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EXHIBIT 99
FIRST INDUSTRIAL REALTY TRUST, INC.
311 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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TO BE HELD ON MAY 12, 1999
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders
(the "Annual Meeting") of First Industrial Realty Trust, Inc. (the "Company")
will be held on Wednesday, May 12, 1999 at 9:00 a.m. at the Sears Tower
Conference Center, Lincoln Room, 233 South Wacker Drive, 33rd Floor, Chicago,
Illinois 60606 for the following purposes:
1. To elect three Class II directors of the Company to serve until the
2002 Annual Meeting of Stockholders and until their respective successors are
duly elected and qualified;
2. To ratify the Board of Directors' selection of
PricewaterhouseCoopers LLP as the Company's independent auditors for the fiscal
year ending December 31, 1999; and
3. To consider and act upon any other matters that may properly be
brought before the Annual Meeting and at any adjournments or postponements
thereof.
Any action may be taken on the foregoing matters at the Annual Meeting
on the date specified above, or on any date or dates to which, by original or
later adjournment, the Annual Meeting may be adjourned, or to which the Annual
Meeting may be postponed.
The Board of Directors has fixed the close of business on March 12,
1999 as the record date for the Annual Meeting. Only stockholders of record of
the Company's common stock, $.01 par value per share, at the close of business
on that date will be entitled to notice of and to vote at the Annual Meeting and
at any adjournments or postponements thereof.
You are requested to fill in and sign the enclosed Proxy Card, which is
being solicited by the Board of Directors, and to mail it promptly in the
enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may vote
in person, even if they have previously delivered a signed proxy.
By Order of the Board of Directors
Chicago, Illinois Michael J. Havala
April ___, 1999 Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
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FIRST INDUSTRIAL REALTY TRUST, INC.
311 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
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PROXY STATEMENT
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FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 1999
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of First Industrial Realty Trust, Inc. (the
"Company") for use at the 1999 Annual Meeting of Stockholders of the Company to
be held on Wednesday, May 12, 1999, and at any adjournments or postponements
thereof (the "Annual Meeting"). At the Annual Meeting, stockholders will be
asked to vote on the election of three Class II directors of the Company, to
ratify the Board of Directors' selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for the current fiscal year and to act on any
other matters properly brought before them.
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are first being sent to stockholders on or about April ___, 1999. The
Board of Directors has fixed the close of business on March 12, 1999 as the
record date for the Annual Meeting (the "Record Date"). Only stockholders of
record of the Company's common stock, par value $.01 per share (the "Common
Stock"), at the close of business on the Record Date will be entitled to notice
of and to vote at the Annual Meeting. As of the Record Date, there were
38,019,898 shares of Common Stock outstanding and entitled to vote at the Annual
Meeting. Holders of Common Stock outstanding as of the close of business on the
Record Date will be entitled to one vote for each share held by them on each
matter presented to the Stockholders at the Annual Meeting.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY CARD RECEIVED PRIOR TO
THE VOTE AT THE ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL
MEETING AS DIRECTED ON THE PROXY CARD. IF A PROPERLY EXECUTED PROXY CARD IS
SUBMITTED AND NO INSTRUCTIONS ARE GIVEN, THE PERSONS DESIGNATED AS PROXY HOLDERS
ON THE PROXY CARD WILL VOTE (I) FOR THE ELECTION OF THE THREE NOMINEES FOR CLASS
II DIRECTORS OF THE COMPANY NAMED IN THIS PROXY STATEMENT, (II) FOR THE
RATIFICATION OF THE BOARD OF DIRECTORS' SELECTION OF PRICEWATERHOUSECOOPERS LLP
AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR AND (III) IN
THEIR OWN DISCRETION WITH RESPECT TO ANY OTHER BUSINESS THAT MAY PROPERLY COME
BEFORE THE STOCKHOLDERS AT THE ANNUAL MEETING OR AT ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF. IT IS NOT ANTICIPATED THAT ANY MATTERS OTHER THAN THOSE
SET FORTH IN THE PROXY STATEMENT WILL BE PRESENTED AT THE ANNUAL MEETING.
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The presence, in person or by proxy, of holders of at least a majority
of the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. The affirmative vote of the holders of a majority of the votes cast
with a quorum present at the Annual Meeting is required for the election of
Class II directors and the ratification of the selection of the Company's
auditors. Abstentions and broker non-votes will not be counted as votes cast
and, accordingly, will have no effect on the majority vote required, although
they will be counted for quorum purposes.
A stockholder of record may revoke a proxy at any time before it has
been exercised by filing a written revocation with the Secretary of the Company
at the address of the Company set forth above, by filing a duly executed proxy
bearing a later date, or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in person whether or not a proxy has been previously
given, but the presence (without further action) of a stockholder at the Annual
Meeting will not constitute revocation of a previously given proxy.
The Company's 1998 Annual Report, including financial statements for
the fiscal year ended December 31, 1998, is being mailed to stockholders
concurrently with this Proxy Statement. The Annual Report, however, is not part
of the proxy solicitation material.
PROPOSAL I
ELECTION OF A CLASS OF DIRECTORS
Pursuant to the Articles of Amendment and Restatement of the Company,
as amended (the "Articles"), the maximum number of members allowed to serve on
the Company's Board of Directors is 12. The Board of Directors of the Company
currently consists of nine seats and is divided into three classes, with the
directors in each class serving for a term of three years and until their
successors are duly elected and qualified. The term of one class expires at each
Annual Meeting of Stockholders. Eight persons currently serve as directors of
the Company.
At the Annual Meeting, three directors will be elected to serve until
the 2002 annual meeting of stockholders and until their successors are duly
elected and qualified. The Board of Directors has nominated Michael W. Brennan,
Michael G. Damone and Kevin W. Lynch to serve as Class II directors (the
"Nominees"). Each of the Nominees is currently serving as a Class II director of
the Company and has consented to be named as a nominee in this Proxy Statement.
The Board of Directors anticipates that each of the Nominees will serve as a
director if elected. However, if any person nominated by the Board of Directors
is unable to accept election, the proxies will vote for the election of such
other person or persons as the Board of Directors may recommend.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.
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INFORMATION REGARDING NOMINEES AND DIRECTORS
The following biographical descriptions set forth certain information
with respect to the three Nominees for election as Class II directors at the
Annual Meeting, the continuing directors whose terms expire at the Annual
Meetings of Stockholders in 2000 and 2001 and certain executive officers, based
on information furnished to the Company by such persons. The following
information is as of March 12, 1999, unless otherwise specified.
CLASS II NOMINEES FOR ELECTION AT 1999 ANNUAL MEETING - TERM TO EXPIRE IN 2002
MICHAEL W. BRENNAN Director since 1996
Mr. Brennan, 42, has been a director since March 1996. He has been
President and Chief Executive Officer of the Company since November
1998, prior to which time he served as Chief Operating Officer of the
Company from December 1995 to November 1998 and as Senior Vice
President--Asset Management of the Company from April 1994 to December
1995. He was a partner of The Shidler Group between 1988 and 1994 and
the President of the Brennan/Tomasz/Shidler Investment Corporation and
was in charge of asset management, leasing, project finance, accounting
and treasury functions for The Shidler Group's Chicago operations.
Between 1986 and 1988, Mr. Brennan served as The Shidler Group's
principal acquisition executive in Chicago. Prior to joining The
Shidler Group, Mr. Brennan was an investment specialist with CB
Commercial (now CB Richard Ellis, Inc.). His professional affiliations
include the Urban Land Institute ("ULI"), the National Association of
Industrial and Office Properties ("NAIOP"), the National Association of
Real Estate Investment Trusts ("NAREIT"), National Association of
Manufacturers, the Council for Logistic Management, the Chicago Union
League Club Real Estate Group and the Young Presidents Organization.
MICHAEL G. DAMONE Director since 1994
Mr. Damone, 64, is Director of Strategic Planning for the Company and
has been a director of the Company since June 1994. Between 1973 and
1994, Mr. Damone was Chief Executive Officer of Damone/Andrew, a full
service real estate organization, which developed several million
square feet of industrial, warehouse, distribution and research and
development buildings. Prior to co-founding Damone/Andrew in 1973, Mr.
Damone was the executive vice president of a privately-held, Michigan
based real estate development and construction company, where he was
responsible for the development of industrial/business parks. His
professional affiliations include the Society of Industrial and Office
Realtors ("SIOR"), the National Association of Realtors ("NAR"), the
Michigan Association of Realtors and the South Oakland County Board of
Realtors.
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KEVIN W. LYNCH Director since 1994
Mr. Lynch, 46, has been a director of the Company since June 1994. Mr.
