SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 |_|
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|_| Preliminary Proxy Statement |_| Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Mid-Atlantic Realty Trust
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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(2) Aggregate number of securities to which transaction applies: N/A
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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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(4) Date Filed:
MID-ATLANTIC REALTY TRUST
170 West Ridgely Road, Suite 300
Lutherville, Maryland 21093
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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April 2, 2001
Dear Shareholders:
The Annual Meeting of Shareholders of Mid-Atlantic Realty Trust
("MART") will be held at The Renaissance Harborplace Hotel, 202 East Pratt
Street, Baltimore, Maryland on Friday, May 11, 2001, at 11:00 a.m. prevailing
local time, for the following purposes:
1. To elect seven Trustees to serve for the ensuing year and until the
election and qualification of their successors;
2. To consider and vote upon the selection of independent certified
public accountants to audit the books and accounts of MART for
calendar year 2001; and
3. To transact such other business as may properly be brought before the
meeting or any adjournments thereof.
Only the shareholders of record of MART at the close of business on
March 16, 2001 will be entitled to notice of and to vote at the meeting.
It is important that your shares be represented and voted at the
meeting. You can vote your shares by mail, telephone or Internet. To vote your
shares by mail, you must complete and return the enclosed proxy card. Whether
you are voting by mail, telephone or Internet, you must be careful to follow the
instructions on or attached to the proxy card. You can revoke a proxy at any
time prior to the meeting by timely and proper delivery to the Secretary of MART
prior to the meeting of written notice of such revocation or a duly executed
later-dated proxy, by a later-dated telephone or Internet vote, or by voting at
the meeting.
By Order of the Board of Trustees,
PAUL F. ROBINSON
Secretary
MID-ATLANTIC REALTY TRUST
170 West Ridgely Road, Suite 300
Lutherville, Maryland 21093
(410) 684-2000
______________________________________________
PROXY STATEMENT
The Board of Trustees of Mid-Atlantic Realty Trust ("MART") is
soliciting proxies in connection with the Annual Meeting of the Shareholders of
MART to be held on May 11, 2001, and any adjournments or postponements thereof.
The approximate date this Proxy Statement and proxy card are being sent to
shareholders is April 2, 2001.
Only holders of record of MART's common shares of beneficial interest,
par value $.01 per share (the "Shares"), at the close of business on March 16,
2001 (the "Record Date") are entitled to notice of and to vote at the meeting.
As of the Record Date, 13,889,867 Shares were outstanding and entitled to vote
at the meeting, with each Share entitled to one vote.
You can vote your Shares in person, by mail, over the telephone or
through the Internet. You can vote by mail by completing and mailing the proxy
card in the postage paid envelope provided, over the telephone by dialing a
toll-free telephone number and following the instructions printed on the proxy
card, or through the Internet by following the instructions printed on the proxy
card. Please be aware that if you vote through the Internet you may incur costs
such as telephone and Internet access charges for which you will be responsible.
The telephone and Internet facilities for shareholders will close at 9:00 a.m.
E.S.T. on May 11, 2001.
The telephone and Internet voting procedures are designed to
authenticate shareholders by use of a control number and to allow you to confirm
that your instructions have been properly recorded.
The method by which you vote will in no way limit your right to vote at
the meeting if you decide to attend in person. If your Shares are held in the
name of a bank, broker or other holder of record, you must obtain a proxy,
executed in your favor, from the holder of record to be able to vote at the
meeting.
You can revoke a proxy at any time prior to the meeting by voting at
the meeting or by timely and proper delivery to the Secretary of MART prior to
the meeting of written notice of such revocation or a duly executed later-dated
proxy, or by a later-dated telephone or Internet vote. All Shares entitled to
vote and represented by properly completed proxies received prior to the meeting
and not revoked will be voted at the meeting in accordance with your
instructions. If you do not indicate how your Shares should be voted on a
matter, the Shares represented by your properly completed proxy will be voted as
the Board of Trustees recommends.
If any other matters are properly presented at the Annual Meeting for
consideration, including, among other things, consideration of a motion to
adjourn the meeting to another time or place, the persons named as proxies and
acting thereunder will have discretion to vote on those matters according to
their best judgment to the same extent as the person delivering the proxy would
be entitled to vote. At the date this proxy statement went to press, we do not
anticipate that any other matters would be raised at the meeting.
BENEFICIAL OWNERSHIP
The following table reflects the names and addresses of the only
persons known to MART to be the beneficial owners of 5% or more of the Shares.
