock.
(13) Represents insurance premiums paid by the Company for term life insurance
on Mr. Gates' life, the proceeds of which are payable to his designated
beneficiary.
(14) Represents Company's matching contribution to 401(k) Plan.
11
OPTION TABLE
The following table sets forth, for the Company's Chief Executive Officer
and each of the other executive officers named in the Summary Compensation
Table, information with respect to option exercises during the last fiscal year
and option values at the end of the last fiscal year.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED DECEMBER 31, 1996
OPTION VALUES AT DECEMBER 31, 1996
Number of
securities Value of
underlying unexercised in-
unexercised options the-money options
at fiscal year end at fiscal year end
(2) (#) (4) ($)
------------------- -------------------
Shares Acquired on Value Realized Exercisable/ Exercisable/
Exercise (#) (1)($) unexercisable (3) unexercisable (3)
------------ -------------- ------------------- -----------------
John S. Gates, Jr. 5,000 $23,125 63,770 $ 915,743
104,459 1,330,991
Robert L. Stovall None None 50,478 726,614
65,635 854,772
Michael M. Mullen None None 40,096 579,422
40,656 544,770
Paul S. Fisher None None 40,096 579,422
40,656 544,770
Rockford O. Kottka 17,120 156,220 9,278 133,634
24,340 330,861
- --------------------
(1) Based on the difference between an exercise price of $18.25 per share and
the closing price of the Common Stock as reported on the New York Stock
Exchange on the date of exercise which was, in the case of Mr. Gates,
$22-7/8, and, in the case of Mr. Kottka, $27-3/8.
(2) All options are for shares of the Company's Common Stock.
(3) The first number appearing in the column refers to exercisable options, and
the second number refers to unexercisable options.
(4) Based on the difference between an exercise price of $18.25, $19.50 or
$22.50 per share, as the case may be, and the closing price of the Common
Stock on December 31, 1996 of $32-3/4 per share as reported on the New York
Stock Exchange.
12
COMPENSATION OF DIRECTORS
The Company currently pays its directors who are not employees of the
Company an annual fee of $20,000 ($33,333 for Mr. Barber as Chairman of the
Board) plus a fee of $1,000 for attendance at each meeting of the Board of
Directors. Directors who are employees of the Company are not paid any
directors' fees. In addition, the Company will reimburse the directors for
travel expenses incurred in connection with their activities on behalf of the
Company. Under the 1995 Director Stock Plan, each director was awarded 444
shares of Common Stock on March 12, 1996, except Martin Barber who was awarded
740 shares of Common Stock on March 12, 1996.
Directors are eligible for the grant of options under the Company's Stock
Option Plan. As of December 31, 1996, directors of the Company who are not
employees of the Company were granted the following options to purchase Common
Stock:
NUMBER OF
NAME OPTIONS GRANTED (#) EXERCISE PRICE ($) EXPIRATION DATE (1)
---- ------------------- ------------------ -------------------
Martin Barber 51,000 $18.25 12/10/2003
20,000 19.88 3/11/2004
3,000 19.875 5/23/2005
3,000 24.875 5/14/2006
------------------------------------------------------------
Nicholas C. Babson 3,000 18.25 12/10/2003
3,000 19.875 5/23/2005
3,000 24.875 5/14/2006
------------------------------------------------------------
Alan D. Feld 3,000 18.25 12/10/2003
3,000 19.875 5/23/2005
3,000 24.875 5/14/2006
------------------------------------------------------------
John J. Kinsella 3,000 18.25 12/10/2003
3,000 19.875 5/23/2005
3,000 24.875 5/14/2006
------------------------------------------------------------
Thomas E. Robinson 3,000 18.25 12/10/2003
3,000 19.875 5/23/2005
3,000 24.875 5/14/2006
------------------------------------------------------------
- --------------------
(1) Options become exercisable at the rate of 20% per year.
EMPLOYMENT CONTRACTS
The Company's executive officers have entered into employment agreements
with the Company. Such agreements had an original term of five years (expiring
December 10, 1998), subject to earlier termination, with or without cause, by
the Company's Board of Directors, subject, in the case of termination without
cause, to a severance payment equal to base salary for a specified number of
months. No severance payments are required upon early termination. The
agreements with the executive officers: (i) require that substantially all of
their time and effort be for the benefit of the Company (all such executive
officers are employed exclusively by the Company), (ii) set forth their annual
compensation level and (iii) provide for their participation in a discretionary
cash bonus plan. The agreements provide for annual base salaries which are
subject to review and increase by the Board of Directors: Effective
13
July 1, 1996, the Board of Directors set the following base salaries: Mr. Gates
- -- $216,320; Mr. Stovall -- $189,280; Mr. Mullen -- $175,000; Mr. Fisher --
$175,000; and Mr. Kottka -- $110,000.