Lynch is the co-founder and Principal of The Townsend Group
("Townsend"), an institutional real estate consulting firm, which
provides real estate consulting for pension funds and institutional
investors. In his capacity as Principal, Mr. Lynch is responsible for
strategic development and implementation of client real estate
portfolios. Mr. Lynch is also responsible for new product development.
Prior to founding Townsend, Mr. Lynch was associated with Stonehenge
Capital Corporation, where he was involved in the acquisition of
institutional real estate properties and the structuring of
institutional real estate transactions. Since 1996, Mr. Lynch has
served on the Board of Directors for Lexington Corporate Properties. He
is a member of the National Real Estate Advisory Board for the Real
Estate Center at New York University, the National Council of Real
Estate Investment Fiduciaries, the Pension Real Estate Association, the
American Society for Real Estate Research, ULI and NAREIT.
CLASS III CONTINUING DIRECTORS - TERM TO EXPIRE IN 2000
JOHN RAU Director since 1994
Mr. Rau, 50, has been a director of the Company since June 1994. Mr.
Rau is President and Chief Executive Officer of Chicago Title
Corporation, a New York Stock Exchange listed company, and its
subsidiaries Chicago Title and Trust Co., Chicago Title Insurance Co.,
Ticor Title Insurance Co. and Security Union Title Insurance Co. Mr.
Rau is a director of Chicago Title Corporation, Chicago Title and Trust
Co. and Chicago Title Insurance Co., as well as Chairman of the Board
of Directors of Ticor Title Insurance Co. and Security Union Title
Insurance Co. He is also a director of LaSalle National Bank,
Borg-Warner Automotive, Inc. and Nicor Inc. From July 1993 until
November 1996, Mr. Rau was Dean of the Indiana University School of
Business. From 1991 to 1993, Mr. Rau served as Chairman of the Illinois
Economic Development Board and as special advisor to Illinois Governor
James Edgar. From 1990 to 1993, he was Chairman of the Banking Research
Center Board of Advisors and a Visiting Scholar at Northwestern
University's J.L. Kellogg Graduate School of Management. During that
time he also served as Special Consultant to McKinsey & Company, a
worldwide strategic consulting firm. From 1989 to 1991, Mr. Rau served
as President and Chief Executive Officer of LaSalle National Bank. From
1979 to 1989, he was associated with The Exchange National Bank,
serving as President from 1983 to 1989, at which time The Exchange
National Bank merged with LaSalle National Bank. Prior to 1979, he was
associated with First National Bank of Chicago.
ROBERT J. SLATER Director since 1994
Mr. Slater, 61, has been a director of the Company since June 1994.
Since 1985, Mr. Slater has been President of Jackson Consulting, Inc.,
a private consulting company specializing in advising basic
manufacturing and the distribution industries. Mr. Slater is also a
director of Southdown, Inc., a
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major cement and cement products manufacturing company, based in
Houston, Texas. He has retired as President of Crane Co., a
multinational manufacturing company.
CLASS I CONTINUING DIRECTORS - TERM TO EXPIRE IN 2001
JAY H. SHIDLER Director since 1993
Mr. Shidler, 52, has been Chairman of the Board of Directors since the
formation of the Company in August 1993. He is the founder and managing
partner of The Shidler Group. A nationally acknowledged expert in the
field of real estate investment and finance, Mr. Shidler has over 30
years of experience in real estate investment and has acquired and
managed properties involving several billion dollars in aggregate
value. Since 1970, Mr. Shidler has been directly involved in the
acquisition and management of over 1,000 properties in 40 states and
Canada. Mr. Shidler is the Chairman of the Board of Directors of
Corporate Office Properties Trust, Inc. (OFC: NYSE). Mr. Shidler is
also a founder and Chairman of the Board of Directors of CGA Group,
Ltd., a holding company whose subsidiary is a AAA-rated financial
guarantor based in Bermuda. He serves on the boards of directors of
several private companies and is active as a trustee of several
charitable organizations, including The Shidler Family Foundation. Mr.
Shidler is a member of ULI and NAREIT.
JOHN L. LESHER Director since 1994
Mr. Lesher, 65, has been a director of the Company since June 1994. Mr.
Lesher is President of Jack Lesher and Associates, a management
consulting firm. He was President of Resource Evaluation, Inc., a
consulting firm specializing in working capital management, from 1994
to July 1997, at which time he became the Chairman. He is a director of
REL Consultancy Group, the parent of Resource Evaluation, Inc., and a
director of The Sound Shore Fund. From 1990 to 1993, he was a Managing
Director of Korn/Ferry International, an executive recruiting
organization. From 1985 to 1989, he was Vice President of the New York
financial services practice of Cresap, McCormick & Paget, a management
consulting organization; President of Home Group Financial Services, a
subsidiary of Home Insurance Company; and President of Mars & Company,
an international strategic planning and consulting firm. Prior to 1985,
he served for 24 years in various capacities at Booz, Allen & Hamilton,
including from 1976 to 1985 as its President.
J. STEVEN WILSON Director since 1994
Mr. Wilson, 55, has been a director of the Company since June 1994.
Since 1991, Mr. Wilson has been Chairman of the Board of Directors,
President and Chief Executive Officer and a director of Wickes Inc.,
which is one of the largest lumber yard chains in the United States.
Since 1985, Mr. Wilson has been President, Chief Executive Officer and
a director of Riverside Group, Inc., an Internet development company
with e-commerce operations.
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EXECUTIVE OFFICERS AND OTHER SENIOR MANAGEMENT
MICHAEL J. HAVALA
Mr. Havala, 39, has been Chief Financial Officer, Treasurer and
Secretary of the Company since April 1994. He joined The Shidler Group
in 1989, and was Chief Financial Officer for The Shidler Group's
midwest region with responsibility for accounting, finance and treasury
functions. With The Shidler Group, Mr. Havala structured joint
ventures, obtained and refinanced project financing, developed and
implemented management information systems and directed all financial
aspects of a several million square foot portfolio located in various
states throughout the Midwest. Prior to joining The Shidler Group, Mr.
Havala was a Senior Tax Consultant with Arthur Andersen & Company,
where he specialized in real estate, banking and corporate finance. Mr.
Havala is a certified public accountant. His professional affiliations
include NAREIT and the Illinois CPA Society.
GARY H. HEIGL
Mr. Heigl, 43, has been the Chief Operating Officer of the Company
since December 1998, prior to which time he served as Senior Vice
President--Capital Markets of the Company from January 1996 to December
1998. Over the last 20 years, Mr. Heigl has specialized in commercial
real estate finance. During 1994 and 1995, Mr. Heigl was Senior Vice
President--Director of New Business Development for ITT Real Estate
Services, Inc. From 1991 through 1993, he operated his own real estate
consulting firm. From 1984 through 1990, Mr. Heigl served in various
project finance capacities at VMS Realty Partners culminating as Senior
Vice President--Finance and Dispositions. Prior to 1984, he served in
lending officer positions for the commercial real estate groups of ITT
Financial and Aid Association for Lutherans. Mr. Heigl's professional
affiliations include ULI and NAREIT.
JOHANNSON L. YAP
Mr. Yap, 36, has been the Chief Investment Officer of the Company since
February 1997. From April 1994 to February 1997, he served as Senior
Vice President--Acquisitions of the Company. During this time, he
oversaw and implemented the Company's investment strategy and
initiatives. In addition to participating in over one billion dollars
of investments, Mr. Yap has extensive experience in entity acquisitions
using the UPREIT structure. Prior to joining the Company, Mr. Yap
joined The Shidler Group in 1988 as an acquisitions associate, and
became Vice President in 1991, with responsibility for acquisitions,
property management, leasing, project financing, sales and construction
management functions. Between 1988 and 1994, he participated in the
acquisition, underwriting and due diligence of several hundred million
dollars of commercial properties. His
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professional affiliations include the Chicago Real Estate Council, ULI,
NAREIT, NAIOP and the Real Estate Investment Advisory Council.
ANTHONY MUSCATELLO
Mr. Muscatello, 50, has been the senior officer of the Company in
charge of development activities, as President of FI Development
Services Corporation, since September 1996, prior to which he had
served as a Senior Regional Director for Pennsylvania, Nashville and
Atlanta since June 1994. Over the last 25 years, he has been
responsible for the leasing, management and/or development of several
million square feet of office, industrial and residential real estate.
From 1987 to 1994, he served as Managing General Partner of the central
Pennsylvania operations of Rouse & Associates, where he was responsible
for day-to-day operations, including profit and loss, marketing,
leasing, acquisition, financing, construction and asset management
functions. From 1982 to 1987, he served in various capacities with
Rouse & Associates. From 1969 to 1982, Mr. Muscatello worked for
several real estate development firms, where his responsibilities
included land acquisition, market analysis and marketing, sales,
financing and construction of single family and multi-family homes. He
is an active member in NAIOP and the Industrial Real Estate Brokers of
Metropolitan New York.
