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
Equity Residential Properties Trust
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
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(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
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
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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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Notes:
LOGO
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NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
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Dear Shareholder:
The trustees and officers of Equity Residential Properties Trust cordially
invite you to attend our 1998 Annual Meeting of Shareholders, which will be
held at One North Franklin Street, Third Floor, Chicago, Illinois, on
Thursday, May 14, 1998, at 10:00 a.m., for the following purposes:
(1) To elect four trustees of the Board of Trustees to terms expiring in
2001;
(2) To approve an amendment to the Trust's Share Option and Share Award
Plan; and
(3) To transact any other business properly before the meeting and any
adjournment thereof.
Your Board of Trustees recommends a vote for each of the proposals.
Shareholders of record at the close of business on March 16, 1998 are entitled
to vote at the meeting. We encourage you to read this proxy and sign and
return your proxy card in the enclosed envelope as soon as possible, so that
your shares will be represented at the meeting. Your vote is important.
Sincerely,
/s/ Bruce C. Strohm
Bruce C. Strohm,
Executive Vice President, General
Counsel
and Secretary
Two North Riverside Plaza
Chicago, Illinois 60606
March 30, 1998
EQUITY RESIDENTIAL PROPERTIES TRUST
TWO NORTH RIVERSIDE PLAZA
CHICAGO, IL 60606
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PROXY STATEMENT
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This Proxy Statement is furnished in connection with the solicitation by the
Board of Trustees (the "Board") of Equity Residential Properties Trust, a
Maryland real estate investment trust (the "Trust"), of proxies to be voted at
the 1998 Annual Meeting of Shareholders of the Trust (the "Meeting") to be
held on Thursday, May 14, 1998, and any adjournment thereof. Brokers and other
nominees who held common shares of beneficial interest, par value $.01 per
share ("Common Shares"), of the Trust at the close of business on March 16,
1998, will be asked to contact the beneficial owners of the Common Shares
which they hold.
VOTING PROCEDURES AND COSTS OF PROXY SOLICITATION
This Proxy Statement and accompanying proxy are being mailed to the Trust's
shareholders ("Shareholders") commencing on or about March 30, 1998. The
proxy, if properly executed and returned, will be voted according to your
instructions, but it may be revoked at any time before it is exercised by
giving notice of revocation in writing to the Secretary of the Trust, by
executing and returning a later dated proxy or by voting in person at the
Meeting. The mere presence at the Meeting of a Shareholder who appointed a
proxy does not itself revoke the appointment of such proxy. The cost of the
solicitation is anticipated to be nominal and will be borne by the Trust. In
addition to solicitation by mail, employees of the Trust may solicit proxies
by telegraph, telephone, telecopy and personal interviews.
Only Shareholders of record at the close of business on March 16, 1998 (the
"Record Date") will be entitled to vote at the Meeting. On such date,
95,798,559 Common Shares were outstanding. Each Common Share outstanding on
the Record Date entitles the holder thereof to one vote upon each matter to be
voted upon at the Meeting. The presence in person or by proxy of Shareholders
entitled to cast a majority of all votes entitled to be cast at the Meeting
shall constitute a quorum. Abstentions and broker non-votes are counted for
purposes of determining the presence of a quorum for the transaction of
business. If, however, there is not a quorum at the Meeting, the Shareholders
entitled to vote at the Meeting, whether present in person or represented by
proxy, shall only have the power to adjourn the Meeting until such time as
there is a quorum. At such time as there is a quorum present or represented by
proxy, the Meeting will reconvene without notice to Shareholders, other than
an announcement at the Meeting prior to adjournment, unless the adjournment is
for more than 120 days after the Record Date or a new record date has been
set.
If a proxy in the form enclosed is duly executed and returned, the Common
Shares represented thereby will be voted in accordance with the Shareholder's
instructions. If no such specifications are made, the proxy will be voted: (i)
for election of the four nominees for trustee to terms expiring in 2001; (ii)
for an amendment to the Trust's Third Amended and Restated 1993 Share Option
and Share Award Plan (the "Award Plan") increasing the number of Common Shares
which may be issued under the Award Plan from 5,600,000 to 8,000,000; and
(iii) at the discretion of Samuel Zell and Douglas Crocker II, the Board's
designated representatives for the Meeting, with respect to such other
business as may properly come before the Meeting or any adjournment thereof.
PROPOSAL 1
ELECTION OF TRUSTEES
BOARD OF TRUSTEES
The business and affairs of the Trust are managed under the direction of the
Board, which consists of thirteen trustees. The Board has responsibility for
establishing broad corporate policies and
for the overall performance of the Trust rather than day-to-day operating
details. Members of the Board are kept informed of the Trust's business by
various reports and documents sent to them each month, as well as by reports
presented at meetings of the Board and its committees by officers of the
Trust.
The Trust's Second Amended and Restated Declaration of Trust (the
"Declaration") provides that the trustees of the Trust shall be divided into
three classes as nearly equal in number as possible, with each class having a
term of three years. The terms of four trustees expire in 1998. The Board has
nominated Douglas Crocker II, Gerald A. Spector, James D. Harper, Jr., and
Sheli Z. Rosenberg for election to serve as trustees of the Trust until the
2001 Meeting and until their successors are duly elected and qualified.
Biographical information for each of the nominees is set forth under the
caption "Management." The affirmative vote of Common Shares held of record by
owners of a plurality of the Common Shares present in person or represented by
proxy at the Meeting is required for election of the nominees. An abstention
will have no effect on the outcome of the election of trustees. In the event
that any nominee is unable to serve (which is not anticipated), the persons
designated as representatives will cast votes for the remaining nominees and
for such other person or persons as the Board may recommend. All of the
nominees are presently trustees.
THE BOARD RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES. PROXIES SOLICITED BY
THE BOARD WILL BE VOTED "FOR" THE NOMINEES UNLESS INSTRUCTIONS TO WITHHOLD OR
TO THE CONTRARY ARE GIVEN.
MANAGEMENT
TRUSTEES AND EXECUTIVE OFFICERS
The following table and biographies provide certain information with respect
to the trustees and executive officers of the Trust as of March 1, 1998.
NAME AGE POSITION
---- --- --------
Samuel Zell 56 Chairman of the Board of Trustees (term expires in
1999)
Douglas Crocker II 57 President, Chief Executive Officer and Trustee (term
expires in 1998)
John W. Alexander 51 Trustee (term expires in 1999)
Stephen O. Evans 52 Executive Vice President--Strategic Investments and
Trustee
(term expires in 2000)
Henry H. Goldberg 59 Trustee (term expires in 1999)
Errol R. Halperin 57 Trustee (term expires in 1999)
James D. Harper, Jr. 64 Trustee (term expires in 1998)
Edward Lowenthal 53 Trustee (term expires in 2000)
Jeffrey H. Lynford 50 Trustee (term expires in 2000)
Sheli Z. Rosenberg 56 Trustee (term expires in 1998)
Gerald A. Spector 51 Executive Vice President, Chief Operating Officer and
Trustee
(term expires in 1998)
Barry S. Sternlicht 37 Trustee (term expires in 2000)
B. Joseph White 50 Trustee (term expires in 2000)
Richard G. Berry 53 Executive Vice President--Development
Alan W. George 40 Executive Vice President--Acquisitions
Edward J. Geraghty 48 Executive Vice President--Development and Asset
Management
Michael J. McHugh 42 Executive Vice President, Chief Accounting Officer
and Treasurer
David J. Neithercut 42 Executive Vice President and Chief Financial Officer
Gregory H. Smith 46 Executive Vice President--Asset Management
Bruce C. Strohm 43 Executive Vice President, General Counsel and
Secretary
Frederick C. Tuomi 43 Executive Vice President--Property Management
2
The following is a biographical summary of the experience of the trustees
and executive officers of the Trust. Officers serve at the pleasure of the
Board.
Samuel Zell has been Chairman of the Board of the Trust since March 1993.
Mr. Zell is chairman of the board of directors of Equity Group Investments,
Inc., an owner, manager and financier of real estate and corporations ("EGI"),
Jacor Communications, Inc., an owner and operator of radio stations ("Jacor"),
American Classic Voyages Co., an owner and operator of cruise lines ("American
Classic"), Anixter International Inc., a provider of integrated network and
cabling systems ("Anixter"), and Manufactured Home Communities, Inc., a real
estate investment trust ("Reit") specializing in the ownership and management
of manufactured home communities ("MHC"). Mr. Zell is chairman of the board of
trustees of Equity Office Properties Trust, a Reit specializing in the
ownership and management of office buildings ("EOP"), and Capital Trust, a
specialized finance company. He is a director of Fred Meyer, Inc., an owner
and operator of supermarkets, Chart House Enterprises, Inc., an owner and
operator of restaurants, Ramco Energy plc, an independent oil company based in
the United Kingdom, and TeleTech Holdings, Inc., a provider of telephone and
computer based customer care solutions.
Douglas Crocker II has been a Trustee, Chief Executive Officer and President
of the Trust since March 1993. Mr. Crocker is a director of Horizon Group
Inc., an owner, developer and operator of outlet retail properties and has
been a director of Wellsford Real Properties, Inc. ("WRP"), a publicly traded
real estate merchant banking firm since its formation in June 1997. Mr.