In July, 1996, the Company entered into an Employment Separation Agreement
with Robert L. Stovall, Executive Vice President, Chief Operating Officer and a
Director, under which (i) Mr. Stovall will retire from the office of Executive
Vice President and Chief Operating Officer effective October 31, 1997, (ii) the
Company agreed to continue to nominate Mr. Stovall to serve on the Board of
Directors through the year 2000 and, if he continues to be re-elected, to
appoint him as Vice Chairman of the Board of Directors, for which he will be
compensated after October 31, 1997 at the annual rate of $25,000 through the
year 2000, (iii) the Company agreed to form an Asset Allocation Committee and to
appoint Mr. Stovall as Chairman of the Asset Allocation Committee, (iv) in the
event the stockholders of the Company do not re-elect Mr. Stovall to the Board
through the year 2000, the Company agreed to retain Mr. Stovall as a consultant
at the annual rate of $25,000 per year through the year 2000, (v) the Company
agreed to accelerate upon Mr. Stovall's retirement the vesting of stock options
granted to him under the 1993 Stock Option Plan and (vi) in consideration of the
foregoing, Mr. Stovall agreed not to compete with the Company through the year
2000 for which he will paid at the annual rate of $100,000 from October 31, 1997
until December 31, 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee during fiscal year 1996
included Nicholas C. Babson, Alan D. Feld and John S. Gates, Jr. Mr. Gates is
employed by the Company as its President and Chief Executive Officer.
During fiscal 1996, no executive officer of the Company served on the board
of directors or compensation committee (or other board committee performing
equivalent functions) of any other entity any of whose executive officers served
as a director of the Company or member of the Company's Compensation Committee.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
MISSION OF THE COMPENSATION COMMITTEE
The Board of Directors has delegated to the Compensation Committee
strategic and administrative responsibility for the Company's management
compensation strategy and incentive compensation plan(s). The Committee's basic
responsibility is to assure that the Chief Executive Officer, other officers and
key management of the Company are compensated fairly and effectively in a manner
consistent with the Company's stated compensation strategy, competitive
practice, applicable regulatory requirements and performance results.
PAY-FOR-PERFORMANCE PLAN
In July 1994, based on the report of an independent consultant, Towers
Perrin Foster, and the recommendations of the Compensation Committee, the
Company's Board of Directors approved a pay-for-performance compensation plan
(the "Plan"). The Plan is designed to provide competitive compensation levels
within the Company's industry and incentive pay that varies based on corporate,
departmental or profit center and individual performance. To achieve this
objective, the Plan contemplates that the Company generally will maintain base
salary levels for its executive employees at or about the median compensation
level for persons holding similar positions within the industry, based on
information drawn
14
from compensation surveys and compensation consultants, but that employees will
have an opportunity to receive a total compensation package significantly
greater than the median based upon their contribution to the Company's
attainment of its growth objectives. For certain senior management employees,
the Plan contemplates that base salary levels will generally be somewhat below
the median, to further emphasize pay for performance through incentives.
The Plan includes three elements: a salary management system, an annual
incentive plan and a long term incentive plan.
SALARY MANAGEMENT SYSTEM. Under the Plan, the Company has established
a salary structure by individual position within a range of plus or minus 25%
of the median marketplace rate for that position. Annual salary rates for
specific individuals will vary within the range for such position based on
such individual's experience and qualifications. The Board of Directors,
based on the recommendations of the Compensation Committee, establishes a
budget for aggregate merit increases each year based on marketplace
practices, the Company's ability to pay and the attainment of the Company's
overall objectives. Individual merit increases generally are expected to
range from 0% to 10% of salary, and merit increases in the aggregate
generally are not expected to exceed 4%. Annual merit increases are based on
individual performance levels gauged by performance appraisals conducted
every six months.
Salary adjustments are made as of July 1 each year, effective for the
following 12 months. The aggregate increase in executive salaries effective as
of July 1, 1996 was approximately 10%.