DAVID P. DRAFT
Mr. Draft, 47, has been Managing Director of the Company's midwest
region since December 1998, prior to which time he served as a Senior
Regional Director of the Company for the Michigan and Northern Ohio
regions from March 1996 to December 1998. He oversees acquisitions,
developments, construction, asset management and lease negotiations for
the several million square foot regional portfolio. He has 24 years
experience in real estate brokerage, sales, leasing and asset
management. Between 1994 and March 1996, Mr. Draft was Co-Founder and
Principal of Draft & Gantos Properties, L.L.C., where he was
responsible for real estate management, construction and development.
From 1990 to 1994, Mr. Draft was Director of Development and Operations
for Robert Grooters Development Company where he was responsible for
land acquisitions, development project planning, financing and
construction of industrial property. From 1977 to 1990, he was with
First Real Estate, Inc. serving in the capacity of chief operating
officer. Mr. Draft is a licensed real estate broker and a member of NAR
and the Michigan Association of Realtors.
PETER F. MURPHY
Mr. Murphy, 33, has been Managing Director of the Company's eastern
region since December 1998, prior to which time he had served as a
Senior Regional Director of the Company for Indiana and Ohio since
March 1996. Between 1991 and March 1996, Mr. Murphy was a Vice
President of First Highland Management and Development Corporation
where he was responsible for the acquisition, development, management
and leasing activities for a portfolio of properties consisting of
several million square feet in Indiana and Ohio. Mr. Murphy is a member
of NAIOP.
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TIMOTHY E. GUDIM
Mr. Gudim, 39, has been Managing Director of the Company's western and
Gulf regions since December 1998, prior to which time he served as a
Senior Regional Director of the Company's western region from June 1998
to December 1998 and as a Regional Director for Colorado from November
1997 to June 1998. He oversees acquisitions, development,
build-to-suits, asset management and lease negotiations for the several
million square foot regional portfolio. Mr. Gudim has 17 years
experience in the industrial real estate field. Between 1991 and
October 1997, he was Vice President and a Principal of Pacifica Holding
Company, a full service real estate company operating in Denver. Mr.
Gudim's professional affiliations include NAIOP, SIOR and the
Association of Industrial Realtors.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company is currently managed by an eight member Board of Directors,
a majority of whom are independent of both The Shidler Group and the Company's
management. The current independent directors are Messrs. Lesher, Wilson, Lynch,
Rau and Slater. Pursuant to the terms of the Company's Articles, the directors
are divided into three classes. Class II directors hold office for a term
expiring at this Annual Meeting. Class III directors hold office for a term
expiring at the Annual Meeting of Stockholders to be held in 2000. Class I
directors hold office for a term expiring at the Annual Meeting of Stockholders
to be held in 2001. Each director will hold office for the term to which he is
elected and until his successor is duly elected and qualified. At each Annual
Meeting of Stockholders, the successors to the class of directors whose terms
expire at that meeting will be elected to hold office for a term continuing
until the Annual Meeting of Stockholders held in the third year following the
year of their election and the election and qualification of their successors.
The Board of Directors held eight meetings during the fiscal year of
1998. Except for Messrs. Rau and Lynch, each of the directors attended at least
75% of the total number of meetings of the Board of Directors and of the
respective committees of the Board of Directors of which he was a member.
The Board of Directors has appointed an Audit Committee, a Compensation
Committee, an Investment Committee, a Nominating Committee and a Special
Committee.
Audit Committee. The Audit Committee, which consists of Messrs. Rau,
Lynch and Wilson, makes recommendations concerning the engagement of independent
public accountants, reviews with the independent public accountants the plans
and results of the audit engagement, approves professional services provided by
the independent public accountants, reviews the independence of the independent
public accountants, considers the range of audit and non-audit fees and reviews
the adequacy of the Company's internal accounting controls. The Audit Committee
met two times in 1998.
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Compensation Committee. The Compensation Committee, which consists of
Messrs. Slater and Lesher, makes recommendations and exercises all powers of the
Board of Directors in connection with certain compensation matters, including
incentive compensation and benefit plans. The Compensation Committee
administers, and has authority to grant awards under, the First Industrial
Realty Trust, Inc. 1994 Stock Incentive Plan (the "1994 Stock Plan"), the First
Industrial Realty Trust, Inc. 1997 Stock Incentive Plan (the "1997 Stock Plan")
and the First Industrial Realty Trust, Inc. Deferred Income Plan (the "Deferred
Income Plan"). The Compensation Committee met five times in 1998.
Investment Committee. The Investment Committee, which consists of
Messrs. Shidler, Brennan and Damone, provides oversight and discipline to the
acquisition and new investment process. New investment opportunities are
described in written reports based on detailed research and analyses in a
standardized format applying appropriate underwriting criteria. The Investment
Committee meets with the Company's acquisition personnel, reviews each
submission thoroughly and approves acquisitions and development projects having
a total investment of less than $30 million. The Investment Committee makes a
formal recommendation to the Board of Directors for all acquisitions and
development projects with a total investment in excess of $30 million. The
Investment Committee met 37 times during 1998.
Nominating Committee. The Nominating Committee proposes individuals for
election as directors at the Annual Meeting of Stockholders of the Company and
in connection with any vacancy that may develop on the Board of Directors. The
Board of Directors, in turn, as a whole by a majority vote either approves all
of the nominations so proposed by the Nominating Committee or rejects all of the
nominations in whole, but not in part. In the event that the Board of Directors
as a whole by a majority vote rejects the proposed nominations, the Nominating
Committee develops a new proposal. The Nominating Committee will consider
nominees recommended by stockholders of the Company. Such recommendations shall
be submitted in writing to the Secretary of the Company. The membership of the
Nominating Committee consists of a total of four directors which includes (i)
the Chairman of the Board of the Company, (ii) the President of the Company, and
(iii) two other directors selected by the entire Board of Directors of the
Company from among those directors who are not officers of the Company and whose
term is not expiring in the calendar year that the Nominating Committee is
making its proposal. The Nominating Committee that made the proposals approved
by the Board of Directors and set forth in this Proxy Statement consisted of
Messrs. Shidler, Brennan, Rau and Slater. The Nominating Committee met once in
March 1999 to determine its nominations for this Proxy Statement.
Special Committee. The Special Committee consists of Messrs. Shidler,
Brennan and Rau. The Special Committee is authorized, within limits specified by
the Board of Directors, to approve the terms under which the Company issues
common stock, preferred stock or depository shares representing fractional
interests in preferred stock, or which the Company or any of the Company's
subsidiaries, including First Industrial, L.P., issues debt. The Special
Committee met five times during 1998.
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DIRECTOR COMPENSATION
Directors of the Company who are also employees receive no additional
compensation for their services as a director. Non-employee directors of the
Company receive an annual director's fee equivalent in value to $20,000. At
least 50% of the value of such fee must be taken in the form of restricted
stock. Each non-employee director also receives $1,000 for each regular
quarterly meeting of the Board of Directors attended, $1,000 for each special
meeting of the Board attended, $1,000 for each substantive special telephonic
Board meeting participated in and $1,000 for each committee meeting attended.
Following the Annual Meeting of Stockholders held in 1998, each of the Company's
non-employee directors received options under the 1997 Stock Plan to purchase
10,000 shares at the market price of the shares on the date of grant. Such
options granted to non-employee directors vest one year after the date of grant.
Following this Annual Meeting the Company intends to grant 10,000 options under
the 1997 Stock Plan to each of the Company's non-employee directors. Such
options will be granted at the market price of the shares on the date of grant
and will vest one year after the date of grant.