Crocker has been President and Chief Executive Officer of First Capital
Financial Corporation, previously a sponsor of public limited real estate
partnerships ("First Capital"), since December 1992 and a director of First
Capital since January 1993. He was an Executive Vice President of Equity
Financial and Management Company ("EF&M"), a subsidiary of EGI, providing
strategic direction and services for EGI's real estate and corporate
activities from November 1992 until March 1997.
John W. Alexander has been a Trustee of the Trust since May 1993 and is the
President of Mallard Creek Capital Partners, Inc., an investment company with
interests in real estate and development entities. He is also a partner of
Meringoff Equities, a real estate investment and development company, and is a
director of Jacor.
Stephen O. Evans has been Executive Vice President--Strategic Investments
and Trustee of the Trust since December 23, 1997, the date of the merger
("Evans Merger") of Evans Withycombe Residential, Inc. ("Evans"), a
multifamily property REIT, into the Trust. Prior to the Evans Merger, Mr.
Evans served as the Chairman of the Board and Chief Executive Officer of Evans
since its formation in May 1994. Mr. Evans founded Evans Withycombe, Inc., the
predecessor of Evans, in 1977 and served as its Chairman of the Board and
Chief Executive Officer from 1977 to 1994. Mr. Evans is a member of the
National Multi-Housing Counsel, National Association for Real Estate
Investment Trusts ("NAREIT"), Lambda Alpha, a national land economic
fraternity, and the Urban Land Institute.
Henry H. Goldberg has been a Trustee of the Trust since January 1995. Mr.
Goldberg is Chairman of the Board, Chief Executive Officer and founder of The
Artery Group, L.L.C., a diversified real estate company. Mr. Goldberg was the
direct or indirect general partner (or an executive thereof) of four
partnerships owning residential apartment communities and one commercial
office building, each of which filed petitions under the Federal bankruptcy
laws during 1993. Each of the partnerships is now out of bankruptcy through a
reorganization plan agreed to by the project lender.
Errol R. Halperin has been a Trustee of the Trust since May 1993. Mr.
Halperin has been an attorney at Rudnick & Wolfe, a law firm, since 1979,
serving as a senior partner and a member of such firm's policy committee since
1981, specializing in Federal income tax counseling and real estate and
corporate transactions.
3
James D. Harper, Jr. has been a Trustee of the Trust since May 1993. Mr.
Harper is the President of JDH Realty Co., a real estate development and
investment company, and is the principal partner in AH Development, S.E. and
AH HA Investments, S.E., special limited partnerships formed to develop over
400 acres of land in Puerto Rico. He is a Trustee of EOP and a director of
Burnham Pacific Properties Inc., a Reit that owns, develops and manages
commercial real estate properties in California, and American Health
Properties, Inc., a Reit specializing in health care facilities. Mr. Harper is
also a trustee of the Urban Land Institute.
Edward Lowenthal has been a Trustee of the Trust since June 1997. Mr.
Lowenthal has been the President, Chief Executive Officer and director of WRP
since its formation in January 1997 and had been the President and Chief
Executive Officer and a trustee of Wellsford Residential Property Trust
("Wellsford"), a multifamily property Reit, since its formation in July 1992
until its merger with the Trust (the "Wellsford Merger") on May 30, 1997. Mr.
Lowenthal is a director of United American Energy Corporation, a developer,
owner and operator of hydroelectric and other alternative energy facilities,
Corporate Renaissance Group, Inc., a mutual fund, Omega Healthcare, Inc., a
healthcare Reit, and Great Lakes Reit, Inc., an office building Reit. He is
also a member of the Board of Governors of NAREIT and a member of the New York
bar.
Jeffrey H. Lynford has been a Trustee of the Trust since June 1997. Mr.
Lynford has been the Chairman of the Board, Secretary and director of WRP
since its formation in January 1997 and had been the Chairman of the Board and
Secretary of Wellsford since its formation in July 1992 until the Wellsford
Merger, and was the Chief Financial Officer of Wellsford from July 1992 until
December 1994. Mr. Lynford currently serves as a trustee emeritus of the
National Trust for Historic Preservation and as a director of five mutual
funds: Cohen & Steers Total Return Realty Fund, Inc., Cohen & Steers Realty
Shares, Inc., Cohen & Steers Realty Income Fund, Inc., Cohen & Steers Special
Equity Fund, Inc. and Cohen & Steers Equity Income Fund, Inc. He is also a
member of the New York bar.
Sheli Z. Rosenberg has been a Trustee of the Trust since March 1993. Ms.
Rosenberg is Chief Executive Officer, President and a director of EGI and was
a principal of the law firm of Rosenberg & Liebentritt, P.C., a law firm
("R&L"), from 1980 to 1997. Ms. Rosenberg is a trustee of Capital Trust and
EOP and is a director of Jacor, American Classic, MHC, Anixter, CVS
Corporation, a drugstore chain, Illinois Power Co., a supplier of electricity
and natural gas in Illinois, and its parent holding company, Illinova Corp.
Gerald A. Spector has been a Trustee and Executive Vice President of the
Trust since March 1993 and Chief Operating Officer of the Trust since February
1995. Mr. Spector was Treasurer of the Trust from March 1993 through February
1995. From January 1973 until January 1996, Mr. Spector was an officer of
EF&M, most recently serving as Vice President from November 1994 through
January 1996. Mr. Spector was Executive Vice President and Chief Operating
Officer of EF&M from September 1990 through November 1994. From January 1988
until January 1996, Mr. Spector was an officer of EGI, most recently serving
as Vice President from November 1994 through January 1996. Mr. Spector was
Executive Vice President and Chief Operating Officer of EGI from January 1991
through January 1994.
Barry S. Sternlicht has been a Trustee of the Trust since May 1993. Mr.
Sternlicht is Chief Executive Officer and President of Starwood Capital Group,
L.P., a privately owned real estate investment firm. Mr. Sternlicht is
Chairman of the Board and Chief Executive Officer of Starwood Hotels & Resorts
Trust, a Reit specializing in the ownership of hotels. Mr. Sternlicht is
Chairman of the Board of Starwood Financial Trust, a mortgage Reit, and a
director of U.S. Franchise Systems, a hotel franchise company, and Starwood
Hotel & Resorts Worldwide, which manages hotels owned by Starwood Hotels &
Resorts Trust.
4
B. Joseph White has been a Trustee of the Trust since May 1993. Mr. White is
the Dean of the University of Michigan Business School. Mr. White is a
director of Kelly Services, Inc., a temporary services firm, Gordon Food
Service, Inc., a midwestern food distribution company, and the Cummins Engine
Foundation, the philanthropic arm of Cummins Engine Co., a heavy duty engine
manufacturer.
Richard G. Berry has been Executive Vice President--Development of the Trust
since the Evans Merger. Mr. Berry was a director of Evans since its formation
in May 1994 until the Evans Merger and had been President and Chief Operating
Officer of Evans from January 1997 until the Evans Merger. Mr. Berry had been
Executive Vice President of Evans since May 1994 until December 1997 and
served as the Executive Vice President of Evans Withycombe, Inc., (the
predecessor of Evans) from 1992 until 1994.
Alan W. George has been Executive Vice President--Acquisitions of the Trust
since February 1997, Senior Vice President--Acquisitions of the Trust from
December 1995 until February 1997 and Vice President--Acquisitions and asset
manager of the Trust from December 1993 until December 1995. Mr. George was
Vice President--Asset Management of Equity Assets Management, Inc. ("EAM"), a
subsidiary of EGI providing real estate ownership services, from June 1992 to
August 1993.
Edward J. Geraghty has been Executive Vice President--Development and Asset
Management since March 1, 1998. Mr. Geraghty was a Managing Director--Real
Estate of The Travelers Insurance Company from January 1995 to March 1998. Mr.
Geraghty was an officer of The Travelers Realty Investment Company, a
subsidiary of The Travelers Insurance Company, from July 1989 to January 1995,
most recently serving as an Executive Vice President from December 1992 to
January 1995.
Michael J. McHugh has been Executive Vice President of the Trust since
January 1998 and Chief Accounting Officer and Treasurer of the Trust since
February 1995. Mr. McHugh was Senior Vice President of the Trust from November
1994 until January 1998 and, from May 1990 until January 1995, Mr. McHugh was
a Senior Vice President and Chief Financial Officer of First Capital.
David J. Neithercut has been Executive Vice President and Chief Financial
Officer of the Trust since February 1995. Mr. Neithercut had been Vice
President--Financing of the Trust from September 1993 until February 1995. Mr.
Neithercut was a Senior Vice President--Finance of EGI from January 1995 until
February 1995. He was a Vice President--Finance of EAM from October 1990 until
December 1994.
Gregory H. Smith has been Executive Vice President--Asset Management of the
Trust since December 1994. Mr. Smith was a Senior Vice President of Strategic
Realty Advisors, Inc., a real estate and advisory company, from January 1994
until December 1994. Mr. Smith was employed at VMS Realty Partners, a sponsor
of public and private real estate limited partnerships, from June 1989 until
December 1993, most recently serving as First Vice President.