ANNUAL INCENTIVE PLAN. The annual incentive plan is performance-driven,
provides cash awards based on the success of the Company in any fiscal year and
provides motivation to accomplish objectives that are critical to the Company's
success. No awards will be made for any fiscal year unless the Company achieves
a threshold level of funds from operations ("FFO") for that year. The Company
will annually establish threshold, target and maximum award opportunities for
each position, based on satisfaction of certain criteria. The target award
opportunities will generally be established consistent with median rates for
comparable positions. Cash awards are declared and paid as of the end of March
each year, based on performance during the prior year.
The criteria and the relative weights assigned to the criteria vary
depending on an employee's position. For the Company's Chief Executive
Officer, (i) an 80% weighting factor is assigned to the Company's overall
corporate performance determined by reference to FFO per share, the Company's
total portfolio occupancy rate and the overall results of a tenant
satisfaction survey conducted under the supervision of the Compensation
Committee, and (ii) a 20% weighting factor is assigned to a non-formula
assessment of individual performance as gauged by performance appraisal
results. For executive officers with departmental functions, (i) a 50%
weighting factor is assigned to the Company's overall corporate performance
determined by reference to the same measures as described above, (ii) a 30%
weighting factor is assigned to qualitative departmental performance, and
(iii) a 20% weighting factor is assigned to a non-formula assessment of
individual performance as gauged by performance appraisal results. For
executive employees in charge of property management for particular regions,
(i) a 40% weighting factor is assigned to overall corporate performance based
on the same measures as described above, (ii) a 40% weighting factor is
assigned to regional performance, determined by comparison of regional
portfolio operating income to budget, regional portfolio occupancy rate and
the results of a regional tenant satisfaction survey, and (iii) a 20%
weighting factor is assigned to a non-formula assessment of individual
performance as gauged by performance appraisal results. For each class of
executive employee, points will be assigned based on achievement of
performance standards within each performance category, and points will be
used to determine eligibility for threshold, target or maximum awards.
15
In March 1996, the Compensation Committee assigned each executive officer a
cash incentive award opportunity for 1996, expressed as a percentage of salary,
based on the attainment of threshold, target and maximum performance levels.
Depending on position, the low range was between 17.5% and 30.5% of salary,
while the high range was between 35% and 100% of salary. In March 1997, the
Compensation Committee determined that the performance of the executive officers
entitled them to cash incentive awards ranging from approximately 46% to 58% of
salary.
LONG TERM INCENTIVE PLAN. The long-term incentive plan currently
consists of two elements, restricted stock options and restricted stock
grants. All executive employees are eligible for the grant of options, while
only the Company's senior executive officers are eligible for restricted
stock grants. It is expected that the long-term incentive awards to senior
executive officers for any fiscal year will consist of two-thirds stock
options and one-third restricted stock grants. Like cash awards, stock
options are awarded and restricted stock grants are made as of the end of
March each year, based on performance during the prior year.
The Company has adopted and the stockholders have approved a stock option
plan (the "Stock Option Plan") pursuant to which officers, directors and key
employees of the Company may be offered the opportunity to acquire shares of
Common Stock through the grant of stock options ("Options"), including
non-qualified stock options and incentive stock options within the meaning of
Section 422 of the Internal Revenue Code. All Options will be exercisable at
a price at least equal to the fair market value of the Common Stock on the
date of grant and will terminate ten years after the date of grant. The
Company has reserved 1,500,000 shares of Common Stock for issuance under the
Stock Option Plan. The Compensation Committee has full authority under the
Stock Option Plan (other than with respect to the initial Options to be
granted as described in the following paragraph) to determine the terms and
conditions of all Options granted, including the individuals who will receive
Options, when such Options will be granted, the number of shares issuable and
exercisable and the date or dates when such Options will be exercisable. The
Compensation Committee determines the size of the grants based on its
perception of the individual's potential future contributions to the Company,
past performance and market practice.
The Company has also adopted and the stockholders have approved a
Restricted Stock Plan (the "Restricted Stock Plan") pursuant to which certain
key executives may be granted restricted stock awards. Stock granted under
the Restricted Stock Plan will ordinarily vest at the end of eight years from
the date of the grant. However, restricted stock awards may be accelerated
in full (so-called "cliff-vesting") if the Company's total stockholder return
(determined by dividing (i) cumulative share price appreciation plus
dividends per share from the date of the grant to the date of determination
by (ii) the share price on the date of the grant), averaged over a period of
at least sixty consecutive trading days, is equal to or greater than a
specified percentage. In any event, subject to certain exceptions,
restricted stock awards will not vest earlier than two years after the date
of the grant, regardless of the Company's performance.