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EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation, including
cash compensation and restricted stock and option awards, paid by the Company
with respect to the fiscal years ended December 31, 1996, 1997 and 1998 to the
Company's Chief Executive Officer, the four other most highly compensated
executive officers of the Company and to the Company's former Chief Executive
Officer (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
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Long Term
Compensation
--------------------------------
Restricted Shares All Other
Name and Annual Stock Underlying Compensation
Principal Position Year Salary($) Bonus($)(1) Awards($)(2) Options(#) ($)(6)
- ------------------ ---- --------- ----------- ------------ ---------- ------------
Michael W. Brennan 1998 $ 276,875 $ 345,000 $ 163,313 85,000 (5) $ 90,054
President and 1997 225,000 337,500 178,125 310,000 (4) 59,112
Chief Executive Officer 1996 190,000 285,000 200,366 65,000 (3) 19,148
Michael J. Havala 1998 $ 225,000 $ 275,000 $ 138,188 45,000 (5) $ 71,434
Chief Financial 1997 195,000 292,500 142,500 220,000 (4) 52,511
Officer, Treasurer and 1996 175,000 236,241 154,135 44,000 (3) 17,529
Secretary
Gary H. Heigl 1998 $ 219,167 $ 320,000 $ 150,750 69,000 (5) $ 58,502
Chief Operating Officer 1997 185,000 277,500 142,500 220,000 (4) 38,157
1996 150,000 184,375 129,115 62,000 (3) 10,030
Johannson L. Yap 1998 $ 200,000 $ 300,000 $ 125,625 40,000 (5) $ 58,502
Chief Investment Officer 1997 150,000 300,000 199,500 265,000 (4) 38,157
1996 140,000 238,510 144,139 42,500 (3) 10,432
Anthony Muscatello 1998 $ 185,000 $ 310,000 $ 120,600 40,000 (5) $ 52,967
President of FI 1997 165,000 300,000 124,688 232,000 (4) 37,489
Development Services 1996 125,000 209,250 89,250 30,000 (3) 14,688
Corporation
Michael T. Tomasz 1998 $ 350,000 $ 450,000 $ 0 13,700 (5) $ 104,676
1997 300,000 450,000 222,656 375,000 (4) 128,608
1996 250,000 375,000 249,037 90,000 (3) 51,136
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- -------------------
(1) Amounts for 1996 represent bonuses awarded in February 1997 based on
performance for the year ended December 31, 1996 and include bonus
amounts awarded in 1996 in conjunction with the Company's profitability
incentive plan. Amounts for 1997 represent bonuses awarded in February
1998 based on performance for the year ended December 31, 1997. Amounts
for 1998, other than for Mr. Tomasz, represent bonuses awarded in
February 1999 based on performance for the year ended December 31,
1998. Mr. Tomasz's 1998 bonus was paid pursuant to his Separation
Agreement.
(2) Amounts for 1996 represent restricted Common Stock awarded (but not
issued until September and October 1997) in February 1997 as part of
the annual bonus with respect to 1996 performance. Amounts for 1997
represent restricted Common Stock awarded in February 1998 as part of
the annual bonus with respect to 1997 performance. Amounts for 1998
represent restricted Common Stock awarded in March 1999 as part of the
annual bonus with respect to 1998 performance. The dollar amount shown
is approximately equal to the product of the number of shares of
restricted Common Stock granted multiplied by the closing price of the
Common Stock as reported by the New York Stock Exchange on the date of
grant ($29.75 on February 14, 1997 for 1996 amounts; $35.625 on for
February 18, 1998 for 1997 amounts; $25.125 on March 4, 1999 1998
amounts). This valuation does not take into account any diminution in
value which results from the restrictions applicable to such Common
Stock. From and after the date of issuance, holders of the restricted
Common Stock are entitled to vote such Common Stock and receive
dividends at the same rate applicable to unrestricted shares of
Common Stock; however, with respect to the restricted Common Stock
awarded in February 1997, but issued in September and October 1997, the
Named Executive Officers earned amounts equal to the dividends that
would have been payable if such restricted Common Stock had been issued
when awarded (such amounts equaled as follows: Mr. Brennan - $6,802,
Mr. Havala - $5,232, Mr. Heigl - $8,929, Mr. Yap - $4,893, Mr.
Muscatello - $3,030 and Mr. Tomasz - $8,455). The total number of
shares, and the value, of restricted Common Stock awarded to each Named
Executive Officer as of December 31, 1998 is as follows: Mr. Brennan -
11,735 shares ($314,645), Mr. Havala - 9,181 shares ($246,166), Mr.
Heigl - 12,840 shares ($344,273), Mr. Yap - 10,445 shares ($280,057),
Mr. Muscatello - 6,200 shares ($166,238) and Mr. Tomasz - 14,621 shares
($392,026). Restrictions with respect to restricted Common Stock
awarded to Mr. Tomasz were removed in November 1998 pursuant to his
Separation Agreement. An aggregate of 6,051 shares of restricted Common
Stock awarded to Messrs. Brennan, Havala, Heigl and Yap vested in
January 1999 and restrictions with respect to such shares have been
removed.
(3) Amounts for 1996 represent (a) an aggregate of 98,500 options granted
to the Named Executive Officers on July 11, 1996 under the 1994 Stock
Plan at an exercise price equal to $22.75 per share, (b) an aggregate
of 215,000 options granted to the Named Executive Officers on May 13,
1997 under the 1994 and 1997 Stock Plans at an exercise price equal to
$30.38 per share and (c) 20,000 options granted to Mr. Heigl on
July 10, 1997 under the 1997 Stock Plan at an exercise price equal to
$28.50 per share. These options vested in two equal installments on the
six-month and first year anniversary of the date of grant.
(4) Amounts for 1997 represent (a) an aggregate of 1,335,000 options
granted to the Named Executive Officers under the 1997 Stock Plan on
January 2, 1998 at an exercise price equal to $35.8125 per share and
which vest primarily in accordance with certain performance measures
established by the Compensation Committee and (b) an aggregate of
287,000 options granted to the Named Executive Officers under the 1997
Stock Plan on May 14, 1998 at an exercise price equal to $31.13 per
share and which vest in two equal installments on the six month and
first year anniversary of the date of grant, except for Mr. Tomasz's
options which vested on November 11, 1998 pursuant to his Separation
Agreement. All 300,000 options granted to Mr. Tomasz on January 2, 1998
have been cancelled pursuant to his Separation Agreement.
(5) Amounts for 1998 represent an aggregate of 239,000 options which the
Compensation Committee, in March 1999, determined to grant following
the Annual Meeting in May 1999 to the Named Executive Officers, other
than Mr. Tomasz, under the 1997 Stock Plan. Such options will vest in
two equal installments on the six-month and first year anniversary of
the date of grant and shall have an exercise price equal to the closing
price per share of Common Stock on the date of grant. Amounts for 1998
also represent (a) 13,700 options granted to Mr.
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Tomasz, pursuant to his Separation Agreement, under the 1997 Stock Plan
on November 11, 1998 at an exercise price equal to $30.00 per share and
which immediately vested, and (b) an aggregate of 40,000 options
granted to Messrs. Brennan and Heigl under the 1997 Stock Plan on
December 3, 1998 at an exercise price equal to $24.00 per share and
which vest in two equal installments on the six month and first year
anniversary of the date of grant.
(6) Includes premiums paid by the Company on term life insurance for the
benefit of the Named Executive Officers. Amounts reported for 1996 also
include benefits accrued on units awarded in 1996 to the Named
Executive Officers under the Deferred Income Plan. Generally, amounts
accrued under the Deferred Income Plan vest in equal quarterly
installments over three years and are paid out (in cash or Common Stock
at the discretion of the Compensation Committee) in three annual
installments, commencing on the January 31st after the date of grant.
Amounts accrued under the Deferred Income Plan to each Named Executive
Officer in 1996 were used to acquire Common Stock having an aggregate
value at the time of acquisition to each such Named Executive Officer
as follows: Mr. Brennan - $16,173, Mr. Havala - $14,974, Mr. Heigl -
$10,030, Mr. Yap - $9,861, Mr. Muscatello - $10,646 and Mr. Tomasz -
$34,971. Amounts accrued under the Deferred Income Plan to each Named
Executive Officer in 1997 were used to acquire Common Stock having an
aggregate value at the time of acquisition to each such Named Executive
Officer as follows: Mr. Brennan - $56,137, Mr. Havala - $49,956, Mr.
Heigl - $37,424, Mr. Yap - $37,424, Mr. Muscatello - $33,303 and Mr.
Tomasz - $112,443. A portion of the amounts accrued under the Deferred
Income Plan to each Named Executive Officer, other than Mr. Tomasz, in
1998 were used to acquire Common Stock having an aggregate value at the
time of acquisition to each such officer as follows: Mr. Brennan -
$43,591, Mr. Havala - $34,491, Mr. Heigl - $28,936, Mr. Yap - $28,936
and Mr. Muscatello - $29,389. The remainder of the amounts accrued
under the Deferred Income Plan to each Named Executive Officer, other
than Mr. Tomasz, in 1998 were paid in cash. All amounts accrued under
the Deferred Income Plan to Mr. Tomasz in 1998 were paid in cash
pursuant to his Separation Agreement. In addition to amounts reported
for Mr. Tomasz for 1998, on January 6, 1999, the Company paid Mr.
Tomasz approximately $2,724,214 in connection with his Separation
Agreement.
OPTION GRANTS AND EXERCISES
Option Grants. The following table sets forth the options granted in
the fiscal year ended December 31, 1998 to the Named Executive Officers.