Bruce C. Strohm has been Executive Vice President and General Counsel of the
Trust since March 1995 and Secretary since November 1995. Mr. Strohm was a
Vice President of the Trust from March 1993 through March 1995 and an
Assistant Secretary of the Trust from March 1995 through November 1995. Mr.
Strohm was a Vice President of R&L from January 1988 to March 1995, most
recently serving as a member of the firms management committee.
Frederick C. Tuomi has been Executive Vice President--Property Management of
the Trust since January 1994. Mr. Tuomi had been President of RAM Partners,
Inc., a subsidiary of Post Properties, Inc., a Reit, from March 1991 to
January 1994.
5
MEETINGS AND COMMITTEES OF THE BOARD OF TRUSTEES
Meetings: During the year ended December 31, 1997, the Board held 19
meetings. Each of the present trustees attended over 75% of the total number
of meetings of the Board and of its committees which they were eligible to
attend, except Mr. Sternlicht who attended approximately 57% of the meetings
and Mr. Lynford who attended approximately 67% of the meetings. There are
three standing committees of the Board: the Executive Committee, the
Compensation Committee and the Audit Committee, which are described below.
Executive Committee: The Executive Committee is comprised of Messrs.
Alexander, Crocker and Zell. The Executive Committee has the authority within
certain parameters to acquire, dispose of and finance investments for the
Trust (including the issuance of additional limited partnership interests ("OP
Units") in ERP Operating Limited Partnership (the "Operating Partnership")).
The Executive Committee held four meetings in 1997.
Compensation Committee: The Compensation Committee, which is comprised
entirely of trustees who are not officers or employees of the Trust, is
comprised of Messrs. Halperin and Harper and Ms. Rosenberg. Mr. Harper is the
Chairman. The Compensation Committee reviews and makes recommendations
concerning proposals by management with respect to compensation, bonuses,
employment agreements and other benefits and policies respecting such matters
for the executive officers of the Trust. The Compensation Committee held five
meetings in 1997.
Audit Committee: The Audit Committee, which is comprised entirely of
trustees who are not officers or employees of the Trust, is comprised of
Messrs. White, Alexander, Halperin and Goldberg. Mr. White is the Chairman.
Mr. Sternlicht resigned as a member of the Audit Committee on November 18,
1997. The Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews the plans and results of the audit
engagement with the independent public accountants, approves professional
services provided by the independent public accountants, considers the range
of audit and non-audit fees and reviews the adequacy of the Trust's internal
accounting controls. The Audit Committee held four meetings in 1997.
COMPENSATION OF TRUSTEES
Trustees who are not employees of the Trust received an annual fee in 1997
of $40,000 for serving as trustees. In addition, trustees who serve on the
Audit Committee, the Executive Committee or the Compensation Committee receive
an additional $1,000 per annum for each committee on which they serve.
Committee chairs receive an additional $500 per annum. The Trust also
reimburses the trustees of each committee for travel expenses incurred in
connection with their activities on behalf of the Trust. Each trustee is also
granted options to purchase 5,000 Common Shares at the fair market value of
the Trust's Common Shares at the close of business on the date of the first
trustees' meeting following each annual meeting of Shareholders. These options
vest in approximately equal installments six months, one year and two years
from the date of grant.
The Trust has adopted an optional deferred compensation plan for its non-
employee trustees, pursuant to which these trustees may take any percentage of
their annual trustees' compensation they desire in the form of cash, which is
placed in a Supplemental Retirement Savings Plan on a tax deferred basis and
used to purchase Common Shares under the Trust's 1996 Non-Qualified Employee
Share Purchase Plan. Each trustee is immediately 100% vested in his/her Common
Shares and is allowed to commence withdrawals over a one-to-ten year period
following termination of his/her trusteeship. Each trustee has elected to join
the deferred compensation plan and defer the taxation of all of the trustee's
fees they receive.
6
SHARE OWNERSHIP OF TRUSTEES AND MANAGEMENT
The following table sets forth, as of March 1, 1998, information regarding
the beneficial ownership of the Trust's Common Shares by each trustee of the
Trust, the Trust's five most highly compensated executive officers at year
end, and the trustees and all executive officers as a group.
NUMBER OF SHARES UPON PERCENT OF
COMMON EXERCISE OF COMMON
NAME SHARES(1) OPTIONS(2) TOTAL(1) SHARES(1)
- ---- --------- ----------- --------- ----------
Samuel Zell..................... 3,141,179(3) 220,000 3,361,179 3.41%
Douglas Crocker II.............. 212,194(4) 332,500 544,694 *
Stephan O. Evans................ 987,632(5) 0 987,632 1.02%
Gerald A. Spector............... 59,835(6) 179,251 239,086 *
John W. Alexander............... 1,226 20,001 21,227 *
Henry H. Goldberg............... 398,119(7) 10,001 408,120 *
Errol R. Halperin............... 4,418(8) 20,001 24,419 *
James D. Harper, Jr............. 3,210 20,001 23,211 *
Edward Lowenthal................ 109,450(9) 1,667 111,117 *
Jeffrey H. Lynford.............. 81,136 1,667 82,803 *
Sheli Z. Rosenberg.............. 17,522(10) 93,667 111,189 *
Barry S. Sternlicht............. 1,834,518(11) 20,001 1,854,519 1.90%
B. Joseph White................. 6,007 20,001 26,008 *
Alan W. George.................. 9,694 44,999 54,693 *
Gregory Smith................... 8,625 59,999 68,624 *
Frederick C. Tuomi.............. 16,925 84,999 101,924 *
Trustees and Executive Officers
as a group
(21 persons)................... 6,967,838 1,365,587 8,333,425 8.18%
- --------
* Less than 1%.
(1) Assumes that all OP Units and the Trust's Convertible Preferred Shares
of Beneficial Interest ("Convertible Shares") held by the person are
exchanged for Common Shares, that none of the OP Units or Convertible
Shares held by other persons are so exchanged, that all options
exercisable within sixty days of March 1, 1998 to acquire Common Shares
held by the person are exercised and that no options to acquire Common
Shares held by other persons are exercised.
(2) Reflects Common Shares which may be acquired within 60 days after March
1, 1998 through the exercise of share options.
(3) Includes 2,499,043 OP Units which are exchangeable on a one-for-one
basis into 2,499,043 Common Shares. Also includes 30,000 Common Shares
beneficially owned by the Samuel Zell Foundation. Mr. Zell disclaims
beneficial ownership of 634,949 Common Shares (assuming the exchange of
604,949 OP Units) because the economic benefits with respect to such
Common Shares are attributable to other persons.
(4) Includes 8,825 Common Shares beneficially owned by Mr. Crocker's
spouse, as to which Mr. Crocker disclaims beneficial ownership. Also
includes 175,000 Common Shares beneficially owned by MWC Partners,
L.P., an Illinois limited partnership ("MWC") of which Mr. Crocker is
the sole general partner. The sole limited partner of MWC is a trust
created for the benefit of Mr. Crocker's wife and Mr. Crocker's
children.
(5) Includes 904,066 OP Units which are exchangeable on a one-for-one basis
into 904,066 Common Shares.
(6) Includes 35,142 Common Shares beneficially owned by Mr. Spector's
spouse, and 2,200 Common Shares beneficially owned by Mr. Spector as
custodian for his minor children, as to all of which Mr. Spector
disclaims beneficial ownership. Also includes 1,683 OP Units which are
exchangeable on a one-for-one basis into 1,683 Common Shares.
7
(7) Includes 263,347 OP Units held by Mr. Goldberg, which are exchangeable
on a one-for-one basis into 263,347 Common Shares; 48,078 OP Units held
by Mr. Goldberg's spouse, which are exchangeable on a one-for-one basis
into 48,078 Common Shares; and 75,714 OP Units held by GGL Investment
Partners #1 ("GGL"), a Maryland general partnership, which are
exchangeable on a one-for-one basis into 75,714 Common Shares. Mr.
Goldberg is a general partner of GGL with a 66.67% percentage interest.
Mr. Goldberg disclaims beneficial ownership of the interests held by
his spouse and 33.33% of the interests held by GGL.
(8) Includes 1,000 Common Shares beneficially owned by Mr. Halperin's
spouse, as to which Mr. Halperin disclaims beneficial ownership.
(9) Includes 726 Common Shares beneficially owned by Mr. Lowenthal's
spouse, as to which Mr. Lowenthal disclaims beneficial ownership.
(10) Includes 1,528 OP Units which are exchangeable on a one-for-one basis
into 1,528 Common Shares. Ms. Rosenberg is a trustee of certain trusts
created for the benefit of Mr. Zell and his family. Such trusts are
indirect owners of certain partnerships or limited liability companies
which own Common Shares and/or OP Units which are exchangeable on a
one-for-one basis into Common Shares. Ms. Rosenberg disclaims
beneficial ownership of such Common Shares and OP Units indirectly
beneficially owned by Mr. Zell's trusts.