For purposes of calculating beneficial ownership, Rule 13d-3 of the Securities
Exchange Act of 1934 requires inclusion of Shares that may be acquired by a
shareholder within 60 days upon the exercise or conversion of such shareholder's
warrants, options and convertible securities (assuming the nonexercise and
nonconversion of all other outstanding warrants, options and convertible
securities). The following information is based on data contained in Schedules
13G filed with the Securities and Exchange Commission:
Name and Address Shares Beneficially Percent
of Beneficial Owner Owned of Class
David L. Babson & Co., Inc. 1,037,100 7.5%
One Memorial Drive
Cambridge, Massachusetts 02142-1300
Palisade Capital Management, LLC 1,239,000 8.9%
One Bridge Plaza, Suite 695
Fort Lee, New Jersey 07024
ELECTION OF TRUSTEES
A Board of Trustees of seven persons is to be elected by the
shareholders. All of the nominees will be elected as Trustees to serve until the
2002 Annual Meeting of Shareholders and until their respective successors have
been elected and qualify. Under MART's Declaration of Trust and Maryland law,
Trustees are elected by a plurality vote, which means the affirmative vote of
holders of a majority of the Shares present (in person or by proxy) and voted at
the meeting. Consequently, withholding of votes, abstentions and broker
non-votes will have no effect on the outcome of this vote.
Unless authority to vote is withheld, your proxy will be voted in favor
of the election as Trustees of the following nominees. The Board of Trustees
does not know of any nominee who will be unable to serve, but if any of them
becomes unable to serve, the proxies may be voted with discretionary authority
for the election of other persons as Trustees.
Principal Occupation Trustee
Name During the Last Five Years Age Since
- - ---- -------------------------- --- -----
David F. Benson.................. Financial Consultant from December 1, 2000; prior 52 1993
thereto Consultant to Meditrust Corporation (a
publicly owned real estate investment trust) from
February through November, 2000; prior thereto,
President, CEO and Director of Meditrust
Corporation
Marc P. Blum..................... Chief Executive Officer of World Total Return Fund 58 1993
Limited Partnership and U.S.A. Fund Limited
Partnership (private investment funds); Of Counsel
to Gordon, Feinblatt, Rothman, Hoffberger &
Hollander, LLC
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Robert A. Frank.................. President, Intellectual Capital Markets, Inc. 51 1993
(financial services firm engaged in research and
capital management) from September 1, 2000; prior
thereto Executive Vice President, Legg Mason Wood
Walker, Inc. (a publicly owned investment banking
firm) from January, 2000; prior thereto, Executive
Vice President, Director of Research and co-Head
of Capital Markets from September 1996; prior
thereto, Managing Director and Group Head of Real
Estate Securities Research Department of Alex.
Brown & Sons Incorporated (a publicly owned
investment banking firm now known as DB Alex.
Brown)
LeRoy E. Hoffberger.............. Chairman of the Board of MART; President of CPC, 75 1993
Inc. (real estate investments); Chairman of the
Board of Merchants Terminal Corp. (warehouse
company); Of Counsel to Gordon, Feinblatt,
Rothman, Hoffberger & Hollander, LLC
F. Patrick Hughes................ President and Chief Executive Officer of MART 53 1993
M. Ronald Lipman................. Member of Lipman, Frizzell & Mitchell, L.L.C. 62 1993
(real estate consultants)
Daniel S. Stone.................. President of Stone & Associates, Inc. (real estate 56 1993
developers and consultants); Chief Financial
Officer of The Rehab Documentation Company, LLC
(computer software venture).
Mr. Blum is also a director of ten funds in the Davis Fund complex,
which are investment companies registered under the Investment Company Act of
1940. As indicated above, Mr. Blum and Mr. Hoffberger are Of Counsel to the law
firm of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC, which is
general outside counsel to MART. In their position as Of Counsel, Mr. Hoffberger
and Mr. Blum are not members of the firm, do not provide substantial services to
or for the firm, and do not receive material compensation from the firm.
In 2000, the Board of Trustees held six meetings. During that year, all
Trustees attended at least 75% of all Board meetings and meetings of the
committees on which they served.
Committees of the Board of Trustees
The Board of Trustees has an Executive Compensation Committee, an Audit
Committee, an Investment Committee and a Nominating Committee.
The Audit Committee consists of Messrs. Blum (Chairman), Frank and
Lipman, each of whom is independent consistent with the New York Stock Exchange
listing standards. The Audit Committee is responsible for providing independent,
objective oversight of MART's accounting functions and internal controls on
behalf of the Board of Trustees. In carrying out its responsibilities, the Audit
Committee meets with the Board and independent accountants to review MART's
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financial results and annual reports, discuss the financial statements, and the
auditor's independence, and review with the auditors and management the internal
accounting procedures and controls. The Audit Committee is also responsible for
recommending to the Board the selection of the independent public accountants
and for reviewing proposed related party transactions, if any. The Audit
Committee acts under a written charter first adopted and approved by the Board
in 2000, a copy of which is attached as Appendix A of this Proxy Statement. This
Committee held two meetings in 2000.