OPTION GRANTS IN 1998
------------------------------------------------------------
Individual Grants
------------------------------------------------------------
Percent of
Number of Total Options
Options Granted to Exercise or Total Present
Granted Employees in Base Price Expiration Value as
NAME (#)(1) 1998 (%)(2) ($/SH) Date(s) of Grant Date(3)
- ---- ----------- --------------- ------------- ----------- ------------------
Michael W. Brennan 335,000 6.5 $ (4) (4) $ (4)
Michael J. Havala 220,000 4.2 (5) (5) (5)
Gary H. Heigl 235,000 4.5 (6) (6) (6)
Johannson L. Yap 265,000 5.1 (7) (7) (7)
Anthony Muscatello 232,000 4.5 (8) (8) (8)
Michael T. Tomasz 388,700 7.5 (9) (9) (9)
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- -------------------
(1) Represents an aggregate of (i) 1,335,000 options granted on January 2,
1998 to the Named Executive Officers (ii) 287,000 options granted on
May 14, 1998 to the Named Executive Officers (iii) 13,700 options
granted on November 11, 1998 to Mr. Tomasz pursuant to his Separation
Agreement and (iv) an additional 25,000 and 15,000 options granted to
Messrs. Brennan and Heigl, respectively, on December 3, 1998. All of
such options were granted under the 1997 Stock Plan. Of the options
granted on January 2, 1998, 1,035,000 vest primarily in accordance with
certain performance measures established by the Compensation Committee;
of the options granted on May 14, 1998, 212,000 vest in two equal
installments on the six-month and first year anniversary of the date of
grant; of the options granted to Mr. Tomasz, 300,000 have been
cancelled and 88,700 vested on November 11, 1998 pursuant to his
Separation Agreement. The options granted to Messrs. Brennan and Heigl
on December 3, 1998 vest in two equal installments on the six month and
first year anniversary of the date of grant.
(2) Percentages do not take into account 60,000 options in the aggregate
granted to non-employee directors of the Company.
(3) Based on the Black-Scholes option pricing model adapted for use in
valuing stock options. The actual value, if any, that the Named
Executive Officer may receive would depend on the excess of the stock
price at the time of exercise over the exercise or base price on the
date the option is exercised. There is no assurance that the value
realized by the Named Executive Officer would be at or near the value
estimated by the Black-Scholes model. The estimated values under the
model are based on certain assumptions, such as interest rates, stock
price volatility and future dividend yields.
(4) Mr. Brennan received a grant of 250,000 options on January 2, 1998
which expire January 2, 2008, have an exercise price of $35.8125 and
had a total present value as of the date of grant of $757,500. Mr.
Brennan received a second grant of 60,000 options on May 14, 1998 which
expire May 14, 2008, have an exercise price of $31.13 and had a total
present value as of the date of grant of $159,600. Mr. Brennan received
a third grant of 25,000 options on December 3, 1998 which expire
December 3, 2008 have an exercise price of $24.00 and had a total
present value as of the date of grant of $43,750.
(5) Mr. Havala received a grant of 180,000 options on January 2, 1998 which
expire January 2, 2008, have an exercise price of $35.8125 and had a
total present value as of the date of grant of $545,400. Mr. Havala
received a second grant of 40,000 options on May 14, 1998 which expire
May 14, 2008, have an exercise price of $31.13 and had a total present
value as of the date of grant of $106,400.
(6) Mr. Heigl received a grant of 180,000 options on January 2, 1998 which
expire January 2, 2008, have an exercise price of $35.8125 and had a
total present value as of the date of grant of $545,400. Mr. Heigl
received a second grant of 40,000 options on May 14, 1998 which expire
May 14, 2008, have an excise price of $31.13 and had a total present
value as of the date of grant of $106,400. Mr. Heigl received a third
grant of 15,000 options on December 3, 1998 which expire December 3,
2008, have an excise price of $24.00 and had a total present value as
of the date of grant of $26,250.
(7) Mr. Yap received a grant of 225,000 options on January 2, 1998 which
expire January 2, 2008, have an exercise price of $35.8125 and had a
total present value as of the date of grant of $681,750. Mr. Yap
received a second grant of 40,000 options on May 14, 1998 which expire
May 14, 2008, have an exercise price of $31.13 and had a total present
value as of the date of grant of $106,400.
(8) Mr. Muscatello received a grant of 200,000 options on January 2, 1998
which expire January 2, 2008, have an exercise price of $35.8125 and
had a total present value as of the date of grant of $606,000. Mr.
Muscatello received a second grant of 32,000 options on May 14, 1998
which expire May 14, 2008, have an exercise price of $31.13 and had a
total present value as of the date of grant of $85,120.
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(9) Mr. Tomasz received a grant of 300,000 options on January 2, 1998. All
of such options have been cancelled. Mr. Tomasz received a second grant
of 75,000 options on May 14, 1998 which, pursuant to the terms of his
Separation Agreement, expire November 10, 2001, have an exercise price
of $31.13 and had a total present value as of the date of grant of
$199,500. Mr. Tomasz received a third grant of 13,700 options on
November 11, 1998 pursuant to his Separation Agreement which expire
November 10, 2001, have an exercise price of $30.00 and had a total
present value as of the date of grant of $16,714.
Option Exercises and Year-End Holdings. No options were exercised in
1998 by the Named Executive Officers. During such period an aggregate of 42,000
vested options were converted into restricted Common Stock by certain of the
Named Executive Officers. The following table sets forth the value of options
held at the end of 1998 by the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
AND FISCAL YEAR-END 1998 OPTION VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
SHARES AT FISCAL YEAR-END(#) DECEMBER 31, 1998(2)
ACQUIRED ON VALUE ----------------------- ----------------------
NAME EXERCISE(#)(1) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------------- ----------- ----------- ------------- ----------- -------------
Michael W. Brennan 0 0 115,000 305,000 $ 196,250 $70,313
Michael J. Havala 0 0 130,000 200,000 319,000 0
Gary H. Heigl 0 0 82,000 215,000 48,750 42,188
Johannson L. Yap 0 0 102,500 245,000 215,781 0
Anthony Muscatello 0 0 96,000 216,000 271,250 0
Michael T. Tomasz 0 0 330,700 0 739,125 0
- -------------------
(1) No options were exercised in 1998 by the Named Executive Officers.
During such period, certain of the Named Executive Officers converted
an aggregate of 42,000 vested options into restricted Common Stock. The
number of shares of restricted Common Stock received by each Named
Executive Officer in 1998 as a result of such conversion were as
follows: Mr. Brennan - 8,363 and Mr. Havala - 1,235.
(2) Based on the closing price per share of Common Stock as reported on the
New York Stock Exchange on December 31, 1998 ($26.8125).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (as amended, the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and the New York Stock Exchange.
Officers, directors and "greater than ten-percent" stockholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms so
filed.
Based solely on review of the copies of such forms furnished to the
Company for 1998, all Section 16(a) filing requirements applicable to the
Company's officers, directors and "greater than ten-
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percent" stockholders were complied with, except that (i) each of Craig
Cosgrove, Scott Sealy, Sr., Donald Thompson, Timothy Donohue and Timothy Gudim
filed his Form 3 late, (ii) each of Jan Burman, Michael Damone, David Draft,
Timothy Gallagher, Michael Havala, Gary Heigl, Duane Lund, Peter Murphy, Anthony
Muscatello, Scott Musil, Jay Shidler and Michael Tomasz filed one Form 4 late
with respect to a transaction in January 1998 and (iii) Jan Burman filed one
Form 4 late with respect to a transaction in March 1998.
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EMPLOYMENT AGREEMENTS
In December 1996, the Company entered into a written employment
agreement with Michael T. Tomasz. The agreement provided for an initial term of
three years and subsequent three-year periods unless otherwise terminated. Upon
certain changes in control of the Company or a termination without cause, Mr.
Tomasz was entitled to severance in an amount equal to three times his annual
salary, three times his average bonus over the prior three years, immediate
vesting of his options and similar awards and the continuation of his other
benefits for three years. Mr. Tomasz agreed to a three-year covenant not to
compete after termination. In November 1998, Mr. Tomasz resigned his position as
President and Chief Executive Officer, and as a director, of the Company
pursuant to a Separation Agreement. Pursuant to the terms of the Separation
Agreement, Mr. Tomasz received, in addition to the remainder of his 1998 salary
and other 1998 compensation, a cash severance payment of approximately
$2,724,214 and 13,700 stock options with an exercise price of $30.00 per share
and an expiration date of November 10, 2001. All 300,000 stock options granted
to Mr. Tomasz on January 2, 1998 were cancelled. The remainder of Mr. Tomasz's
stock options became fully vested, with their expiration date accelerated to
November 10, 2001. In addition, all of Mr. Tomasz's restricted stock became
fully vested. The Separation Agreement supercedes and replaces Mr. Tomasz's
employment agreement except in respect of certain obligations contained in such
agreement, including, without limitation, confidentiality and loyalty,
indemnification and the covenant not to compete.