(11) Includes 1,831,943 OP Units which are exchangeable on a one-for-one
basis into 1,831,943 Common Shares. Mr. Sternlicht may be deemed to be
the beneficial owner of the 1,831,943 Common Shares (assuming exchange
of 1,831,943 OP Units) because Mr. Sternlicht controls or shares
control of the power to vote and invest such Common Shares. Mr.
Sternlicht disclaims beneficial ownership of 1,555,955 Common Shares
(assuming the exchange of 1,555,955 OP Units).
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
The following table sets forth information as of December 31, 1997, with
respect to persons who were known by the Trust to be the beneficial owner of
more than 5% of the Trust's outstanding Common Shares as of such date.
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS(1)
------------------------------------ ----------------- ----------
FMR Corp.(2)
82 Devonshire Street
Boston, MA 02109 9,343,434 10.49%
The Prudential Insurance Company of America(3)
Prudential Plaza
751 Broad Street
Newark, NJ 07102 5,917,866 6.64%
Princeton Services, Inc.(4)
c/o Merrill Lynch Growth Fund
800 Scudders Mill Road
Plainsboro, NJ 08536 5,500,100 6.17%
Samuel Zell and Ann Lurie and entities
controlled by or established for the
benefit of Samuel Zell and/or Ann Lurie(5)
Two North Riverside Plaza
Chicago, IL 60606 4,900,084 5.28%
8
- --------
(1) Assumes that all OP Units and the Trust's Convertible Shares held by the
person are exchanged for Common Shares, that none of the OP Units or
Convertible Shares held by other persons are so exchanged, that all
options exercisable within sixty days of December 31, 1997 to acquire
Common Shares held by the person are exercised and that no options to
acquire Common Shares held by other persons are exercised.
(2) Pursuant to a Schedule 13G filed with the Securities and Exchange
Commission ("SEC"), FMR Corp. may have direct or indirect voting and/or
investment discretion over these Common Shares which are held for the
benefit of its clients by its separate accounts, externally managed
accounts, registered investment companies, subsidiaries and/or other
affiliates. The combined holdings of these entities have been reported for
administrative convenience.
(3) Pursuant to a Schedule 13G filed with the SEC, The Prudential Insurance
Company of America ("Prudential") may have direct or indirect voting
and/or investment discretion over these Common Shares which are held for
its general account and for the benefit of its clients by its separate
accounts, externally managed accounts, registered investment companies,
subsidiaries and/or other affiliates. The combined holdings of these
entities have been reported for administrative convenience.
(4) Pursuant to a Schedule 13G filed with the SEC, Princeton Services, Inc., a
parent holding company, has shared voting power and shared disposition
power with Merrill Lynch Asset Management, L.P., a registered investment
advisor, and Merrill Lynch Growth Fund, a registered investment company.
The combined holdings of these entities have been reported for
administrative convenience.
(5) Includes 3,436,060 OP Units which are exchangeable on a one-for-one basis
into 3,436,060 Common Shares. Also includes 30,000 Common Shares
beneficially owned by the Samuel Zell Foundation. Mr. Zell disclaims
beneficial ownership of 2,175,450 Common Shares (assuming the exchange of
1,541,966 OP Units) because the economic benefits with respect to such
Common Shares are attributable to other persons. Ms. Lurie disclaims
beneficial ownership of 2,755,303 Common Shares (assuming the exchange of
1,894,763 OP Units) because the economic benefits with respect to such
Common Shares are attributable to other persons.
9
EXECUTIVE COMPENSATION
The following tables show compensation for services to the Trust of the
persons who during 1997 were the Chief Executive Officer and the other four
most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------- -------------------------------
AWARDS PAYOUTS
--------------------- ---------
SHARES
RESTRICTED UNDERLYING LONG-TERM
OTHER ANNUAL SHARE OPTIONS INCENTIVE ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) GRANTED PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($) ($)(3) (#)(4) ($) ($)(5)
------------------ ---- ------ ------ ------------ ---------- ---------- --------- ------------
Douglas Crocker II, 1997 500,000 625,000 4,050 624,976 457,500 0 9,600
President and Chief 1996 500,000 325,013 4,050 324,987 105,000 0 9,000
Executive Officer 1995 401,346 200,020 0 199,980 30,000 0 8,955
Gerald A. Spector, 1997 375,000 287,500 1,872 287,500 192,500 0 9,600
Executive Vice President
and 1996 360,000 200,011 1,786 199,989 80,000 0 9,000
Chief Operating Officer 1995 300,000 100,010 0 99,990 55,000 0 6,528
Frederick C. Tuomi, 1997 250,000 125,000 408 124,995 25,000 0 9,600
Executive Vice Presi-
dent-- 1996 235,000 62,501 377 62,499 40,000 0 9,000
Property Management 1995 225,000 40,016 0 39,984 25,000 0 8,192
Gregory H. Smith, 1997 250,000 125,000 696 124,995 25,000 0 9,600
Executive Vice Presi-
dent-- 1996 225,000 62,501 609 62,499 40,000 0 9,000
Asset Management 1995 196,827 31,000 0 31,000 15,000 0 0
Alan W. George, 1997 200,000 137,500 198 137,465 25,000 0 9,600
Executive Vice Presi-
dent-- 1996 140,000 62,501 118 62,499 17,500 0 9,000
Acquisitions 1995 115,000 17,500 0 17,486 5,000 0 5,481
- --------
(1) Compensation deferred at the election of named officers is included in the
category and year it would have otherwise been reported had it not been
deferred.
(2) Cash bonuses are reported in the year earned, even if paid in a subsequent
year.
(3) The named executives received restricted Common Shares as one-half of
their annual bonuses, which Common Shares vest upon completion of two
years of continuous employment following the date of grant. The dollar
amount shown equals the number of restricted Common Shares granted
multiplied by the fair market value of the Common Shares on the grant date
(i.e., 1997--$50.6875; 1996--$41.50 and 1995--$29.75). This valuation does
not take into account the diminution in value attributable to the
restrictions applicable to the Common Shares. Distributions are paid on
all restricted Common Shares at the same rate as on unrestricted Common
Shares. The total number of restricted Common Shares awarded each named
executive officer for the 1997, 1996 and 1995 years, respectively, were:
Mr. Crocker--12,330, 7,831 and 6,722; Mr. Spector--5,672, 4,819 and 3,361;
Mr. Tuomi--2,466, 1,506, and 1,344; Mr. Smith--2,466, 1,506 and 1,042 and
Mr. George--2,712, 1,506 and 571. As of December 31, 1997, the number and
value of total restricted Common Shares held by the above officers is: Mr.
Crocker (20,161 shares; $1,019,390); Mr. Spector (10,491 shares;
$530,451); Mr. Tuomi (3,972 shares; $200,834); Mr. Smith (3,972 shares;
$200,834); and Mr. George (4,208 shares; $213,272).
(4) Shares underlying options are reported in the year granted.
(5) Includes employer matching and profit-sharing contributions to the Trust's
401(k) Advantage Retirement Savings Plan.
10
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF SHARE
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
---------------------------------------------- ---------------------
NUMBER OF
SHARES % OF TOTAL EXERCISE
UNDERLYING OPTIONS GRANTED OR BASE
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(2) 1997 ($/SH) DATE 5% ($)(3) 10% ($)(4)
- ---- ---------- --------------- -------- ---------- ---------- ----------
Douglas Crocker II...... 452,500 22.64 41.50 01/28/07 11,809,854 29,928,491
5,000 .25 51.50 08/04/07 161,940 410,388
Gerald A. Spector....... 187,500 9.38 41.50 01/28/07 4,893,586 12,401,308
5,000 .25 51.50 08/04/07 161,940 410,388
Frederick C. Tuomi...... 25,000 1.25 41.50 01/28/07 652,478 1,653,507
Gregory H. Smith........ 25,000 1.25 41.50 01/28/07 652,478 1,653,507
Alan W. George.......... 25,000 1.25 41.50 01/28/07 652,478 1,653,507
- --------
(1) The dollar amounts under these columns reflect the 5% and 10% rates of
compounded annual appreciation set by the SEC over the ten year option
term, and are not intended to forecast possible future appreciation of the
Trust's Common Share price. No gain to the optionee is possible without an
increase in Common Share price which would benefit all Shareholders as
well.
(2) All options are granted at the fair market value of the Common Shares at
the date of grant. Options granted are for a term of not more than ten
years from the date of grant and vest in equal amounts over three years,
with the exception of the 5,000 options granted annually to each trustee,
which vest 1,667 shares six months after the grant date, 1,667 shares one
year after the grant date and 1,666 shares two years after the grant date.
(3) A 5% per year compounded appreciation in Common Share price from $41.50
per share yields $67.60 per Common Share, and from $51.50 per Common Share
yields $83.89 per Common Share.