The Executive Compensation Committee consists of Messrs. Frank
(Chairman), Benson and Blum, and makes recommendations to the Board regarding
compensation of Trustees and executive officers, executive compensation
generally, and benefit plans for management to be considered by the Board. The
Executive Compensation Committee held four meetings in 2000.
The Investment Committee consists of Messrs. Lipman (Chairman), Stone
and Hoffberger, with Mr. Hughes serving as a member ex officio. The Investment
Committee, which held four meetings in 2000, studies potential acquisition
opportunities, reviews the performance of MART's properties and evaluates
development and redevelopment opportunities.
The Nominating Committee, which consists of Messrs. Blum (Chairman),
Benson and Stone, makes recommendations regarding nominations for Trustees and
officers. The Nominating Committee would consider nominees recommended by
shareholders upon timely written notice given to MART. The time period during
which this notice must be given is specified at the end of this proxy statement
under the caption "Submission of Shareholder Proposals to be Considered at the
May 2002 Annual Meeting." The Nominating Committee held one meeting in 2000.
Trustee Compensation
MART paid its Trustees (other than Mr. Hughes, who is employed as
President and Chief Executive Officer of MART) a retainer of $12,000 per annum,
$1,000 per meeting for each Board and committee meeting attended in person, and
$500 for meetings attended by telephone. MART has a Deferred Compensation Plan
pursuant to which non-management Trustees may defer receipt of their
compensation through a deferred money account, in which the funds accrue
interest at market rates, or in a deferred stock account, in which the funds are
invested in MART Shares. The Trustee of the Deferred Compensation Trust is
directed to vote Shares in the Trust in accordance with the instructions of the
Board of Trustees.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that
MART's Trustees and executive officers and each person who owns more than 10% of
MART's Shares file with the Securities and Exchange Commission an initial report
of beneficial ownership and subsequent reports of changes in beneficial
ownership of the Shares. To MART's knowledge, based on written certifications
received from such persons, all reports required to be so filed by such persons
have been filed on a timely basis. MART believes that all of its Trustees and
executive officers, and all persons owning beneficially more than 10% of the
Shares, complied with all filing requirements applicable to them with respect to
transactions during the fiscal year ended December 31, 2000.
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INFORMATION REGARDING SHARE OWNERSHIP OF MANAGEMENT
The following table reflects, as of the Record Date, the number of
Shares owned by each Trustee and named executive officer, each nominee to become
a Trustee and by all Trustees and executive officers as a group. Share ownership
of Trustees and executive officers is calculated in accordance with Rule 13d-3
under the Securities Exchange Act of 1934, which includes Shares that a person
has the right to acquire within 60 days upon exercise of options or warrants and
conversion of securities.
Name of Shares Percent
Beneficial Owner Beneficially Owned (1) of Class
--------------------------------- ------------------ --------
David F. Benson 32,111 0.2%
Marc P. Blum 396,481 (2) 2.9%
Robert A. Frank 38,166 0.3%
LeRoy E. Hoffberger 211,105 (3) 1.5%
F. Patrick Hughes 429,308 3.1%
M. Ronald Lipman 60,340 0.4%
Daniel S. Stone 38,400 0.3%
Paul F. Robinson 262,799 1.9%
All Trustees and Executive Officers
as a Group (8 persons included) 1,489,081 (4) 10.7%
- - ----------------------------------
(1) Includes 30,000 Shares, 30,000 Shares, 30,000 Shares, 50,000 Shares,
177,000 Shares, 26,000 Shares, 30,000 Shares, and 113,199 Shares subject to
immediately exercisable options granted pursuant to the Company's 1993
Omnibus Share Plan and the 1995 Stock Option Plan to each of Messrs.
Benson, Blum, Frank, Hoffberger, Hughes, Lipman, Stone and Robinson,
respectively.
(2) Includes 366,481 Shares held by World Total Return Fund Limited Partnership
and by U.S.A. Fund Limited Partnership, investment funds of which Mr. Blum
is the President and CEO of the General Partner and in which he holds a
substantial interest.
(3) Excludes 134,624 Shares owned by the Hoffberger Foundation, Inc., a
charitable foundation of which Mr. Hoffberger is an officer and director.
The number of Shares in the above table includes 95,000 Shares owned by
CPC, Inc., a corporation of which Mr. Hoffberger is a director, stockholder
and executive officer and includes 25,749 Shares registered in the name of
Mr. Hoffberger as co-trustee under two trust agreements.
(4) Includes 20,371 Shares held by the Trustees' Deferred Compensation Trust
which the Board of Trustees has the power to vote.
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EXECUTIVE COMPENSATION
The following table reflects, with respect to the chief executive
officer and each executive officer of MART whose annual compensation exceeded
$100,000 in 2000, the aggregate amounts paid to or accrued for such officers as
compensation in 2000, 1999 and 1998.