In March 1996, the Company established a range of stock options that
could be awarded and, in the case of certain key executives, restrictive
stock grants that could be made, based on performance in 1996. In March
1997, the Company determined that the performance of all of the Company's
executive officers in 1996 entitled them to stock option awards and, where
applicable, restrictive stock grants, at the high end of the range, resulting
in the award of stock options for a total of 226,769 shares and restricted
stock grants for a total of 12,444 shares.
16
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
During 1996, the Company's Chief Executive Officer was paid a salary at
the rate of $208,000 per annum for the first six months and at the rate of
$216,320 per annum for the last six months pursuant to an employment contract
entered into in connection with the Company's initial public offering. The
Compensation Committee did not participate in the setting of Mr. Gates' initial
salary under the employment contract, but approved the 4% increase effective
July 1, 1996. In January, 1996, the Company engaged Towers Perrin Foster to
conduct a survey of the salaries paid by the Company to executive employees.
Mr. Gates' current salary is approximately 33-1/3% of the median for the
Company's industry reported in the survey, well within the Company's salary
objectives.
In March 1996, the Compensation Committee assigned to Mr. Gates an
incentive award opportunity for 1996, expressed as a percentage of salary, based
on corporate and individual performance meeting or exceeding threshold, target
or maximum levels. As indicated above, an 80% weighting factor was assigned to
corporate performance determined by reference to FFO per share, the Company's
total portfolio occupancy rate and the results of a tenant satisfaction survey.
Corporate performance in each of these categories entitled Mr. Gates to maximum
points. A 20% weighting factor was assigned to individual performance, based on
objectives that the Compensation Committee established for Mr. Gates for 1996,
including (a) expansion of the Company's "franchise"--i.e., market penetration,
market awareness and market reputation; (b) expansion of the Company's business
opportunities; and (c) development of a long-term management development and
succession plan. Mr. Gates performance in these categories entitled him to a
cash incentive at the mid-range level. On the basis of points awarded, the
Compensation Committee in March 1997 awarded Mr. Gates a cash bonus of $125,466.
Also in March 1996, the Compensation Committee approved a range of stock
option awards and restrictive stock grants for Mr. Gates based on performance in
1996. On the basis of Mr. Gates' performance in 1996, the Compensation Committee
in March 1997 approved an award of 52,878 stock options and a restricted stock
grant of 4,807 shares, in each case at the high end of the range.
Nicholas C. Babson, Chairman
Alan D. Feld
John S. Gates, Jr.
PERFORMANCE GRAPH
The following graph compares the percentage change in cumulative total
return on the Company's Common Stock for the period December 31, 1993 (trading
in the Company's Common Stock commenced on the American Stock Exchange on
December 3, 1993) through December 31, 1996 with the percentage change in (a)
the Standard & Poor's 500 index ("S&P") for the same period and (b) the Total
Return Index for Equity REITs published by The National Association of Real
Estate Investment Trusts ("NAREIT") for the same period. (The NAREIT index for
Equity REITs, which is published monthly, is an index of approximately 166 REITs
which includes REITs with 75% or more of their gross invested book value of
assets invested directly or indirectly in the ownership of real property.)
Cumulative total return includes reinvestment of dividends. The historical
information set forth below is not necessarily indicative of future performance.
17
CENTERPOINT PROPERTIES CORPORATION
[GRAPH]
- --------------------------------------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1994 1995 1996
- --------------------------------------------------------------------------------
CenterPoint
Properties $100.00 $112.68 $143.29 $217.04
- --------------------------------------------------------------------------------
Corporation
S&P 500 Index 100.00 101.31 139.23 171.19
- --------------------------------------------------------------------------------
NAREIT Equity Total
Return Index 100.00 103.17 118.92 180.88
- --------------------------------------------------------------------------------
CERTAIN TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
In January, 1994, the Company entered into a consulting agreement with
Capital and Regional USA Holdings, a United Kingdom corporation and wholly-owned
subsidiary of CRP-London ("C&R USA"), pursuant to which the Company agreed to
provide consulting services with respect to the development and management of
six undeveloped parcels of real property in Naperville, Illinois, owned by an
affiliate of C&R USA. For such services, the Company received a fee of $112,500
for 1994 and $37,500 for 1995. In December, 1996, CenterPoint Realty Services
Corporation, a non-consolidated subsidiary of the Company, acquired four of the
parcels of undeveloped real property in Naperville, Illinois from an affiliate
of C&R USA for an aggregate purchase price of approximately $2,900,000 and the
Company acquired the remaining parcel of undeveloped real property in
Naperville, Illinois from such affiliate for $220,000. In connection with the
acquisition of such parcels, the Company obtained independent appraisals and
paid less than the appraised value of such parcels in transactions which
satisfied the Company's investment criteria and were approved by the Company's
independent directors without the participation of Mr. Barber.