(4) A 10% per year compounded appreciation in Common Share price from $41.50
per Common Share yields $107.64 per Common Share, and from $51.50 per
Common Share yields $133.58 per Common Share.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF
SHARES UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED IN-THE-
OPTIONS AT MONEY OPTIONS AT
SHARES VALUE DECEMBER 31, 1997 DECEMBER 31, 1997
ACQUIRED ON REALIZED (#) EXERCISABLE/ ($) EXERCISABLE/
NAME EXERCISE (#) ($)(1) UNEXERCISABLE UNEXERCISABLE(2)
- ---- ------------ -------- ----------------- -------------------
Douglas Crocker II. 15,000 375,000 171,666/500,834 3,784,460/5,027,882
Gerald A. Spector.. 0 0 90,167/260,833 2,004,493/3,145,569
Frederick C. Tuomi. 0 0 54,999/60,001 1,212,372/968,564
Gregory H. Smith... 0 0 33,333/56,667 739,159/887,090
Alan W. George..... 0 0 29,166/38,334 671,078/502,827
- --------
(1) Represents the market value of a Common Share on the exercise date of
October 27, 1997 ($51.00) less the exercise price of the option.
(2) Represents the market value of a Common Share at December 31, 1997
($50.5625) less the exercise price of in-the-money options.
11
LONG-TERM INCENTIVE PLANS/AWARDS
IN 1997
NUMBER OF PERFORMANCE PERIOD
NAME SHARES UNTIL MATURATION
- ---- --------- ------------------
Douglas Crocker II................................. 45,000 January 7, 2001
Gerald A. Spector.................................. 20,000 January 7, 2001
Frederick C. Tuomi................................. 6,500 January 7, 2001
Gregory H. Smith................................... 6,500 January 7, 2001
Alan W. George..................................... 6,500 January 7, 2001
This table identifies the target number of performance units awarded under
the Trust's Performance Based Restricted Share Plan (the "Performance Based
Plan") in January 1998 for services rendered during 1997. The executive
officers have the opportunity to earn up to 225% of the target amount of units
which will be payable in an equal amount of Common Shares. The owners of
performance units have no right to vote, receive dividends or transfer the
units until Common Shares therefor are issued. The number of Common Shares the
executive receives on the third anniversary of the grant date will be
calculated based upon the following schedule:
If the Trust's Average Annual Return
(share appreciation and
distributions) from the date of the
award to the third anniversary is: 0-9% 9-9.9% 10% 11% 12% 13% 14% 15%
The executive will receive Common
Shares equal to the target number
of units times the following
payment percentage: 0% 50% 100% 115% 135% 165% 190% 225%
Fifty percent of the Common Shares to which an executive under the
Performance Based Plan may be entitled will vest on the third anniversary of
the award; 25% will vest on the fourth anniversary and the remaining 25% will
vest on the fifth anniversary. The executive's rights under the Common Shares
will also fully vest upon the employee's death, disability or upon the change
of control of the Trust.
Notwithstanding anything to the contrary set forth in any of the Trust's
filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that might incorporate
future filings, including this Proxy Statement, in whole or in part, the
Compensation Committee Report on Executive Compensation presented below and
the Performance Graph following such report shall not be incorporated by
reference into any such future filings.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board consists of the independent trustees
of the Trust listed below. The Committee's functions include the review and
approval of the Trust's executive compensation structure and overall benefits
program. The purpose of the Trust's executive compensation program is to
establish and maintain a performance and achievement oriented environment
throughout the Trust so that the interests of its executives are aligned with
the interests of the Trust's shareholders. The program is designed so that
executives may earn higher than average total compensation (base salary plus
bonus) for above-average job performance. At the end of 1997, the Trust
engaged the services of two independent compensation consulting firms,
Ferguson Partners and The Hay Group, to advise the Trust as to the appropriate
methods and amounts of compensation for its executive officers. There are four
major components of the Trust's executive compensation program: (i) base
salary; (ii) bonuses; (iii) performance based shares; and (iv) share option
awards. Each of these components is discussed further below.
12
Base Salary. The Trust's overall salary structure is reviewed annually,
using outside executive compensation surveys of the real estate industry in
general and Reits in particular, to ensure that it remains competitive.
Positions are classified within the salary structure on the basis of assigned
responsibilities and on an evaluation of the latest survey information
available, as to appropriate compensation levels. Individual base salaries are
reviewed at least annually. Salary increases are granted based on each
executive's performance as well as such executive's position in the applicable
salary range.
Bonus. The objectives underlying the Trust's bonus program are to more
closely link bonus awards to value added for the Trust's Shareholders and
promote a culture of performance and ownership among the Trust's managers.
Executive officers' mid-term incentives are accomplished by tying the
executive officers' performance to the continued performance of the Trust. The
Trust accomplishes this by awarding the Chief Executive Officer and each other
executive officer some or all of his or her bonus, as determined by the
Compensation Committee, in restricted Common Shares or Common Share
equivalents, which shares vest two years from the date of grant. The
Compensation Committee believes that having its executive officers "invest" a
portion of their bonuses in Common Shares or Common Share equivalents
facilitates better alignment of the executive officer's compensation with the
performance of the Trust's Common Shares.
The long-term incentives for executive officers are in the form of
performance-based restricted shares and share option grants.
Performance Based Restricted Share Plan. The Performance Based Plan is
designed to focus the Trust's key employees eligible under this plan on
achieving a high level of total return (i.e., share appreciation and
distributions) to the Trust's Shareholders, and to encourage such key
employees to continue their employment with the Trust. Under this plan, awards
will be made to certain executive officers on an annual basis by setting a
target number of Common Shares for each executive. The employee will be
eligible to receive from 0% to 225% of the target number of Common Shares,
based on the Trust's average return (as heretofore described) received by
Shareholders during the three-year period following the award. The number of
Common Shares an executive will receive will be fixed and determined and then
issued (subject to the five-year vesting formula previously discussed) to the
executive beginning on the third anniversary of the grant of award. It is
anticipated that awards will be made on an annual basis so that by the fifth
year of an award, each executive will have vested and unvested rights in each
of the previous five awards.
Share Options. The Compensation Committee recognizes that while the bonus
program provides rewards for positive short-term and mid-term performance, the
interests of Shareholders are also served by giving key employees the
opportunity to participate in the appreciation of the Trust's Common Shares
through the granting of share options. The Compensation Committee believes
that over an extended period of time, share performance will, to a meaningful
extent, reflect executive performance and that such arrangements further
reinforce management goals and incentives to achieve Shareholder objectives.
The Share Options vest over a period of three years at a rate of one-third of
such grant each year, thereby encouraging the retention of key employees who
receive awards. The amount of Share Options awarded each executive was
determined utilizing the aforementioned executive compensation surveys and an
assessment of the executive officer's achieved performance goals and
objectives.
Based on the executive compensation surveys and the Trust's financial
performance in 1997, the Compensation Committee believes that the salary,
bonus, performance shares and option grants of Mr. Crocker, the Chief
Executive Officer and President of the Trust, are fair and competitive and
that the Trust's overall executive compensation ranks in the upper quartile
among the general real estate industry and among Reits. This ranking
correlates with the excellent financial performance of the Trust in 1997. The
Trust accomplished its main goals in 1997 by increasing its net income and
funds from operations ("FFO") per Common Share, strengthening its balance
sheet, increasing its portfolio size and continuing the diversification of its
portfolio across the United States, thereby providing stability in cash flows
and insulation against regional economic downturns.
13
During Mr. Crocker's tenure as Chief Executive Officer and President, the
Trust has become the largest owner and operator of multifamily properties and
has the largest market capitalization of all multifamily Reits and among the
largest market capitalization of all Reits. The key performance measure the
Compensation Committee used to determine Mr. Crocker's 1997 compensation was
the continued execution of the Trust's growth strategy in 1997 while
simultaneously maintaining excellent financial operating results. The Trust's
financial performance in 1997 was in the top quartile in almost every
financial category, when compared to other multifamily Reits, due in large
part to Mr. Crocker's leadership, foresight and experience. The Committee
notes the following factors in support of its conclusion:
. An 18% increase in FFO per Common Share over 1996, compared with the
average multifamily Reit increase of 9%;
. Excellent "same store" operating results with such properties achieving a
5.9% increase in net operating income over 1996;
. Distributions per Common Share of $2.545, a 6.3% increase over 1996 while
simultaneously lowering the Trust's distribution pay-out ratio;
. A 29% total return (share appreciation and distributions) to the Trust's
Shareholders in 1997 compared with the average multifamily Reit total
return of 20%;
. Total market capitalization of $9 billion, an increase of $4.8 billion
over year-end 1996;
. Acquisition of 252 properties with 68,830 units in 1997 representing an
investment of $4.1 billion: 33,878 units through property acquisitions,
19,004 units in the Wellsford Merger and 15,948 units in the Evans
Merger;
. Increases in investment grade credit ratings on the Operating
Partnership's unsecured debt from Moody's (A3); S&P (BBB+) and Duff &
Phelps (A-); and
. Mr. Crocker's recognition as Multifamily Property Executive of the Year
by Commercial Property News and Outstanding CEO of the Year by Realty
Stock Review.
Based on the Trust's excellent corporate performance in 1997, the
Compensation Committee believes that the compensation program properly rewards
its executive officers for achieving improvements in the Trust's performance
and serving the interest of its Shareholders.