Summary Compensation Table
Long Term Compensation
-----------------------
Annual Compensation Awards
------------------- -----------------------
Restricted Securities
Name and Other Annual Stock Underlying All Other
Principal Position Year Salary Bonus($) Compensation($)(1) Award($) Options Compensation($)(2)
- - ------------------ ---- ------ ----- ------------ ----- ---------- ------------
F. Patrick Hughes 2000 $285,000 (3) 7,800 $177,187(4) 104,000 807
President and 1999 $230,000 82,500 7,800 --- --- 807
Chief Executive Officer 1998 $230,000 57,500 12,165 --- --- 807
Paul F. Robinson
Executive Vice President, 2000 $190,000 (3) 7,521 $118,125(4) 69,333 1,580
Secretary and 1999 $165,000 61,250 9,892 --- --- 1,580
General Counsel 1998 $160,000 41,250 9,801 --- --- 1,264
- - ---------------------------------
(1) Consists of car allowance and amounts reimbursed under MART's executive
medical reimbursement plan.
(2) Consists of premiums paid by MART on term life insurance policies on the
lives of Messrs. Hughes and Robinson the proceeds of which are payable to
their respective heirs or estates.
(3) The sum of $223,119 was accrued by MART for company-wide bonuses for 2000;
however, as of the date of this Proxy Statement, no bonus allocation has
been made for that fiscal year except as otherwise reflected in the table.
(4) Reflects grants of restricted Shares that were made pursuant to the 1997
Restricted Share Plan. Mr. Hughes and Mr. Robinson received grants of
15,000 and 10,000 Shares, respectively, valued at $11.8125 per Share as of
September 29, 2000, the date of grant. With respect to each grant, the
Shares vest as follows: 10% vest on January 1, 2001 and 90% vest at a rate
of 10% on each of January 1, 2002 through 2010. The Shares are subject to a
risk of forfeiture in the event of termination of employment (other than in
a change in control of MART), and are restricted as to transfer prior to
vesting. Mr. Hughes and Mr. Robinson have the right to vote and receive
dividends on the Shares. At December 31, 2000, the aggregate restricted
Share holdings were 215,000 Shares for Mr. Hughes and 143,333 Shares for
Mr. Robinson. The aggregate value of all restricted Share holdings at
December 31, 2000 was $2,620,313 for Mr. Hughes and $1,746,871 for Mr.
Robinson.
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Options granted to the executive officers named in the above Summary
Compensation Table during 2000 are set forth below:
Option Grants in Last Fiscal year
Individual Grants
-----------------------------------------------------------
Potential Realized
Percent of Value At Assumed
Number of Total Annual Rates Of Stock
Securities Options/SARs Exercise Price Appreciation
Underlying Granted To or Base For Option Term
Option/SARs Employees In Price Expiration -----------------------
Name Granted (#)(1) Fiscal Year ($/S) Date 5% ($) 10% ($)
- - ---- -------------- ----------- ----- ---- ------ -------
F. Patrick Hughes 84,000 (2) 25.1% $10.00 04/01/10 $528,360 $1,338,960
20,000 (2) 6.0% $11.50 09/29/10 $144,670 $ 366,620
Paul F. Robinson 56,000 (3) 16.7% $10.00 04/01/10 $352,240 $ 892,640
13,333 (3) 3.9% $11.50 09/29/10 $ 96,444 $ 244,407
- - --------------------------
(1) Options granted in the year ended December 31, 2000 were issued under the
Omnibus Share Plan.
(2) Represents (i) options to purchase 84,000 Shares, granted on April 1, 2000
and exercisable in increments of 28,000 Shares annually on April 1, 2000,
2001 and 2002; and (ii) options to purchase 20,000 Shares, granted on
September 29, 2000 and exercisable in increments of 2,000 Shares annually
on January 1, 2001 through 2010.
(3) Represents (i) options to purchase 56,000 Shares, granted on April 1, 2000
and exercisable in increments of 18,666 Shares on April 1, 2000 and 18,677
Shares annually on April 1, 2001 and 2002; and (ii) options to purchase
13,333 Shares, granted on September 29, 2000 and exercisable in increments
of 1,333 Shares annually on January 1, 2001 through 2009, and 1,336 Shares
on January 1, 2010.
The following table reflects certain information regarding options
exercised during and held as of the end of the last fiscal year.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money-Options
Options at FY End at FY End
------------------------- -------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------
F. Patrick Hughes 175,000/76,000 $188,565/$122,360
Paul F. Robinson 111,866/50,667 $117,107/$ 90,835
Executive Employment Agreements
MART has Executive Employment Agreements ("Agreements") with F. Patrick
Hughes and Paul F. Robinson. Under the Agreements, the annual base salary for
each of Messrs. Hughes and Robinson for the last fiscal year was $285,000 and
$190,000 respectively. The Agreements provide annual increases of at least
one-half of the annual increase in the Consumer Price Index. The term of each
Agreement is at all times two years.