In February 1997, the Company entered into a written employment
agreement with Michael W. Brennan, who became the Company's President and Chief
Executive Officer in November 1998. The agreement provides for an initial annual
minimum base salary of $195,000, which may be increased at the discretion of the
Compensation Committee, and an annual bonus at the discretion of the
Compensation Committee. The agreement provides for an initial term of two years
and subsequent two year periods unless otherwise terminated; provided, however,
that the agreement will expire on Mr. Brennan's 70th birthday. Upon certain
changes in control of the Company or a termination without cause, Mr. Brennan is
entitled to severance in an amount equal to two times his annual salary, plus
two times his average bonus over the prior two years. In addition, upon
termination, Mr. Brennan's options and awards under the 1994 Stock Plan, the
1997 Stock Plan and Deferred Income Plan will fully vest and his other benefits
will continue for a period of two years. Severance amounts payable to Mr.
Brennan upon termination will be reduced if such amounts become payable after
Mr. Brennan's 67th birthday. Mr. Brennan has agreed to a two-year covenant not
to compete after termination.
STOCK PERFORMANCE GRAPH
The incorporation by reference of this Proxy Statement into any
document filed with the SEC by the Company shall not be deemed to include the
following performance graph unless such graph is specifically stated to be
incorporated by reference into such document.
The following graph provides a comparison of the cumulative total
stockholder return among the Company, the NAREIT Equity REIT Total Return Index
(the "NAREIT Index"), an industry index which, as
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of December 31, 1998, was comprised of 173 tax-qualified equity REITs (including
the Company) and the Standard & Poor's 500 Index ("S&P 500"). The comparison is
for the period from May 31, 1994 (for the NAREIT Index and the S&P 500) and June
23, 1994 (for the Company, the date of the Initial Public Offering of its Common
Stock) to December 31, 1998 and assumes the reinvestment of any dividends. The
initial price of the Company's Common Stock shown in the graph below is based
upon the price to the public of $23.50 per share in the Initial Public Offering
on June 23, 1994. The Common Stock of the Company was first listed for quotation
on the New York Stock Exchange on June 24, 1994. The closing price quoted on the
New York Stock Exchange at the close of business on June 24, 1994 was $23-5/8
per share. The NAREIT Index includes REITs with 75% or more of their gross
invested book value of assets invested directly or indirectly in the equity
ownership of real estate. Upon written request, the Company will provide
stockholders with a list of the REITs included in the NAREIT Index. The
historical information set forth below is not necessarily indicative of future
performance. The following graph was prepared at the Company's request by
Research Data Group, Inc., San Francisco, California.
[Graphic materials is presented here]
--------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN
--------------------------------------------------------------------------------------------
6/24/94 12/94 12/95 12/96 12/97 12/98
--------------------------------------------------------------------------------------------
FIRST INDUSTRIAL REALTY TRUST, INC. $100 $87 $110 $161 $204 $163
NAREIT EQUITY 100 96 111 150 180 148
S & P 500 100 102 141 173 231 297
--------------------------------------------------------------------------------------------
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REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is composed of two
of the Company's independent outside directors, Messrs. Slater and Lesher. The
Compensation Committee is responsible for administering the policies which
govern the Company's executive compensation.
Objectives of Executive Compensation. The Compensation Committee has
designed its compensation policy to provide the proper incentives to management
to maximize the Company's performance in order to serve the best interests of
its stockholders. As a result, the Compensation Committee intends to focus on
incentive awards, such as stock option grants, restricted stock awards and
deferred income awards (as described below), as opposed to large salary
increases, to emphasize performance related incentive compensation. The
Compensation Committee currently grants stock option and other incentive awards
under the 1997 Stock Plan and the Deferred Income Plan.
The bonuses and incentive awards awarded for 1998 performance to the
Chief Executive Officer and the other executive officers were based on the
Company's Funds from Operations ("FFO"), an industry recognized measure of a
REIT's performance, and officer specific performance objectives, such as
individual performance related to same property net operating income growth and
investment goals.
The Company maintains the philosophy that compensation of its executive
officers and others should be directly and materially linked to operating
performance. To achieve this linkage, executive compensation is weighted towards
bonuses paid and incentive awards granted on the basis of the Company's
performance. Thus, while annual salary increases are based on personal
performance of the executive officers and general economic conditions, annual
bonuses and incentive award grants are directly tied to the Company's actual
economic performance during the applicable fiscal year.
Stock options, together with other incentive awards (e.g., restricted
stock), are granted to the executives under the provisions of the 1997 Stock
Plan. In addition, incentive awards are granted under the Deferred Income Plan.
Such incentive awards are granted to provide incentive to improve stockholder
value over the long-term and to encourage and facilitate executive stock
ownership. Stock options are granted at the market price of the Common Stock at
the date of grant to ensure that executives can only be rewarded for
appreciation in the price of the Common Stock when the Company's stockholders
are similarly benefited. The Compensation Committee determines those executives
who will receive incentive award grants and the size of such awards.
Compensation Committee Procedures. The Compensation Committee will
annually evaluate the personal performance of the Chief Executive Officer and
the other executive officers of the Company, as well as the Company's
performance. In setting the salary levels for compensation, the Compensation
Committee compares the total annual compensation and stock ownership of the
Chief Executive Officer and the other executive officers to the executive
compensation of executive officers of other publicly-held REITs. Personal
performance can include such qualitative factors as organizational and
management development exhibited
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from year to year. Generally the Compensation Committee will meet prior to the
beginning of each fiscal year to establish base salary and performance targets
for the upcoming year and will meet again at the beginning of each year to
review performance and approve incentive awards for the preceding fiscal year.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
the deductibility on the Company's tax return of compensation over $1 million to
any of the named executive officers of the Company unless, in general, the
compensation is paid pursuant to a plan which is performance-related,
non-discretionary and has been approved by the Company's stockholders. The
Compensation Committee's policy with respect to Section 162(m) is to make
reasonable efforts to ensure that compensation is deductible to the extent
permitted while simultaneously providing Company executives with appropriate
rewards for their performance.
The Compensation Committee believes that it has designed and
implemented a compensation structure which provides appropriate awards and
incentives for the Company's executive officers as they work to sustain and
improve the Company's overall performance.
Submitted by the Compensation Committee:
Robert J. Slater John L. Lesher
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Slater and Lesher.
Neither of them has served as an officer of the Company and Mr. Lesher has no
other business relationship or affiliation with the Company, except his service
as a director. From time to time, Mr. Slater provides consulting services to the
Company through his private consulting firm, Jackson Consulting, Inc.
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CERTAIN RELATIONSHIPS AND TRANSACTIONS
The Company often obtains title insurance coverage for its properties
from Chicago Title Corporation ("CTC"). John Rau, a director of the Company,
became the President, Chief Executive Officer and a director of CTC in 1996.
Management of the Company believes the terms of the title insurance provided by
CTC to the Company and the premiums therefor are as favorable to the Company as
could be obtained from other title insurance companies.
The Company often engages in transactions for which CB Richard Ellis,
Inc. ("CB Richard Ellis") acts as a broker. The brother of Michael W. Brennan,
the President and Chief Executive Officer and a director of the Company, is an
employee of CB Richard Ellis and, in four such transactions in 1998 in which the
Company purchased or developed properties for an aggregate consideration or
project cost of approximately $139.8 million, received an aggregate of $130,115
as a portion of the brokerage commissions paid by the Company to CB Richard
Ellis in connection with such transactions. Management of the Company believes
the terms of brokerage services provided by CB Richard Ellis in such
transactions were as favorable to the Company as could be obtained in an arm's
length transaction.
From time to time, Robert J. Slater, a director of the Company,
provides consulting services to the Company through his private consulting firm,
Jackson Consulting, Inc. ("Jackson Consulting"). In 1998, the Company paid
Jackson Consulting approximately $36,000 in connection with Mr. Slater's
consulting services.
From time to time, the Company utilizes leasing services from Sealy and
Company, Inc. ("SCI") in which Scott P. Sealy, Sr., a former Senior Regional
Director of the Company, has a 62.5% ownership interest. In 1998, the Company
paid approximately $200,000 of leasing commissions to SCI. Management of the
Company believes the terms under which SCI provides leasing services are as
favorable to the Company as could be obtained in an arm's length transaction.