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Code"),
generally disallows a Federal income tax deduction for compensation in excess
of $1 million paid in any year to any of the Trust's executive officers listed
in the Summary Compensation Table who are employed by the Trust on the last
day of a taxable year. Section 162(m), however, does allow a deduction for
payments of "performance based" compensation, the material terms of which have
been approved by Shareholders. Awards under the Trust's Award Plan may, but
need not, satisfy the requirements of Section 162(m). The Trust believes that
because it qualifies as a Reit under the Code and therefore is not subject to
Federal income taxes, the payment of compensation that does not satisfy the
requirements of Section 162(m) will not affect the Trust's taxable income,
although to the extent that compensation does not qualify for deduction under
Section 162(m), a larger portion of Shareholder distributions may be subject
to Federal income taxation as dividend income rather than return of capital.
The Trust does not believe that Section 162(m) will materially affect the
taxability of Shareholder distributions, although no assurance can be given in
this regard due to the variety of factors that affect the tax portion of
individual Shareholders.
Respectfully submitted,
James D. Harper, Jr., Chairman
Errol R. Halperin
Sheli Z. Rosenberg
14
PERFORMANCE GRAPH
Set forth below is a graph that compares the cumulative total returns of the
Trust, the Standard and Poor's ("S&P") 500 Stock Index and the index of equity
Reits prepared by NAREIT since August 11, 1993, the date of commencement of
the Trust's initial public offering. The performance graph assumes an
investment of $100 in each of the Trust and the two indexes on August 11, 1993
and the reinvestment of all dividends. The NAREIT equity index includes all
Reits which derive more than 75% of their income from equity investments in
real estate assets and are listed on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq Stock Market.
CUMULATIVE TOTAL SHAREHOLDER RETURN
[PERFORMANCE GRAPH APPEARS HERE]
Aug-93 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97
EQR 100 125 126 139 200 258
S&P 500 100 105 107 147 181 240
NAREIT 100 97 100 116 156 188
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
Deferred Compensation Agreements. To encourage Mr. Crocker and Mr. Spector
to remain in the employ of the Trust, the Board has entered into Deferred
Compensation Agreements with Mr. Crocker and Mr. Spector. Mr. Crocker's
Deferred Compensation Agreement, entered into in 1996, provides Mr. Crocker
with a salary benefit after the termination of his employment with the Trust.
If Mr. Crocker's employment is terminated by the Trust without cause or
voluntarily by Mr. Crocker after age 65, he would be entitled to annual
deferred compensation for a ten year period commencing on the termination date
in an amount equal to his average annual base compensation (before bonus) for
the prior five calendar years, multiplied by a percentage equal to 10% per
each year since December 31, 1995. In the event Mr. Crocker's employment is
terminated as a result of his death, permanent disability or incapacity, he
would be entitled to a similar amount except that the annual percentage would
be 15%, not 10%. Should Mr. Crocker be terminated for cause or should he
choose to leave voluntarily prior to age 65, without good reason, he would not
be entitled to any deferred compensation.
15
Mr. Spector's Deferred Compensation Agreement, entered into in 1997,
provides Mr. Spector with a salary benefit after the termination of his
employment with the Trust. If Mr. Spector's employment is terminated by the
Trust without cause or voluntarily by Mr. Spector after age 65, he would be
entitled to annual deferred compensation for a 15-year period commencing on
the termination date in an amount equal to 75% of his average annual base
compensation (before bonus) for the prior five calendar years, multiplied by a
percentage equal to 6.67% per each year since December 31, 1996. In the event
Mr. Spector's employment is terminated as a result of his death, permanent
disability or incapacity, he would be entitled to a similar amount except that
the annual percentage would be 10%, not 6.67%. Should Mr. Spector be
terminated for cause or should he choose to leave voluntarily prior to age 65,
without good reason, he would not be entitled to any deferred compensation.
Share Distributions Agreement. In January 1996, Mr. Crocker was issued
options to purchase 100,000 Common Shares, which options vest over a three-
year period and are effective for ten years. The Trust also entered into a
Share Distributions Agreement with Mr. Crocker with respect to such options
for Mr. Crocker in 1996. Pursuant to the terms of this agreement, upon the
exercise of any of these options, Mr. Crocker is entitled to a cash payment in
an amount equal to the total amount of Common Share distributions that would
have been paid on said Common Shares being exercised had he owned said Common
Shares for the period from January 18, 1996 until the date of the exercise of
the options in question. This agreement is not affected by Mr. Crocker's death
or termination of employment with the Trust.
Consulting Agreements. In connection with the Wellsford Merger, in May 1997,
Messrs. Lynford and Lowenthal each executed a consulting agreement with the
Operating Partnership. Each consulting agreement has a term of five years from
May 30, 1997, the closing date of the Wellsford Merger. Pursuant to the
consulting agreements, each of Messrs. Lynford and Lowenthal will serve as a
senior management consultant to the Operating Partnership and will receive
compensation at the rate of $200,000 per year plus reimbursement for
reasonable out-of-pocket expenses.
In connection with the Evans Merger, in December 1997, Mr. Evans executed a
Consulting Agreement with an affiliate of the Operating Partnership. The
consulting agreement has a term of two years and expires on December 31, 1999.
Pursuant to the consulting agreement, Mr. Evans will serve as a senior
management consultant to the Operating Partnership and will receive
compensation at the rate of $225,000 per year. Mr. Evans also received an
option to purchase 115,500 Common Shares that will vest in three equal annual
installments and will have an exercise price equal to $50.125 per Common
Share. Mr. Evans is also eligible to participate in all of the Trust's
employee benefit plans in which persons in comparable positions participate,
effectively treating Mr. Evans as an employee.
Several of the Trust's employment benefit plans provide for enhanced
employee benefits upon a "change in control" of the Trust. A change of control
will generally be deemed to have occurred upon a third party's acquisition of
50% or more of the Trust's stock, whether through purchase, merger or
consolidation or a sale of all or substantially all of the assets of the
Trust. In general, upon a change in control, all share options, restricted
shares and performance based shares become immediately vested.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The Compensation Committee members are Messrs. Harper, Halperin and Ms.
Rosenberg. For a description of certain transactions between the Trust and
Compensation Committee members or their affiliates, see "Certain Relationships
and Related Transactions."
16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EGI or certain of its affiliated entities provide the Trust with certain
services with respect to certain aspects of the Trust's business, including,
but not limited to, real estate tax evaluation services, and office facility
services. The Audit Committee annually reviews the rates charged by EGI for
services rendered to the Trust. Amounts incurred for these services amounted
to approximately $890,200 for the year ended December 31, 1997.
R&L, a law firm in which Ms. Rosenberg was a principal through September
1997, provides legal services to the Trust and certain of its subsidiaries.
Amounts incurred for these services amounted to $1,463,160 for the year ended
December 31, 1997. The Trust has also engaged Seyfarth, Shaw, Fairweather &
Geraldson, a law firm in which Ms. Rosenberg's husband is a partner, and
Rudnick & Wolfe, a law firm in which Mr. Halperin is a partner, to perform
legal services for it from time to time.
The Trust occupies office space at various office buildings which are owned
and/or managed by EOP. Amounts incurred for such office space in 1997 were
$912,200. The Riverside Agency, Inc., an affiliate of Mr. Zell, provides
insurance brokerage services (including reimbursements for insurance premiums)
to the Trust. For the year ended December 31, 1997, the Trust incurred fees of
$320,200, which amount primarily represented reimbursement for insurance claim
losses. Multifamily residential communities owned by various affiliates of Mr.
Zell and Mr. Goldberg are also managed by the Trust. The Trust received
approximately $5.7 million in property and asset management fees from such
affiliates for the year ended December 31, 1997.
Mr. Goldberg is a two-thirds owner and chairman of the board of directors of
Artery Property Management, Inc. ("APMI"), a real estate property management
company. In connection with the acquisition of certain properties from Mr.
Goldberg and his affiliates during 1995, the Operating Partnership made a loan
to APMI of $15,212,000 evidenced by two notes and secured by 465,545 OP Units.
The largest aggregate amount of indebtedness outstanding under the loan at any
time during 1997 and the amount outstanding as of December 31, 1997 was
$15,212,000. The first note issued in the amount of $1,056,000 accrues
interest at the prime rate plus 3 1/2% per annum. The second note issued in
the amount of $14,156,000 bears interest equal to approximately $300,000 per
year plus the amount of distributions payable on 433,230 of the OP Units
pledged as collateral for this loan.
Mr. Tuomi borrowed $100,000 from the Trust in 1994 related to his purchase
of a home in the Chicago area. The loan bears interest at 30-day London
Interbank Offered Rate ("LIBOR") plus 2% with interest due quarterly. The
largest principal amount owed in 1997 was $72,000 and the principal balance at
December 31, 1997 was $72,000. The loan is payable in equal principal
installments of $18,000 over five years.
Mr. Crocker borrowed $140,000 from the Trust in April 1996 related to the
payment of a tax liability incurred. The loan bears interest at 30-day LIBOR
plus 2%. The largest principal amount owed in 1997 was $140,000 and the
principal balance at December 31, 1997 was $140,000. The loan was paid in full
in February 1998.
Mr. Crocker borrowed $564,000 from the Trust during 1996. The loan bears
interest at 30-day LIBOR plus 2% with interest due quarterly. The largest
principal amount owed in 1997 was $564,000 and the principal balance at
December 31, 1997 was $483,420. Payment is secured by a pledge of Mr.