In connection with the initial public offering in December, 1993, the
Company acquired an option to purchase four properties owned by entities in
which certain executive officers of the Company, Robert L. Stovall and
Michael M. Mullen, or their affiliates have an interest. In June, 1996, the
Company acquired three of the properties, through a partnership of which the
Company is the general partner, for an aggregate purchase price of approximately
$24.6 million in transactions which satisfied the Company's investment
18
criteria and were approved by the Company's independentdirectors. Messrs.
Stovall and Mullen will continue to own a minority interest in the
partnership owning two of the purchased properties.
Since the initial public offering in December, 1993, the Company has also
been managing three of the four option properties described in the preceding
paragraph and two additional properties owned by entities in which certain
executive officers of the Company have an interest and which are not deemed
suitable for acquisition by the Company. For its management services, the
Company has been receiving an aggregate management fee equal to approximately 3%
of minimum rents from the three option properties, and approximately 2% and 1%,
respectively, of minimum rents from the other properties.
In connection with the formation transactions of the Company prior to the
initial public offering in December, 1993, the Company entered into tax
reimbursement agreements with certain executive officers, Robert L. Stovall and
Michael M. Mullen, under which the Company agreed to reimburse such officers for
certain tax liabilities incurred in connection with the formation transactions.
To settle claimed tax liabilities under such reimbursement agreements and to
reimburse Messrs. Stovall and Mullen for tax liabilities related to the
Company's acquisition of certain properties owned by entities in which such
officers have an interest in transactions which are described above, the Company
agreed in July, 1996 to issue non-interest bearing promissory notes, each in the
amount of $100,000 and payable over eighteen months, to each of Messrs. Stovall
and Mullen in exchange for the release of any and all claims related such tax
reimbursement agreements and all other matters related in any manner to the
formation transactions and the recent property acquisitions.
19
OTHER MATTERS
The Board of Directors knows of no matters which will be presented for
consideration at the meeting other than the matters referred to in this
statement. Should any other matters properly come before the meeting, it is the
intention of the persons named in the accompanying proxy to vote such proxy in
accordance with their best judgment.
The Company will bear the cost of this solicitation of proxies. In
addition to solicitation of proxies by mail, the Company may reimburse brokers
and other nominees for the expense of forwarding proxy materials to the
beneficial owners of stock held in their names. Directors, officers and
employees of the Company may also solicit proxies on behalf of the Board of
Directors but will not receive any additional compensation therefor. The
Company has also retained Corporate Investor Communications, Inc. to assist the
Company in soliciting proxies at an estimated cost of $5,500, plus reimbursement
of out-of-pocket expenses.
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1996 is being furnished to stockholders simultaneously with this
Proxy Statement.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
THEREFORE, ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN,
DATE AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED ENVELOPE.
By order of the Board of Directors,
/s/ Paul S. Fisher
----------------------------------
Paul S. Fisher
SECRETARY
20
EXHIBIT A
CENTERPOINT PROPERTIES CORPORATION
ARTICLES OF AMENDMENT
CENTERPOINT PROPERTIES CORPORATION, a Maryland corporation (the
"Corporation"), having its principal office in Chicago, Illinois, hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The first clause of the first sentence of subsection (ii) of
Section 2 of Article VII of the Charter of the Corporation is hereby amended as
follows:
"Subject to Section 21, notwithstanding any other provisions of this
Article VII and";
SECOND: The first clause of the first sentence of subsection (iii) of
Section 2 of Article VII of the Charter of the Corporation is hereby amended as
follows:
"Subject to Section 21, notwithstanding any other provisions of this
Article VII and";
THIRD: The first clause of the first sentence of subsection (iv) of
Section 2 of Article VII of the Charter of the Corporation is hereby amended as
follows:
"Subject to Section 21, notwithstanding any other provisions of this
Article VII and";
FOURTH: The first clause of the first sentence of Section 7 of Article VII
of the Charter of the Corporation is hereby amended as follows:
"Subject to Section 21, notwithstanding any other provisions of this
Article VII,";
FIFTH: The Charter of the Corporation is hereby amended by adding a new
Section 21 to Article VII of the Charter as follows:
"Section 21. SETTLEMENTS ON THE NYSE. Nothing in Article VII shall
preclude the settlement of any transaction entered into through the
facilities of the New York Stock Exchange or any other national
securities exchange or automated inter-dealer quotation system. The
immediately foregoing sentence shall not limit the authority of the
Board of Directors to take any and all actions it deems necessary or
advisable to protect the Corporation and the interests of the
stockholders in preserving the Corporation's status as a REIT, so long
as such actions do not prohibit the settlement of any transactions
entered into through the facilities of the New York Stock Exchange or
any other national securities exchange or automated inter-dealer
quotation system.";
SIXTH: The amendment does not increase the authorized stock of the
Corporation; and
SEVENTH: The foregoing amendment to the Charter of the Corporation has
been advised by the Board of Directors and approved by the stockholders of the
Corporation.
IN WITNESS WHEREOF, CenterPoint Properties Corporation has caused these
presents to be signed in its name and on its behalf by its President and
witnessed by its Secretary on _______________.
WITNESS: CENTERPOINT PROPERTIES CORPORATION
By:
- ------------------------------ ----------------------------------------
Paul S. Fisher, Secretary John S. Gates, Jr., President
THE UNDERSIGNED, President of CenterPoint Properties Corporation, who
executed on behalf of the Corporation the foregoing Articles of Amendment of
which this certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles of Amendment to be the
corporate act of said Corporation and hereby certifies that to the best of his
knowledge, information, and belief the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
---------------------------------------------
John S. Gates, Jr., President
-2-
PROXY
CENTERPOINT PROPERTIES CORPORATION
401 N. Michigan Avenue
Chicago, Illinois 60611
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CENTERPOINT PROPERTIES CORPORATION FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON MAY 15, 1997.
The undersigned hereby appoints Martin Barber, John S. Gates, Jr. and Paul S.
Fisher, or any of them, jointly and severally, as Proxies each with the power
to appoint his substitute, and hereby authorizes them to represent and to
vote, as designated on the reverse side, all shares of the Company's Common
Stock held in the undersigned's name and shares held by the agent in the
Plan, hereafter described, subject to the voting direction of the undersigned
at the Annual Meeting of Stockholders to be held at the Lower Level
Conference Center, 401 N. Michigan Avenue, Chicago, Illinois on Thursday, May
15, 1997, or any adjournment thereof and, in the Proxie's discretion, to vote
upon such other business as may properly come before the meeting, all as more
fully set forth in the Proxy Statement related to such meeting, receipt of
which is hereby acknowledged.
Comments/Change of address:
--------------------------------
--------------------------------
--------------------------------
ALL SHARES OF COMMON STOCK TO BE VOTED HEREBY BY THE UNDERSIGNED INCLUDE
SHARES, IF ANY, HELD IN THE NAME OF THE AGENT, FOR THE BENEFIT OF THE
UNDERSIGNED, IN THE COMPANY'S DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN.
-------------
| Please See |
|Reverse side|
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6231
PLEASE MARK YOUR
/X/ VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR THE ELECTION OF THE
DIRECTOR NOMINEES, FOR THE APPOINTMENT OF INDEPENDENT AUDITORS AND FOR THE
APPROVAL OF THE AMENDMENT TO THE COMPANY'S CHARTER.
FOR WITHHELD
A. Election of / / / /
Directors
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through that nominee's name.)
_______________________________________________________________
Director Nominees:
Nicholas C. Babson John J. Kinsella
Martin Barber Thomas E. Robinson
Alan D. Feld Robert L. Stovall
John S. Gates, Jr.
FOR AGAINST ABSTAIN
B. Appointment of Coopers & Lybrand as Auditors / / / / / /
C. Approval of the Amendment to the Charter / / / / / /
SIGNATURE(S) ____________________________________________ DATE ___________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
The signer hereby revokes all proxies heretofore given by the signer to vote
at said meeting or any adjournments thereof.