On January 30, 1998, First Industrial, L.P. acquired four industrial
properties located in the metropolitan Chicago area from Western Suburban
Industrial Investment Limited Partnership ("Western") for a total consideration
of approximately $7.9 million. The sole general partner of Western, having a 5%
interest, is Tomasz/Shidler Investment Corporation ("TSIC"), the sole
shareholders of which are Michael T. Tomasz, the former President and Chief
Executive Officer and a former director of the Company, and Jay H. Shidler,
Chairman of the Board of Directors of the Company. Messrs. Tomasz and Shidler
were also limited partners in Western having approximate interests of 32% and
53% respectively. Further, Michael W. Brennan was also a limited partner of
Western having an interest of 2%. As a result of this transaction, Mr. Shidler
was issued 1,886 Units (as defined below) of First Industrial, L.P., Mr. Tomasz
was issued 1,979 Units of First Industrial, L.P. and Mr. Brennan was issued 115
Units of First Industrial, L.P. The Units issued to Messrs. Shidler, Tomasz and
Brennan were valued at $36.72 per Unit at the time of the closing of the Western
transaction (having an aggregate value of $69,254, $72,669 and $4,229
respectively). Management of the Company believes the terms of this acquisition
were as favorable to the Company as could be obtained in an arm's length
transaction.
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On May 21, 1998, the Company acquired Thompson-Kirk Properties, Inc.
("TKP"), a real estate firm in which Donald C. Thompson, at the time one of the
Company's Senior Regional Directors, owned a 52.5% interest. Gross proceeds to
TKP totaled approximately $2.3 million. On July 16, 1998, the Company acquired
TK-SV, Ltd., a real estate partnership in which Mr. Thompson owned a 60.4%
interest, for approximately $3.2 million. Management of the Company believes the
terms of these acquisitions were as favorable to the Company as could be
obtained in an arm's length transaction.
On June 23, 1998, the Company purchased a 292,471 square foot light
industrial property located in Denver, Colorado for approximately $12.2 million.
The property was purchased from Pacifica Bryant Warehouse, LLC., in which
Timothy E. Gudim, one of the Company's Managing Directors, owned a 12.08%
interest. Management of the Company believes the terms of this acquisition were
as favorable to the Company as could be obtained in an arm's length transaction.
On November 19, 1998, the Company sold two industrial properties to two
limited partnerships, Roosevelt Glen Corporate Center ("Roosevelt") and Hartford
Center Investment Company ("Hartford"), for a total consideration of
approximately $8.3 million. TSIC has a 11.638% general partner interest and Mr.
Tomasz has a 75.585% limited partner interest in Roosevelt. TSIC has a 12.39%
general partner interest and Mr. Tomasz has a 80.454% limited partnership
interest in Hartford. On December 4, 1998, the Company sold one industrial
property to Eastgate Shopping Center Investment Co. ("Eastgate"), a limited
partnership, for a total consideration of approximately $2.4 million. TSIC has a
12.972% general partner interest and Mr. Tomasz has a 79.536% limited partner
interest in Eastgate. With respect to each transaction, the purchaser(s) has the
option to sell the property back to the Company and the Company has the option
to repurchase the property. Management of the Company believes the terms of
these transactions were as favorable to the Company as could be obtained in an
arm's length transaction.
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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table presents information concerning the ownership of
Common Stock of the Company and limited partnership units ("Units") of First
Industrial, L.P. (which generally are exchangeable on a one-for-one basis,
subject to adjustments, for Common Stock) by all directors, the Named Executive
Officers, the directors and executive officers as a group and persons and
entities known to the Company to be beneficial owners of more than 5% of the
Company's Common Stock. The information is presented as of March 12, 1999,
unless otherwise indicated, and is based on representations of officers and
directors of the Company and filings received by the Company on Schedule 13G
under the Exchange Act.
Common Stock/Units
Beneficially
Owned
-------------------------
Percent
Number of Class
-------- --------------
Names and Addresses of
5% Stockholders
---------------
Cohen & Steers Capital
Management, Inc.(1)
757 Third Avenue
New York, New York 10017............... 3,918,000 10.3%
Glickenhaus & Co.(2)
6 East 43rd Street
New York, New York 10017................ 2,796,500 7.4%
Names and Addresses of
Directors and Officers*
-----------------------
Jay H. Shidler(3)........................ 1,299,121 3.4%
Michael T. Tomasz(4)..................... 549,464 1.4%
John L. Lesher(5)........................ 43,068 **
Kevin W. Lynch(6)........................ 36,086 **
Michael G. Damone(7)..................... 229,996 **
John Rau(8).............................. 45,068 **
Robert J. Slater(9)...................... 29,173 **
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Common Stock/Units
Beneficially
Owned
-------------------------
Percent
Number of Class
-------- --------------
Names and Addresses of
5% Stockholders
---------------
J. Steven Wilson(10)..................... 43,634 **
Michael W. Brennan(11)................... 270,170 **
Michael J. Havala(12).................... 189,684 **
Gary H. Heigl(13)........................ 128,291 **
Johannson L. Yap(14)..................... 167,461 **
Anthony Muscatello(15)................... 209,007 **
All directors, Named Executive
Officers and other executive officers
as a group (16 persons)(16)............ 3,459,104 8.6%
- --------------
* The business address for each of the Directors and executive officers
of the Company is 311 South Wacker Drive, Suite 4000, Chicago, Illinois
60606.
** Less than 1%
(1) Pursuant to a Schedule 13G dated February 9, 1999 filed by Cohen &
Steers Capital Management, Inc. ("CSCM"), CSCM has the sole power to
dispose of all 3,918,000 shares reported, but has the sole power to
vote only 3,337,100 of such shares.
(2) Pursuant to a Schedule 13G dated February 1, 1999 filed by Glickenhaus
& Co.. ("Glickenhaus"), Glickenhaus has the sole power to dispose of
all 2,796,500 shares reported, but has the sole power to vote only
2,318,900 of such shares.
(3) Includes 910,660 shares held by Shidler Equities, L.P., a Hawaii
limited partnership owned by Mr. Shidler and Wallette Shidler, 66,984
Units held by Mr. Shidler directly, 254,541 Units held by Shidler
Equities, L.P., 1,223 Units held by Mr. and Mrs. Shidler jointly, and
22,079 Units held by Holman/Shidler Investment Corporation. Also
includes 22,500 shares which may be acquired by Mr. Shidler upon the
exercise of vested options granted under the 1994 Stock Plan,
consisting of 15,000 at an exercise price of $23.50 per share and 7,500
shares at an exercise price of $18.25 per share. Also includes 10,000
shares which may be acquired upon the exercise of vested options
granted under the 1997 Stock Plan at an exercise price of $30.50 per
share and 10,000 shares which may be acquired upon the exercise of
options (which will vest in May 1999) granted under the 1997 Stock Plan
at an exercise price of $31.13 per share. Also includes 1,134 shares of
restricted Common Stock issued under the 1997 Stock Plan.
(4) Includes 4,000 shares held by a trust for the benefit of Mr. Tomasz's
spouse and 6,200 shares held by a trust for the benefit of Mr. Tomasz's
daughters. A relative of Mr. Tomasz is the sole trustee of each of such
trusts. Includes 182,000 shares which may be acquired by Mr. Tomasz
upon the exercise of vested options granted under the 1994 Stock Plan,
consisting of 117,000 shares at an exercise price of $23.50 per share,
35,000 shares at an exercise price of $20.25 per share and 30,000
shares at an exercise price of $22.75 per share. Also includes 148,700
shares which may
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be acquired by Mr. Tomasz upon the exercise of vested options granted
under the 1997 Stock Plan, consisting of 60,000 shares at an exercise
price of $30.38 per share, 75,000 shares at an exercise price of $31.13
per share and 13,700 shares at an exercise price of $30.00. Also
includes 25,847 Units.
(5) Includes 22,500 shares which may be acquired by Mr. Lesher upon the
exercise of vested options granted under the 1994 Stock Plan,
consisting of 15,000 shares at an exercise price of $23.50 per share
and 7,500 shares at an exercise price of $18.25 per share. Also
includes 10,000 shares which may be acquired upon the exercise of
vested options granted under the 1997 Stock Plan at an exercise price
of $30.50 and 10,000 shares which may be acquired upon the exercise of
options (which will vest in May 1999) granted under the 1997 Stock Plan
at an exercise price of $31.13. Also includes 568 shares of restricted
Common Stock under the 1997 Stock Plan.
(6) Includes 15,000 shares which may be acquired by Mr. Lynch upon the
exercise of vested options granted under the 1994 Stock Plan at an
exercise price of $23.50 per share. Also includes 10,000 shares which
may be acquired upon the exercise of vested options granted under the
1997 Stock Plan at an exercise price of $30.50 and 10,000 shares which
may be acquired upon the exercise of options (which will vest in May
1999) granted under the 1997 Stock Plan at an exercise price of $31.13.
Also includes 568 shares of restricted Common Stock issued under the
1997 Stock Plan.
(7) Includes 3,000 shares held by a trust for the benefit of Mr. Damone's
wife. Also includes 37,500 shares which may be acquired by Mr. Damone
upon the exercise of vested options granted under the 1994 Stock Plan,
consisting of 30,000 shares at an exercise price of $23.50 per share
and 7,500 shares at an exercise price of $22.75 per share. Also
includes 10,000 shares which may be acquired upon the exercise of
vested options granted under the 1997 Stock Plan at an exercise price
of $30.38 and 10,000 shares which may be acquired upon the exercise of
options (5,000 of which have vested and 5,000 of which will vest in May
1999) granted under the 1997 Stock Plan at an exercise price of $31.13.
Also includes 144,296 Units. Also includes 2,000 shares of restricted
Common Stock issued under the 1997 Stock Plan.
(8) Includes 22,500 shares which may be acquired by Mr. Rau upon the
exercise of vested options granted under the 1994 Stock Plan,
consisting of 15,000 shares at an exercise price of $23.50 per share
and 7,500 shares at an exercise price of $18.25 per share. Also
includes 10,000 shares which may be acquired upon the exercise of
vested options granted under the 1997 Stock Plan at an exercise price
of $30.50 and 10,000 shares which may be acquired upon the exercise of
options (which will vest in May 1999) granted under the 1997 Stock Plan
at an exercise price of $31.13. Also includes 568 shares of restricted
Common Stock issued under the 1997 Stock Plan.
(9) Includes 10,000 shares which may be acquired by Mr. Slater upon the
exercise of vested options granted under the 1997 Stock Plan at an
exercise price of $30.50 per share and 10,000 shares which may be
acquired upon the exercise of options (which will vest in May 1999)
granted under the 1997 Stock Plan at an exercise price of $31.13. Also
includes 8,173 shares of restricted Common Stock issued under the 1997
Stock Plan.
(10) Includes 22,500 shares which may be acquired by Mr. Wilson upon the
exercise of vested options granted under the 1994 Stock Plan,
consisting of 15,000 shares at an exercise price of $23.50 per share
and 7,500 shares at an exercise price of $18.25 per share. Also
includes 10,000 shares which may be acquired upon the exercise of
vested options granted under the 1997 Stock Plan at an exercise price
of $30.50 and 10,000 shares which may be acquired upon the exercise of
options (which will vest in May 1999) granted under the 1997 Stock Plan
at an exercise price of $31.13. Also includes 1,134 shares of
restricted Common Stock issued under the 1997 Stock Plan.
(11) Includes 40,000 shares which may be acquired by Mr. Brennan upon the
exercise of options granted under the 1994 Stock Plan, consisting of
5,000 shares at an exercise price of $23.50 per share, 15,000 shares at
an exercise price of $20.25 per share and 20,000 shares at an exercise
price of $22.75 per share. Also includes 45,000 shares which may be
acquired by Mr. Brennan upon the exercise of vested options granted
under the 1997 Stock Plan at an exercise price of $30.38 per share.
Also includes 60,000 shares which may be acquired by Mr. Brennan upon
the exercise of options (30,000 of which have vested and 30,000 of
which will vest in May 1999) granted under the 1997 Stock Plan
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at an exercise price of $31.13 per share. Also includes 3,806 Units and
39,625 shares of restricted Common Stock issued under the 1997 Stock
Plan. Does not include 380 shares of Preferred Stock.
(12) Includes 1,251 shares held in custodial accounts for Mr. Havala's
children. Also includes 73,000 shares which may be acquired by Mr.
Havala upon the exercise of options granted under the 1994 Stock Plan,
consisting of 58,000 shares at an exercise price of $23.50 per share
and 15,000 shares at an exercise price of $20.25 per share. Also
includes 30,000 shares which may be acquired by Mr. Havala upon the
exercise of vested options granted under the 1997 Stock Plan at an
exercise price of $30.38 per share and 40,000 shares which may be
acquired by Mr. Havala upon the exercise of options (20,000 of which
have vested and 20,000 of which will vest in May 1999) granted under
the 1997 Stock Plan at an exercise price of $31.13 per share. Also
includes 26,150 shares of restricted Common Stock issued under the 1997
Stock Plan. Does not include 750 shares of Preferred Stock.
(13) Includes 12,000 shares which may be acquired by Mr. Heigl upon the
exercise of vested options granted under the 1994 Stock Plan at an
exercise price of $22.75 per share. Also includes 50,000 shares which
may be acquired upon the exercise of vested options granted under the
1997 Stock Plan, consisting of 30,000 shares at an exercise price of
$30.38 per share and 20,000 at an exercise price of $28.50 per share.
Also includes 40,000 shares which may be acquired by Mr. Heigl upon the
exercise of options (20,000 of which have vested and 20,000 of which
will vest in May 1999) granted under the 1997 Stock Plan at an exercise
price of $31.13 per share. Also includes 18,000 shares of restricted
Common Stock issued under the 1997 Stock Plan.
(14) Includes 1,390 shares held in a custodial account for the benefit of
Mr. Yap's children. Also includes 52,500 shares which may be acquired
by Mr. Yap upon the exercise of options granted under the 1994 Stock
Plan, consisting of 30,000 shares at an exercise price of $23.50 per
share, 10,000 shares at an exercise price of $20.25 per share and
12,500 shares at an exercise price of $22.75 per share. Also includes
30,000 shares which may be acquired by Mr. Yap upon the exercise of
options granted under the 1997 Stock Plan at an exercise price of
$30.38 and 40,000 shares which may be acquired by Mr. Yap upon the
exercise of options (20,000 of which have vested and 20,000 of which
will vest in May 1999) granted under the 1997 Stock Plan at an exercise
price of $31.13 per share. Also includes 1,680 Units. Also includes
18,551 shares of restricted Common Stock to be issued under the 1997
Stock Plan.
(15) Includes 60,000 shares which may be acquired by Mr. Muscatello upon the
exercise of options granted under the 1994 Stock Plan, consisting of
30,000 shares at an exercise price of $23.50 per share, 20,000 shares
at an exercise price of $20.25 per share and 10,000 shares at an
exercise price of $22.75 per share. Includes 20,000 shares which may be
acquired by Mr. Muscatello upon the exercise of vested options granted
under the 1997 Stock Plan at an exercise price of $30.38 and 32,000
shares which may be acquired by Mr. Muscatello upon the exercise of
options (16,000 of which have vested and 16,000 of which will vest in
May 1999) granted under the 1997 Stock Plan at an exercise price of
$31.13 per share. Also includes 81,654 Units. Also includes 11,000
shares of restricted Common Stock issued under the 1997 Stock Plan.
(16) Includes 572,000 shares in the aggregate which may be acquired by
directors or executive officers upon the exercise of options granted
under the 1994 Stock Plan, consisting of 345,000 shares at an exercise
price of $23.50 per share, 30,000 shares at an exercise price of $18.25
per share, 95,000 shares at an exercise price of $20.25 per share and
102,000 shares at an exercise price of $22.75 per share. Includes
767,700 shares in the aggregate which may be acquired by directors and
executive officers upon the exercise of options granted under the 1997
Stock Plan, consisting of 265,000 shares at an exercise price of
$30.38, 60,000 shares at an exercise price of $30.50, 20,000 shares at
an exercise price of $28.50, 409,000 shares at an exercise price of
$31.13 and 13,700 shares at an exercise price of $30.00. Also includes
698,749 Units. Also includes 145,071 shares of restricted Common Stock
issued under the 1997 Stock Plan. Does not include 1,130 shares of
Preferred Stock in the aggregate owned by certain executive officers
and directors of the Company.
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PROPOSAL II
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The accounting firm of PricewaterhouseCoopers LLP (or its predecessor,
Coopers & Lybrand L.L.P.) has served as the Company's independent auditors since
the Company's formation in August 1993. On March 5, 1999, the Board of Directors
voted to appoint PricewaterhouseCoopers LLP as the Company's independent
auditors for the current fiscal year. A representative of PricewaterhouseCoopers
LLP will be present at the Annual Meeting, will be given the opportunity to make
a statement if he or she so desires and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT AUDITORS
FOR FISCAL 1999.
OTHER MATTERS
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will
be borne by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2000 Annual
Meeting of Stockholders must be received by the Secretary of the Company no
later than December ___, 1999, in order to be considered for inclusion in the
proxy statement and on the proxy card that will be solicited by the Board of
Directors in connection with the 2000 Annual Meeting of Stockholders.
In addition, the Bylaws of the Company provide that in order for a
stockholder to nominate a candidate for election as a director at an annual
meeting or propose business for consideration at such annual meeting, notice
must generally be given to the Secretary of the Company not more than 180 days
nor less than 75 days prior to the first anniversary of the preceding year's
annual meeting. The fact that the Company may not insist upon compliance with
these requirements should not be construed as a waiver by the Company of its
right to do so at any time in the future.
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OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement that will be presented for action at the
Annual Meeting. If other matters are presented, it is the intention of the
persons named as proxies in the accompanying Proxy Card to vote in their
discretion all shares represented by validly executed proxies.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO
THE COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY
CARD TODAY.
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