Crocker's Common Shares. The loan is payable in equal principal installments
of $80,570 over seven years commencing March 15, 1997.
Mr. George borrowed $100,000 from the Trust in December 1997 related to home
improvements. The loan bears interest at 30-day LIBOR plus 2% with interest
due monthly in 1998. The largest principal amount owed in 1997 was $100,000
and the principal balance due at December 31, 1997 was $100,000. Payment is
secured by a pledge of Mr. George's Common Shares and options to purchase
Common Shares. Payments of principal are due in the amount of $30,000 on each
of April 1, 1999 and April 1, 2000; and $40,000 on April 1, 2001.
17
The executive officers listed below are indebted to the Trust as a result of
purchasing Common Shares from the Trust in June 1994. The loans accrue
interest, payable quarterly in arrears, at the applicable federal rate, as
defined in the Code in effect at the date of each loan. The loans are due and
payable on the first to occur of the date in which the individual leaves the
Trust, other than by reason of death or disability, or the respective loan's
due date. The loans are recourse to the respective individuals and are
collateralized by a pledge of the Common Shares purchased. All distributions
paid on pledged Common Shares in excess of the then marginal tax rate on the
taxable portion of such distributions are used to pay interest and principal
on the loans.
LARGEST PRINCIPAL PRINCIPAL
AMOUNT OWED BALANCE AT INTEREST
NAME IN 1997 DECEMBER 31, 1997 RATE
---- ----------------- ----------------- --------
Douglas Crocker II........... $ 850,318 $ 814,909 6.21%
Douglas Crocker II........... 960,748 931,755 6.15%
Douglas Crocker II........... 944,584 941,415 7.26%
Douglas Crocker II........... 1,901,807 1,864,148 7.93%
Frederick C. Tuomi........... 314,861 313,799 7.26%
Alan W. George............... 79,062 79,062 7.26%
INTERESTS OF MESSRS. LYNFORD AND LOWENTHAL IN THE WELLSFORD MERGER
Messrs. Lynford and Lowenthal received certain benefits from, and entered
into certain agreements with, the Trust or the Operating Partnership in
connection with the Wellsford Merger. Each of Messrs. Lynford and Lowenthal
had an employment agreement with Wellsford that entitled him to certain
benefits as described below.
Share Loans. Messrs. Lynford and Lowenthal previously purchased Wellsford
common shares over the years at their then fair market value, the purchase
price of which was borrowed from Wellsford and evidenced by a ten-year
promissory note. Upon the Wellsford Merger, the then remaining principal
balance of the loans was forgiven for Messrs. Lynford and Lowenthal in the
amounts of approximately $1.5 million and $1.5 million, respectively.
Change in Control Share Grants. Immediately prior to the Wellsford Merger,
Messrs. Lynford and Lowenthal were each issued 22,346 Wellsford common shares,
which shares were converted into 13,966 Common Shares, respectively, in the
Wellsford Merger pursuant to the same conversion ratio that all of Wellsford
common shares were converted into Common Shares.
Restricted Share Grants. Restricted share grants of 11,375 Wellsford common
shares had previously been made to Messrs. Lynford and Lowenthal by Wellsford,
portions of which had vested and portions of which remained subject to
forfeiture prior to the Wellsford Merger. All restricted shares, whether
vested or not, participated in the Wellsford Merger on the same basis as all
other Wellsford common shares. The 7,109 Common Shares received by Messrs.
Lynford and Lowenthal on account of the 11,375 restricted Wellsford common
shares held by each of them continue to remain subject to vesting and will be
forfeited (as to 50% on January 1, 1998 and 50% on January 1, 1999) unless the
Trust achieves on a consolidated basis a minimum 5% increase in FFO per Common
Share for the twelve-month period ending on the December 31 immediately
preceding the applicable vesting date over funds from operations per Common
Share for the preceding twelve-month period. One-half of these Common Shares
vested on January 1, 1998.
Vested Options. Each of Messrs. Lynford and Lowenthal received upon the
exercise of vested options 30,827 Wellsford common shares. Such Wellsford
common shares were converted in the Wellsford Merger into 19,266 Common Shares
for each of Messrs. Lynford and Lowenthal.
18
Tax Payments. Pursuant to their employment agreements and other compensation
arrangements with Wellsford, in connection with the Wellsford Merger, the
Trust paid on behalf of Messrs. Lynford and Lowenthal approximately $1.2
million and $1.2 million, respectively, relating to certain Federal, state and
local income and excise tax liabilities to the Internal Revenue Service and
the various state and local tax authorities.
Appointment to Board of Trustees of the Trust. On June 6, 1997, each of
Messrs. Lynford and Lowenthal was appointed to the Board for a term ending at
the 1997 Annual Meeting of Shareholders. At such meeting, Messrs. Lynford and
Lowenthal were elected as trustees.
CERTAIN AGREEMENTS BETWEEN THE OPERATING PARTNERSHIP AND WRP
The following describes certain aspects of the agreements entered into by
the Operating Partnership and WRP in connection with the Wellsford Merger on
the effective date of the Wellsford Merger. Each of Messrs. Lynford and
Lowenthal are officers and directors of WRP and Mr. Crocker is a director of
WRP.
Common Stock and Preferred Stock Purchase Agreement. Upon consummation of
the Wellsford Merger, WRP entered into a Stock Purchase Agreement with the
Operating Partnership (the "Stock Purchase Agreement") pursuant to which the
Operating Partnership purchased from WRP upon the Effective Date shares of WRP
Class A Common Stock for an aggregate purchase price of $3.5 million. In
addition, the Operating Partnership has agreed to purchase from WRP up to
1,000,000 shares of WRP Series A Preferred Stock at $25.00 per share as
requested by WRP over the three-year period commencing on the date of the
Wellsford Merger. The Operating Partnership and WRP entered into voting
agreements, rights of first refusal and registration rights agreements
relating to such shares of WRP.
WRP Board Member Elected by the Operating Partnership. Upon consummation of
the Wellsford Merger, the Operating Partnership, as the holder of WRP Class A
Common Stock, was entitled to elect, and did so elect, Mr. Crocker to the WRP
Board of Directors. Mr. Crocker received options to purchase 21,375 shares of
WRP common stock upon his election as a director of WRP. In the event Mr.
Crocker (or other person subsequently elected by the Operating Partnership to
the WRP Board of Directors) becomes unable or unwilling to serve as a director
or is no longer employed by the Operating Partnership, the Operating
Partnership and WRP will agree to the election of another member of senior
management of the Operating Partnership to the WRP Board of Directors.
Agreement Regarding Palomino Park. Upon consummation of the Wellsford
Merger, WRP and the Operating Partnership became the shareholders in Wellsford
Park Highland Corp. ("WPHC"), with WRP owning 80% of the shares of WPHC,
consisting of voting Class A Shares, and the Operating Partnership owning the
remaining 20% of WPHC, consisting of non-voting Class B Shares. WPHC is one of
two members of the limited liability companies which own Phase I and Phase II,
respectively, of Palomino Park, a master planned five phase multifamily
development project in suburban Denver, Colorado. The Operating Partnership
has no further obligation to contribute capital to WPHC.
The Operating Partnership has entered into a credit enhancement agreement
with WRP under which it will make its credit available to Dresdner Bank, A.G.,
New York Branch in the form of a guaranty in respect of a letter of credit
issued to WRP for a period of eight years from date of the Wellsford Merger.
WRP has agreed to pay an annual credit enhancement fee to the Operating
Partnership for such enhancement and has agreed to reimburse the Operating
Partnership for any amounts it pays under the guaranty, together with interest
on such amounts.
The Operating Partnership assumed Wellsford's obligation pursuant to a $36.7
million construction loan relating to Phase I of Palomino Park with
NationsBank, N.A. ("NationsBank"). The Operating
19
Partnership was obligated, assuming completion of construction, if the loan
was not paid by WRP when due, to pay NationsBank the lesser of the loan
balance or the final agreed upon budget. This loan was paid off in 1997 by
WRP. The Operating Partnership has agreed to provide similar credit support in
relation to Phase II of Palomino Park, which has an expected construction loan
requirement of approximately $30 million.
INTERESTS OF MESSRS. EVANS AND BERRY IN THE EVANS MERGER
Messrs. Evans and Berry received certain benefits from, and entered into
certain agreements with, the Trust or the Operating Partnership in connection
with the Evans Merger, as more fully described below.
Appointment to Board of Trustees of the Trust. On December 23, 1997, Mr.
Evans was appointed to the Board of Trustees of the Trust for a term ending at
the 2000 Annual Meeting of Shareholders.
Employment Agreements. In connection with the Evans Merger, in December
1997, Mr. Berry executed an Employment Agreement with an affiliate of the
Operating Partnership which expires on December 31, 2000 and provides for cash
compensation of $250,000 per annum. Pursuant to the Agreement, Mr. Berry
exchanged all unvested restricted Evans common shares at the time of the Evans
Merger into 18,747 restricted Common Shares of the Trust, which will vest on
December 31, 2000. Mr. Berry also received an option to purchase 77,500 Common
Shares that will vest in three equal annual installments and will have an
exercise price equal to $50.125 per Common Share. The agreement also provided
that Mr. Berry will be eligible to participate in all of the Trust's employee
benefit plans in which persons in comparable positions participate.