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In the event of the termination of employment due to a change of control in
MART, all compensation payable to the executive for the remainder of the
employment period becomes immediately due and payable. At the election of the
executive, such compensation may be payable in a lump sum, discounted to present
value.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Compensation Committee consists of Messrs. Benson, Blum
and Frank. Mr. Blum and Mr. Hoffberger are Of Counsel to the law firm of Gordon,
Feinblatt, Rothman, Hoffberger & Hollander, LLC, Baltimore, Maryland, which is
general outside counsel to MART. During 2000, MART paid legal fees to that firm
for services rendered in the amount of $293,740. As Of Counsel, Mr. Hoffberger
and Mr. Blum are not members of the firm, do not provide substantial services to
or for the firm, and do not receive material compensation from the firm.
During 2000, Mr. Hughes served on the Board of Directors of Merchants
Terminal Corporation, a company in which Mr. Hoffberger is the Chairman of the
Board and Chief Executive Officer.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The compensation of members of management of MART is determined by the
Board of Trustees based upon the recommendation of the Executive Compensation
Committee (the "Compensation Committee"). The Compensation Committee is
comprised of independent Trustees, who are responsible for developing and
implementing a comprehensive compensation program for management.
Compensation Philosophy. The philosophy of the Compensation Committee
is to ensure that the interests of management and employees are identical to the
interests of MART's owners - the shareholders. To that end, the Compensation
Committee has implemented and will continue to implement a compensation strategy
that includes base salary and cash bonus, as well as incentive stock options and
restricted stock grants which will reward management and employees for adding
shareholder value. Base salary is established at levels which are necessary to
attract and retain a high caliber of management, and cash bonuses provide
short-term rewards for current accomplishments. Incentive stock options and
restricted stock grants provide management and employees with a long-term
investment in MART, the value of which is dependent upon their success in
maximizing shareholder value.
The commonly accepted measure of performance for a real estate
investment trust ("REIT") is funds from operations. Generally, funds earned in
cash from operations are the basis for distributions to shareholders as a
dividend. To the extent management succeeds at increasing funds from operations
and dividends, share prices and shareholder value should be increased. Creating
long-term shareholder value, however, is not always consistent with increased
short-term distributions. To properly reward management for achieving a well
balanced result, the Compensation Committee believes that both short-term
results as well as long-term values must be considered and recognized.
The Compensation Committee also recognizes the individual functions of
each employee and provides for individual goals to be attained by each person.
While the favorable performance of MART as a whole is the basis for any reward,
the performance by each employee is the most significant factor in determining
awards. The compensation of Mr. Hughes as the chief executive officer of MART,
however, is based upon the foregoing factors as well as the overall performance
of MART and its management. As CEO, Mr. Hughes is responsible for the overall
condition of the company and its resources, and his performance is evaluated by
the Compensation Committee, in its discretion, on that basis as well as on
objective criteria based on reaching certain financial and other benchmarks.
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Base Salary. Base salary for senior management for fiscal year 2000 was
based upon salaries paid to such personnel in the preceding year, with
appropriate adjustments. It is the intention of the Compensation Committee to
review MART's executive compensation structure to insure that MART has the
continued ability to attract and retain high caliber executive talent. To that
end, the Compensation Committee will take into account salaries of senior
management of comparable companies within the REIT industry. The base salary for
Mr. Hughes will be consistent with the base salaries of chief executive officers
of peer companies.
Incentive Bonuses. The Compensation Committee has implemented a
discretionary cash bonus program for management and employees. The program makes
available a cash bonus pool consisting of a percentage of the amount by which
MART's funds from operations for the year exceeds a specified increase over the
preceding year. The Compensation Committee has also adopted a bonus program for
operating personnel for exceeding annual goals. For example, personnel engaged
in development and redevelopment of properties would be rewarded for achieving
returns at or above specified levels. Management personnel may participate in
such bonus pools. The purpose of this program is to closely align the interests
of management and employees with the interests of MART's shareholders on a year
to year basis. The performance of the chief executive officer will also be tied
to the overall performance of MART and its management.
In 1997, the Compensation Committee implemented an annual cash bonus
program potentially equal to 100% of base salary for senior management,
consisting of Mr. Hughes, as Chief Executive Officer, and Mr. Robinson, as
Executive Vice President. Under the program, cash incentive compensation equal
to 50% of base salary is available upon attainment of certain objectives. The
other half is payable in whole or in part at the discretion of the Compensation
Committee for company performance including, among other things, achieving
significant total return and/or for exceptional performance relating to
development, redevelopment and acquisition criteria.
Long-Term Incentive Compensation Plans. To promote the best long-term
benefits to MART and its shareholders and to provide incentives for MART's
Trustees, officers and employees, MART has a Restricted Share Plan, an Omnibus
Share Plan and a Stock Option Plan.
Restricted Share Plan. In 1997, the Compensation Committee
recommended, and the Board of Trustees approved, a Restricted Share Plan. The
Compensation Committee believes that the grant of restricted share awards
("Restricted Shares") provides a long-term incentive to such persons who
contribute to the growth of MART and establishes a direct link between
compensation and shareholder return. Shares awarded are subject to such terms,
conditions and restrictions as may be determined by the Compensation Committee,
subject to the provisions of the Restricted Share Plan. The restrictions may
include stock transfer restrictions and forfeiture provisions designed to
facilitate the achievement by participants of MART's Share ownership goals. The
Compensation Committee may vary the grants of Restricted Shares based on a
subjective assessment of MART's overall performance in relation to long-term
goals and plans. In determining the individuals to whom awards will be made and
the amounts of the grants, the Compensation Committee considers the relative
position and responsibilities of each executive officer, past performance of
each officer to MART, total shareholder return relative to peer companies,
growth in funds from operations over time and a review of competitive
compensation for executive officers of similar rank in peer companies.
Stock Option Plans. The Compensation Committee determines
stock option grants under MART's Omnibus Share Plan and 1995 Stock Option Plan.
The purpose of these plans is to provide equity-based incentive compensation
based on the long-term appreciation in value of MART's Shares and to promote the
interests of MART and its shareholders by encouraging greater management
ownership of MART's Shares. Because the value of stock options granted to an
executive is directly related to MART's success in enhancing its market value
over time, the Compensation Committee feels that its stock option plans have
been very effective in aligning the interests of management and shareholders.
Specific grants are determined taking into account an
executive's current responsibilities and historical performance, as well as the
executive's perceived contribution to MART's funds from operations. Options are
also used to provide incentives to newly-promoted officers at the time they are
asked to assume greater responsibilities. In evaluating option grants, the
Compensation Committee considers prior grants and Shares currently held, as well
as the recipient's success in meeting operational goals and the recipient's
level of responsibility. However, no fixed formula is utilized to determine
particular grants. The terms of the options, including vesting, exercisability
and term, are determined by the Compensation Committee, subject to the
provisions of the plans. Most of the awards granted or to be granted under these
plans vest over a period of several years, thereby providing a long-term
incentive and encouraging a long-term relationship with MART. Share options are
typically granted at prevailing market price, and therefore will only have value
if MART's Share price increases over the exercise price. The Compensation
Committee believes that the opportunity to acquire a significant equity interest
in MART is a strong motivation for executive officers to maximize long-term
value for MART's shareholders and promotes longevity and retention of key
employees. Under the Omnibus Share Plan, the aggregate number of Shares
available for issuance is the number of Shares equal to 7% of the outstanding
shares of MART. The Omnibus Share Plan provides for accelerated vesting of
awards in the event of an "Extraordinary Event" resulting in a change in
control.
Awards under the Omnibus Share Plan and 1995 Stock Plan have
been and will continue to be made to employees who have demonstrated significant
management potential or who have the capacity for contributing in a substantial
measure to the successful performance of MART.
The foregoing report is submitted by the following Trustees of MART,
comprising all of the members of the Compensation Committee of the Board of
Trustees.
EXECUTIVE COMPENSATION COMMITTEE
Robert A. Frank, Chairman
David F. Benson
Marc P. Blum
-10-
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Trustees is responsible for
providing independent, objective oversight of MART's accounting functions and
internal controls on behalf of the Board of Trustees. The Audit Committee is
comprised of independent Trustees and acts under a written Audit Committee
Charter, first adopted and approved by the Board of Trustees in 2000, a copy of
which is attached as Appendix A to this Proxy Statement. Each member of the
Audit Committee is independent as defined in the Audit Committee Charter and
consistent with the New York Stock Exchange listing standards.
The Audit Committee held two meetings during fiscal year 2000. In
fulfilling its oversight responsibilities, the Audit Committee:
o reviewed and discussed the audited financial statements in the
2000 Annual Report with management and the independent
auditors;
o discussed with the independent auditors the matters covered by
the Statement on Auditing Standards No. 61; and
o received written disclosures and the letter from the
independent auditors regarding their independence as required
by Independence Standards Board Standard No. 1, and has
discussed with the independent auditor its independence.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Trustees (and the Board has approved) that
the audited financial statements be included in MART's Annual Report on Form
10-K for the year ended December 31, 2000, to be filed with the Securities and
Exchange Commission. The Audit Committee and the Board of Trustees have also
recommended, subject to shareholder approval, the selection of KPMG LLP as the
Company's independent auditors for the year ended December 31, 2001.
The foregoing report is submitted by the following Trustees of the
Company, comprising all of the members of the Audit Committee of the Board of
Trustees.
AUDIT COMMITTEE
Marc P. Blum, Chairman
M. Ronald Lipman
Robert A. Frank
-11-
PERFORMANCE GRAPH
The following graph tracks the cumulative total return for MART for
fiscal years 1996 through 2000, compared to the S&P 500 and the National
Association of Real Estate Investment Trusts ("NAREIT") Equity REIT Total Return
Index. The cumulative total return represents stock price appreciation and
assumes reinvestment of all dividends paid during the indicated period. The
graph assumes an investment of $100 on January 1, 1996.
[GRAPH]
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Period Ending
--------------------------------------------------------------------------------------------------------
Index 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
--------------------------------------------------------------------------------------------------------
MART 100.00 143.27 202.47 183.71 165.67 222.88
--------------------------------------------------------------------------------------------------------
S&P 500 100.00 122.86 163.86 210.64 254.97 231.74
--------------------------------------------------------------------------------------------------------
EQUITY NAREIT 100.00 135.27 162.67 134.20 128.00 161.76
--------------------------------------------------------------------------------------------------------
-12-
SELECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
On the recommendation of the Audit Committee, the Board of Trustees has
selected KPMG LLP, independent certified public accountants, to audit the books
and accounts of MART for calendar year 2001. The Board of Trustees considers
such accountants to be well qualified and recommends a vote in favor of their
selection.
Audit Fees
KPMG LLP billed MART an aggregate of $115,000 for the audit of MART's
annual financial statements, review of the Annual Report on Form 10-K for the
fiscal year ended December 31, 2000, and the reviews of the financial statements
included in MART's quarterly reports on Form 10-Q for the first three quarters
of 2000.
Financial Information System and Implementation Fees
For the year ended December 31, 2000, KPMG LLP billed MART an aggregate
of $94,937, including out-of-pocket expenses, for management consulting services
in assisting MART in the implementation of the MRI accounting and property
management system.
All Other Fees
For the fiscal year ended December 31, 2000, KPMG LLP billed MART an
aggregate of $20,035 for various tax advisory and compliance services requested
by management. In addition, KPMG LLP billed MART $21,500 for assistance provided
to MART's Controller in developing various management reports.
Audit Committee Consideration
After due consideration, the Audit Committee has concluded that the
provision by KPMG LLP of the services described above, other than the Audit
Fees, is not incompatible with the maintenance by KPMG LLP of its independence.
Vote
Representatives of KPMG LLP are expected to be present at the Annual
Meeting with the opportunity to make a statement if they so desire and to be
available to respond to appropriate questions.
The Board of Trustees unanimously recommends that you vote FOR the
appointment of KPMG LLP as independent certified public accountants.
SUBMISSION OF SHAREHOLDER PROPOSALS TO BE CONSIDERED
AT THE 2002 ANNUAL MEETING
Any shareholder desiring to present a proposal to be included in the
proxy statement and voted on by the shareholders at the 2002 Annual Meeting of
Shareholders must submit proposals in writing to MART's Secretary at its
principal executive offices no later than December 1, 2001. The form and
substance of such proposals must satisfy requirements established by MART's
bylaws and the Securities and Exchange Commission.
-13-
Any shareholder desiring to present a proposal at the 2002 Annual
Meeting of Shareholders must notify MART in writing of the proposal no later
than December 1, 2001 and no earlier than November 1, 2001. If the notice is
submitted in a timely and proper manner, MART may describe the proposal in its
proxy statement and thereby retain its discretionary authority to vote on that
proposal.
OTHER MATTERS
The solicitation of proxies will be made by mail at MART's expense,
including charges and expenses of brokerage firms, banks and others for
forwarding solicitation material to shareholders.
The Board of Trustees of MART is not aware of any other matter which
may be presented for action at the meeting, but should any other matter
requiring a vote of the shareholders arise, including any adjournments of the
meeting, it is intended that the proxies will be voted with respect thereto in
accordance with the best judgment of the person or persons voting the proxies,
discretionary authority to do so being included in the proxy.
Shareholders who do not plan to attend the Annual Meeting are urged to
vote over the Internet or by telephone or complete, date, sign and return the
enclosed proxy in the enclosed envelope, to which no postage need be affixed if
mailed in the United States. Prompt response is helpful and your cooperation
will be appreciated.
By Order of the Board of Trustees,
PAUL F. ROBINSON
Secretary
Dated: April 2, 2001
-14-
Appendix A
MID-ATLANTIC REALTY TRUST
AUDIT COMMITTEE CHARTER
Organization
The Audit Committee of the Board of Trustees shall be comprised of at
least three trustees who are independent of management and the Company. Members
of the Audit Committee shall be considered independent if they have no
relationship to the Company that may interfere with the exercise of their
independence from management and the Company. All Audit Committee members will
be financially literate, and at least one member will have accounting or related
financial management expertise.
Statement of Policy
The Audit Committee shall provide assistance to the trustees in
fulfilling their responsibility to the shareholders, potential shareholders and
investment community relating to corporate accounting, reporting practices of
the Company and the quality and integrity of financial reports of the Company.
In so doing, it is the responsibility of the Audit Committee to maintain free
and open communication between the trustees, the independent auditors and the
financial management of the Company. It is the expectation of the Audit
Committee that the financial management will fulfill its responsibility of
bringing any significant items to the attention of the Audit Committee.
Responsibilities
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the trustees and shareholders that the
corporate accounting and reporting practices of the Company are in accordance
with pertinent requirements and are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
o Obtain annually the full Board of Trustees' approval of this Charter
and review and reassess this Charter as conditions dictate. The
charter will be disclosed publicly at least every three years by being
published in the Company's proxy statement or as otherwise required by
law.
o Review and recommend to the trustees the independent auditors to be
selected to audit the financial statements of the Company and its
divisions and subsidiaries.
o Have a clear understanding with the independent auditors that they are
ultimately accountable to the Board of Trustees and the Audit
Committee, as the shareholders' representatives, who have the ultimate
authority in deciding to engage, evaluate and, if appropriate,
terminate their services.
o Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit and quarterly
reviews for the current year and the procedures to be utilized, the
adequacy of the independent auditors' compensation and at the
conclusion thereof review such audit or reviews, including any
comments or recommendations of the independent auditors.
o Review with the independent auditors, the Company's internal auditor
and financial and accounting personnel, the adequacy and effectiveness
of the accounting and financial controls of the Company, and elicit
any recommendations for the improvement of such internal controls or
particular areas where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the adequacy of such
internal controls to expose any payments, transactions or procedures
that might be deemed illegal or otherwise improper.
o Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the
shareholders. Review with financial management and the independent
auditors the results of their timely analysis of significant financial
reporting issues and practices, including changes in, or adoptions of,
accounting principles and disclosure practices, and discuss any other
matters required to be communicated to the Committee by the auditors.
o Provide sufficient opportunity for the internal and independent
auditors to meet with the members of the Audit Committee without
members of management present. Among the items to be discussed in
these meetings are the independent auditor's evaluation of the
Company's financial, accounting and auditing personnel, and the
cooperation that the independent auditors received during the course
of the audit.
o Report the results of the annual audit to the Board of Trustees.
o On an annual basis, obtain from the independent auditors a written
communication delineating all their relationships and professional
services as required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees.
o Include a report of the Audit Committee in the proxy statement.
o Submit the minutes of all meetings of the Audit Committee to, or
discuss the matters discussed at each Committee meeting with, the
Board of Trustees.
o Investigate any matter brought to its attention within the scope of
its duties, with the power to retain outside counsel for this purpose
if, in its judgment, that is appropriate.
o Review any new accounting or auditing standards adopted by the
accounting profession or the SEC and any proposed new accounting
standards publicly released for comment which are relevant to the
Company's accounting and internal controls.
-2-
PROXY
MID-ATLANTIC REALTY TRUST
170 West Ridgely Road, Suite 300
Lutherville, Maryland 21093
This Proxy is Solicited on Behalf of the Board of Trustees of Mid-Atlantic
Realty Trust.
The undersigned hereby appoints LeRoy E. Hoffberger, F. Patrick Hughes and
Paul F. Robinson, and each of them, as proxies, each with the power of
substitution, to vote as designated below all of the shares the undersigned is
entitled to vote at the Annual Meeting of Shareholders to be held at The
Renaissance Hotel in Baltimore, Maryland on Friday, May 11, 2001 at 11:00 a.m.,
prevailing local time, and any adjournments thereof.
1. ELECTION OF TRUSTEES: FOR all nominees listed below []
(except as set forth to the contrary below)
WITHHOLD AUTHORITY to vote for all nominees listed below []
David F. Benson, Marc P. Blum, Robert A. Frank, LeRoy E. Hoffberger, F.
Patrick Hughes, M. Ronald Lipman, Daniel S. Stone
The terms of all Trustees expire at the next annual meeting at which their
successors are elected and qualify.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
2. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP as the independent certified
public accountants of MART for the fiscal year ending December 31, 2001.
For [] Against [] Abstain []
3. In their discretion, the proxies are authorized to vote upon any other
business which properly comes before the meeting and any adjournments
thereof.
This proxy, when properly executed, will be voted in the manner directed hereby
by the undersigned shareholders. If no direction is made, this proxy will be
voted in favor of all nominees and for Proposal No. 2.
Please sign exactly as your name appears on your proxy card. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by an
authorized person.
PLEASE MARK, SIGN, DATE AND MAIL THE
CARD IN THE ENCLOSED ENVELOPE.
DATED: ___________________, 2001 Signature___________________________
DATED: ___________________, 2001 Signature___________________________