In December 1997, Mr. Berry also entered into a Deferred Compensation
Agreement with the Trust which will pay benefits only in the event Mr. Berry's
employment with the Trust is terminated prior to January 1, 2000. In such
case, the amount payable under Mr. Berry's agreement will equal the value of
any restricted Common Shares received in exchange for Evans common shares
which are forfeited upon his termination of employment. The payment will be
made in two semi-annual installments over the one-year period following
termination of employment, and interest of 9% per annum will accrue on the
balance over the one-year payment period.
Restricted Share Grants. In the second quarter of 1997, Messrs. Evans and
Berry elected to receive restricted common shares of Evans in lieu of salary
for 1997. In July 1997, approximately 13,000 and 12,000 restricted common
shares of Evans were issued to Messrs. Evans and Berry, respectively, in lieu
of their 1997 salaries. The 13,000 restricted common shares of Evans issued to
Mr. Evans vested in connection with the Evans Merger and were exchanged for
approximately 6,500 Common Shares, and 37,494 unvested restricted common
shares of Evans held by Mr. Berry were exchanged for 18,747 restricted Common
Shares at the time of the Evans Merger. In accordance with his employment
agreement, the restricted Common Shares received by Mr. Berry will vest on
January 1, 2001 if Mr. Berry is an employee of the Trust at that time.
Evans Options. Messrs. Evans and Berry each entered into an agreement (an
"Option Cash Out Agreement") with Evans not to exercise their vested and
nonvested options in consideration for a cash payment in lieu thereof. Messrs.
Evans and Berry received $974,250 and $569,250, respectively, pursuant to such
Option Cash Out Agreements.
OP Unit Contribution Agreement. Mr. Evans and certain of his affiliates held
an aggregate of 3,309,762 units of partnership interest in Evans Withycombe
Residential, L.P., which were contributed to the Operating Partnership in
exchange for 1,654,881 OP Units.
Sale of Stock. Mr. Evans sold all of his shares of Evans Withycombe
Management Inc. to an officer of the Trust in connection with the Evans Merger
for aggregate consideration of $5,000.
20
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO THE TRUST'S
THIRD AMENDED AND RESTATED 1993
SHARE OPTION AND SHARE AWARD PLAN
The Trust seeks Shareholder approval of an amendment to increase the number
of Common Shares authorized to be awarded under the Trust's Award Plan from
5,600,000 Common Shares to 8,000,000 Common Shares. The Board approved the
amendment to the Award Plan on March 2, 1998 and recommended that it be
submitted to the Shareholders of the Trust for approval.
The Award Plan provides a means whereby the Trust may award Common Shares,
grants of share options to purchase Common Shares, share appreciation rights
(in tandem with or independent of options), and/or dividend equivalent rights
with respect to Common Shares, restricted shares and performance-based shares
to certain key employees, officers, trustees and consultants of the Trust who
are responsible for the Trust's future growth and continued success. The Board
believes that it is advisable to have additional Common Shares available for
future issuance in connection with employee share incentive programs.
The purpose of amending the Award Plan is to increase the number of Common
Shares eligible for issuance thereunder by 2,400,000 Common Shares, from
5,600,000 Common Shares to 8,000,000 Common Shares. At January 1, 1998
4,726,263 options and restricted share awards have been issued under the Award
Plan, and 873,737 Common Shares were available for issuance under the Award
Plan. Subject to Shareholder approval of this amendment to the Award Plan,
since January 1, 1998 the Compensation Committee of the Board has determined
to grant options to purchase and restricted share awards of approximately 2.2
million Common Shares under the Award Plan. Subsequent to the approval of this
amendment, 6,925,000 options and restricted share awards will have been issued
under the Award Plan and 1,075,000 Common Shares will be available for
issuance under the Award Plan. As of March 1, 1998, there were 105,376,941
Common Shares outstanding (including the assumed conversion of all the
9,586,603 OP Units outstanding). The proposed amendment to the Award Plan will
not result in any new plan benefits to the Trust's trustees, executive
officers or other employees.
The amendment to the Award Plan shall not take effect until approved by the
holders of a majority of the Common Shares present, or represented, and
entitled to vote at the Meeting. Abstentions will have the same effect as
votes against the approval of this amendment to the Award Plan. Broker non-
votes will not be counted as Common Shares entitled to vote on the matter and
will have no effect on the vote.
THE BOARD RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE AWARD PLAN. PROXIES
SOLICITED BY THE BOARD WILL BE VOTED "FOR" THIS AMENDMENT TO THE AWARD PLAN
UNLESS INSTRUCTIONS TO WITHHOLD OR TO THE CONTRARY ARE GIVEN.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Trust to report, based on its
review of reports to the SEC about transactions in its Common Shares furnished
to the Trust and written representations of its trustees, executive officers
and 10% Common Shareholders, that for 1997:
Mr. Lowenthal filed a Form 4 late to report the sale of 11,000 Common
Shares. Mr. McHugh filed a Form 4 late to report the sale of 746 Common
Shares. Mr. Sternlicht filed a Form 4 late to report the exchange of 25,023 OP
Units for 25,023 Common Shares and the distribution of such Common Shares to
the beneficial owners thereof.
21
AUDITORS
Ernst & Young LLP ("Ernst & Young") served as the Trust's auditors for the
fiscal years ended December 31, 1996 and 1997 and has been engaged to serve as
the Trust's auditors for the fiscal year ending December 31, 1998.
Representatives of Ernst & Young are expected to be available at the Meeting.
Such representatives will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR THE 1999 MEETING
Shareholder proposals intended to be presented at the 1999 annual meeting of
Shareholders must be received by the Secretary of the Trust no later than
November 30, 1998, in order to be considered for inclusion in the Trust's 1999
Proxy Statement.
1997 ANNUAL REPORT
Shareholders are concurrently being furnished with a copy of the Trust's
1997 Annual Report which contains its audited financial statements at December
31, 1997. Additional copies of the Trust's Annual Report and Form 10-K for the
year ended December 31, 1997, as filed with the SEC, may be obtained without
charge by contacting Cynthia McHugh, Senior Vice President--Investor Relations
of the Trust, at Two North Riverside Plaza, Chicago, Illinois 60606, 312-466-
3779.
OTHER MATTERS
The Board knows of no other matters to be presented for Shareholder action
at the Meeting. If any other matters are properly presented at the Meeting for
action, it is intended that the persons named in the proxies will vote upon
such matters in accordance with their best judgment.
By Order of the Board of Trustees
/s/ Bruce C. Strohm
Bruce C. Strohm,
Executive Vice President, General
Counsel and Secretary
Chicago, Illinois
March 30, 1998
22
DETACH HERE
PROXY
EQUITY RESIDENTIAL PROPERTIES TRUST
Two North Riverside Plaza, Suite 400, Chicago, Illinois 60606
This Proxy is Being Solicited on Behalf of the Board of Trustees
for the Annual Meeting of Shareholders to be Held on May 14, 1998
The undersigned shareholder of Equity Residential Properties Trust, a
Maryland real estate investment trust (the "Trust"), hereby appoints DOUGLAS
CROCKER II and SAMUEL ZELL, or either of them (the "Representatives"), with full
power of substitution, as proxies for the undersigned to represent the
undersigned at the Annual Meeting of Shareholders of the Trust to be held in
Chicago, Illinois, on May 14, 1998, and any adjournment thereof (the "Annual
Meeting"), and to vote all Common Shares of the Trust which the undersigned may
be entitled to vote. The undersigned hereby acknowledges receipt of the Notice
of the Annual Meeting and of the accompanying Proxy Statement and revokes any
proxy heretofore given with respect to such Common Shares.
Note: You are encouraged to specify your choices by marking the appropriate
boxes ON THE REVERSE SIDE. If you do not mark any boxes, your proxy will be
voted in accordance with the Board of Trustees' recommendations. The
Representatives cannot vote your shares unless you sign and return this card.
If you plan to attend the Annual Meeting in person, please let us know by
marking the enclosed proxy card in the space provided.
- ----------- ------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- ------------
ERP59 F DETACH HERE
[x]
Please mark
votes as in
this example.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, the Proxy
will be voted FOR Authority to vote FOR the election as trustees of the
four nominees to terms expiring in 2001 and FOR item 2 and otherwise in the
discretion of the proxy holders.
1. Authority to vote for the election as trustees of the four nominees
listed below to terms expiring in 2001:
Douglas Crocker II, Gerald A. Spector, James D. Harper, Jr. and Sheli
Z. Rosenberg
[_] FOR [_] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[_]
--------------------------------------
For all nominees except as noted above
2. Authority to vote for the approval of the amendment to the Third
Amended and Restated 1993 Share Option and Share Award Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. In their discretion, the Representatives are authorized to vote upon
such other matters as may properly come before the meeting.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING. [_]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT. [_]
MARK HERE TO DISCONTINUE EXTRA ANNUAL REPORT. [_]
Note: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please print full title under signature.
Signature: Date: Signature: Date: