AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 16, 2001
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
------------------------
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
MACK-CALI REALTY CORPORATION
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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MACK-CALI REALTY CORPORATION
11 COMMERCE DRIVE
CRANFORD, NEW JERSEY 07016
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 2001
------------------------
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Mack-Cali Realty Corporation (the "Company") will be held at the
Marriott at Glenpointe, 100 Frank W. Burr Boulevard, Teaneck, New Jersey 07666
on Tuesday, May 15, 2001 at 2:00 p.m., local time, for the following purposes:
1. To elect four persons to the Board of Directors of the Company, each to
serve a three-year term or until their respective successors are elected
and qualified.
2. To consider and vote upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP, independent accountants, as the Company's
independent accountants for the ensuing year.
3. To consider and vote upon a proposal to approve and adopt an amendment
to the charter of the Company to decrease the affirmative stockholder
vote required to approve any extraordinary corporate action, such as a
merger, consolidation, sale of all or substantially all of the assets or
dissolution of the Company, from two-thirds to a majority of all votes
entitled to be cast on the action by the holders of the outstanding
shares of stock of the Company.
The enclosed Proxy Statement includes information relating to these
proposals. Additional purposes of the Annual Meeting are to receive reports of
officers (without taking action thereon) and to transact such other business as
may properly come before the Annual Meeting.
All stockholders of record as of the close of business on March 26, 2001 are
entitled to notice of and to vote at the Annual Meeting. At least a majority of
the outstanding shares of common stock of the Company present in person or by
proxy is required for a quorum. You may vote electronically through the Internet
or by telephone. The instructions attached to your proxy card describe how to
use these convenient services. Of course, if you prefer, you can vote by mail by
completing your proxy card and returning it in the enclosed postage-paid
envelope.
By Order of the Board of Directors
/s/ ROGER W. THOMAS
--------------------------------------
Roger W. Thomas
SECRETARY
March , 2001
Cranford, New Jersey
THE BOARD OF DIRECTORS APPRECIATES AND ENCOURAGES YOUR PARTICIPATION IN THE
COMPANY'S ANNUAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED. ACCORDINGLY, PLEASE AUTHORIZE A
PROXY TO VOTE YOUR SHARES BY INTERNET, TELEPHONE OR MAIL. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY WITHDRAW YOUR PROXY, IF YOU WISH, AND VOTE IN PERSON.
YOUR PROXY IS REVOCABLE IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN THE PROXY
STATEMENT.
MACK-CALI REALTY CORPORATION
11 COMMERCE DRIVE
CRANFORD, NEW JERSEY 07016
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished to stockholders of Mack-Cali Realty
Corporation, a Maryland corporation (the "Company"), in connection with the
solicitation by the Board of Directors of the Company (the "Board of Directors")
of proxies in the accompanying form for use in voting at the Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held on Tuesday,
May 15, 2001, at 2:00 p.m., local time, at the Marriott at Glenpointe, 100 Frank
W. Burr Boulevard, Teaneck, New Jersey 07666, and any adjournment or
postponement thereof.
This Proxy Statement, the Notice of Annual Meeting of Stockholders and the
accompanying proxy card are first being mailed to the Company's stockholders on
or about March , 2001.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised by delivering to the Company (to
the attention of Roger W. Thomas, the Company's Secretary) a written notice of
revocation or a properly executed proxy bearing a later date, or by attending
the Annual Meeting and giving notice of your intention to vote in person.
SOLICITATION AND VOTING PROCEDURES
The solicitation of proxies will be conducted by mail, and the Company will
bear all attendant costs. These costs will include the expense of preparing and
mailing proxy materials for the Annual Meeting and reimbursements paid to
brokerage firms and others for their expenses incurred in forwarding
solicitation material regarding the Annual Meeting to beneficial owners of the
Company's common stock, par value $.01 per share (the "Common Stock"). The
Company intends to use the services of MacKenzie Partners, Inc., 156 Fifth
Avenue, Suite 110, New York, New York 10010, in soliciting proxies and, in such
event, the Company expects to pay an amount not to exceed $10,000, plus
out-of-pocket expenses, for such services. The Company may conduct further
solicitation personally, telephonically, electronically or by facsimile through
its officers, directors and regular employees, none of whom would receive
additional compensation for assisting with the solicitation.
The presence at the Annual Meeting of a majority of the outstanding shares
of Common Stock of the Company, represented either in person or by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting. The
close of business on March 26, 2001 has been fixed as the record date (the
"Record Date") for determining the holders of shares of Common Stock entitled to
notice of and to vote at the Annual Meeting. Each share of Common Stock
outstanding on the Record Date is entitled to one vote on all matters. As of the
Record Date, there were shares of Common Stock outstanding. Under
Maryland law, stockholders will not have appraisal or similar rights in
connection with any proposal set forth in this Proxy Statement.
Stockholder votes will be tabulated by the persons appointed by the Board of
Directors to act as inspectors of election for the Annual Meeting. The New York
Stock Exchange (the "NYSE") permits member organizations to give proxies,
whether or not instructions have been received from beneficial owners, to vote
as to the election of directors and also on matters of the type contained in
Proposal No. 2, but not as to matters of the type contained in Proposal No. 3.
Shares represented by a properly executed and delivered proxy will be voted at
the Annual Meeting and, when instructions have been given by the stockholder,
will be voted in accordance with those instructions. If no instructions are
given, the shares will be voted FOR the election of each of the four nominees
for director named below and FOR Proposal No. 2. Abstentions and broker
non-votes will have the same effect as a negative vote on Proposal No. 3 but
will have no effect on the outcome of the election of directors or
Proposal No. 2. Abstentions and broker non-votes will each be counted as present
for purposes of determining the presence of a quorum.
VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table sets forth information as of February 28, 2001 with
respect to each person or group who is known by the Company, in reliance on
Schedules 13D and 13G filed with the Securities and Exchange Commission (the
"SEC"), to own beneficially more than 5% of the Company's outstanding shares of
Common Stock. Except as otherwise noted below, all shares of Common Stock are
owned beneficially by the individual or group listed with sole voting and/or
investment power.
AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT OF SHARES
BENEFICIAL OWNER OWNERSHIP OUTSTANDING(%)(1)
---------------- ----------------- -----------------
The Mack Group (2)......................................... 11,527,708 16.8
Cohen & Steers Capital Management, Inc.(3)................. 6,026,200 10.3
Morgan Stanley Dean Witter & Co.(4)........................ 4,159,035 7.2
RREEF America, L.L.C. (5).................................. 3,844,750 6.7
Pacific Financial Research, Inc. (6)....................... 3,152,800 5.4
- ------------------------
(1) The total number of shares outstanding used in calculating this percentage
does not include 14,316,544 shares reserved for issuance upon redemption or
conversion of outstanding units of limited partnership interest ("Units") in
Mack-Cali Realty, L.P., a Delaware limited partnership (the "Operating
Partnership") through which the Company conducts its real estate activities,
2,000,000 shares reserved for issuance upon exercise of outstanding warrants
to purchase Units ("Unit Warrants") or 7,921,325 shares reserved for
issuance upon the exercise of stock options or warrants granted or reserved
for possible grant to certain employees and directors of the Company, except
in all cases where such Units, Unit Warrants, stock options or warrants are
owned by the reporting person or group. This information is as of
February 28, 2001.
(2) Address: 11 Commerce Drive, Cranford, New Jersey 07016. The Mack Group
(which is not a legal entity) is composed of certain directors and executive
officers of the Company and their immediate families and related trusts and
other persons. Share information is furnished in reliance on the
Schedule 13G/A dated February 14, 2001 of the Mack Group filed with the SEC,
which represents holdings as of December 31, 2000. This number represents
shares for which the Mack Group has shared dispositive and voting power, and
includes 3,361,560 common Units and 210,821 preferred Units convertible into
6,084,300 common Units, for a total of 9,445,860 common Units, redeemable
for shares of Common Stock on a one-for-one basis, 1,681,368 vested Unit
Warrants redeemable for shares of Common Stock and 337,980 vested stock
options and warrants to purchase shares of Common Stock.
(3) Address: 757 Third Avenue, New York, New York 10017. Based upon information
provided to the Company by Cohen & Steers Capital Management, Inc.
("Cohen & Steers"), the Company believes that such shares are held for
investment advisory clients and that Cohen & Steers disclaims beneficial
ownership of those shares. Share information is furnished in reliance on the
Schedule 13G/A dated February 12, 2001 of Cohen & Steers filed with the SEC,
which represents holdings as of December 31, 2000. This number represents
shares for which Cohen & Steers has sole dispositive power, and includes
5,022,400 shares for which Cohen & Steers has sole voting power.
(4) Address: 1585 Broadway, New York, New York 10036. Share information is
furnished in reliance on the Schedule 13G dated February 8, 2001 of Morgan
Stanley Dean Witter & Co filed with the SEC, which represents holdings as of
December 31, 2000. This number represents shares for which
2
Morgan Stanley Dean Witter & Co has sole dispositive power, and includes
4,065,535 shares for which Morgan Stanley Dean Witter & Co has sole voting
power.
(5) Address: 875 North Michigan Avenue, 41st Floor, Chicago, Illinois 60611.
Share information is furnished in reliance on the Schedule 13G of RREEF
America, L.L.C. filed with the SEC on February 15, 2001, which represents
holdings as of December 31, 2000. This number represents shares for which
RREEF America, L.L.C. has sole dispositive and voting power.
(6) Address: 9601 Wilshire Boulevard, Suite 800, Beverly Hills, California
90210. Share information is furnished in reliance on the Schedule 13G dated
February 13, 2001 of Pacific Financial Research, Inc. ("Pacific") filed with
the SEC, which represents holdings as of December 31, 2000. This number
represents shares for which Pacific has shared dispositive power, and
includes 3,026,700 shares for which Pacific has shared voting power.
3
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's charter divides the Company's Board of Directors into three
classes, with the members of each such class serving staggered three-year terms.
The Board of Directors presently consists of thirteen members as follows:
Class I directors, Brendan T. Byrne, Martin D. Gruss, Vincent Tese and Roy J.
Zuckerberg, whose terms expire in 2001 (and if re-elected at the Annual Meeting,
in 2004); Class II directors, Nathan Gantcher, Earle I. Mack, William L. Mack
and Alan G. Philibosian, whose terms expire in 2002; and Class III directors,
Martin Berger, John J. Cali, John R. Cali, Mitchell E. Hersh and Irvin D. Reid,
whose terms expire in 2003.
At the Annual Meeting, the stockholders will elect four directors to serve
as Class I directors. The Class I directors who are elected at the Annual
Meeting will serve until the Annual Meeting of Stockholders to be held in 2004
and until such directors' respective successors are elected or appointed and
qualify or until any such director's earlier resignation or removal. The Board
of Directors, acting upon the unanimous recommendation of its Nominating
Committee, has nominated Brendan T. Byrne, Martin D. Gruss, Vincent Tese and Roy
J. Zuckerberg for election as Class I directors at the Annual Meeting. In the
event any nominee is unable or unwilling to serve as a Class I director at the
time of the Annual Meeting, the proxies may be voted for the balance of those
nominees named and for any substitute nominee designated by the present Board of
Directors or the proxy holders to fill such vacancy or for the balance of those
nominees named without nomination of a substitute, or the Board of Directors may
be reduced in accordance with the By-laws of the Company.
BRENDAN T. BYRNE, director nominee, was appointed as a member of the Board
of Directors of the Company in 1994 and as a member of the Audit Committee of
the Board of Directors in 1999. Governor Byrne served two consecutive terms as
governor of the State of New Jersey prior to 1982 and has been a senior partner
with Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein, a Roseland, New
Jersey law firm, since 1982. Governor Byrne graduated from Princeton
University's School of Public Affairs and received his LL.B from Harvard Law
School.
MARTIN D. GRUSS, director nominee, was appointed as a member of the Board of
Directors of the Company in 1997 and as a member of the Executive Compensation
and Option Committee of the Board of Directors in 1999. Mr. Gruss is the senior
partner of Gruss & Co., a private investment firm. From 1989 to 1993, Mr. Gruss
served as a director of Acme Metals Incorporated. Mr. Gruss currently serves as
a member of the board of overseers of the Wharton School and as a trustee of the
Lawrenceville School. Mr. Gruss has a B.S. degree in economics from the Wharton
School of the University of Pennsylvania and a J.D. degree from New York
University School of Law.
VINCENT TESE, director nominee, was appointed as a member of the Board of
Directors of the Company in 1997, as chairman of the Executive Compensation and
Option Committee of the Board of Directors of the Company in 1998 and as
chairman of the Nominating Committee of the Board of Directors in 2000.
Mr. Tese served as New York State Superintendent of Banks from 1983 to 1985,
chairman and chief executive officer of the Urban Development Corporation from
1985 to 1994, director of economic development for New York State from 1987 to
1994 and commissioner and vice chairman of the Port Authority of New York and
New Jersey from 1991 to 1995. Mr. Tese also served as a partner in the law firm
of Tese & Tese, a partner in the Sinclair Group, a commodities trading and
investment management company, and a co-founder of Cross Country Cable TV.
Mr. Tese currently serves as chairman of Wireless Cable International, Inc. and
as a member of the board of directors of The Bear Stearns Companies, Inc.,
Allied Waste Industries, Inc., Bowne & Company, Inc., Cablevision, Inc., Key
Span Energy and as a trustee of New York University School of Law and New York
Presbyterian Hospital. Mr. Tese has a B.A. degree in accounting from Pace
University, a J.D. degree from Brooklyn Law School and an LL.M. degree in
taxation from New York University School of Law.
4
ROY J. ZUCKERBERG, director nominee, was appointed as a member of the Board
of Directors of the Company in 1999, as a member of the Audit Committee of the
Board of Directors of the Company in 1999, as a member of the Strategic Planning
Committee of the Board of Directors in 2000, and as a member of the Executive
Committee of the Board of Directors in 2000. Mr. Zuckerberg is currently a
senior director of the Goldman Sachs Group, Inc. Mr. Zuckerberg served as vice
chairman of Goldman, Sachs & Co., a member of its executive committee and head
of its Equities Division. Mr. Zuckerberg joined Goldman, Sachs & Co. in 1967 and
in 1972 assumed responsibility for developing the private client business.
Mr. Zuckerberg was made a partner of Goldman, Sachs & Co. in 1977.
Mr. Zuckerberg served as chairman of the Securities Industry Association and was
a member of the Senior Advisors Group to the President's Council on Year 2000
Conversion. Mr. Zuckerberg is chairman and a member of the executive committee
of North Shore-Long Island Jewish Health System, Inc., a trustee of the American
Red Cross in Greater New York and a director of the Brookdale Foundation. He has
had a long involvement with the UJA-Federation and served as chairman of the
Wall Street Division. He also serves as chair of the Investment Committee of the
University of Massachusetts Foundation. Mr. Zuckerberg received a B.S. from
Lowell Technological Institute in 1958 and served in the United States Army.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Assuming a quorum is present, the affirmative vote of a plurality of the
votes cast at the Annual Meeting, either in person or by proxy, is required for
the election of a director. For purposes of the election of directors,
abstentions and broker non-votes will have no effect on the result of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES
NAMED ABOVE.
5
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information as of February 28, 2001 for (i) the
members of the Board of Directors of the Company, (ii) the executive officers of
the Company and (iii) the directors and executive officers of the Company as a
group:
PERCENT OF
SHARES
PERCENT OF OUTSTANDING
SHARES (CALCULATED ON A
FIRST TERM NUMBER OF OUTSTANDING FULLY-DILUTED
NAME AND POSITION AGE ELECTED EXPIRES SHARES (1)(2) (%)(3) BASIS)(%)(4)
- ----------------- -------- -------- -------- ------------- ----------- ----------------
William L. Mack, Chairman of the
Board(5).............................. 61 1997 2002 4,468,701(10) 7.28 5.83
John J. Cali, Chairman Emeritus
(6)(28)............................... 82 1994 2003 530,456(11) * *
Mitchell E. Hersh, Chief Executive
Officer and Director (5)(6)........... 50 1997 2003 495,904(12) * *
Timothy M. Jones, President............. 45 -- -- 427,516(13) * *
Barry Lefkowitz, Executive Vice
President and Chief Financial
Officer............................... 38 -- -- 149,159(14) * *
Roger W. Thomas, Executive Vice
President, General Counsel and
Secretary............................. 43 -- -- 145,370(15) * *
Michael A. Grossman, Executive Vice
President............................. 39 -- -- 84,865(16) * *
Martin S. Berger, Director (6)(30)...... 70 1998 2003 534,532(17) * *
Brendan T. Byrne, Director (8).......... 76 1994 2001 20,600(18) * *
John R. Cali, Director (5)(29).......... 53 2000 2003 589,006(19) 1.03 *
Nathan Gantcher, Director (5)(7)(8)..... 60 1999 2002 20,000(20) * *
Martin D. Gruss, Director (9)........... 58 1997 2001 23,000(21) * *
Earle I. Mack, Director (6)............. 62 1997 2002 2,684,917(22) 4.51 3.50
Alan G. Philibosian, Director (7)(9).... 47 1997 2002 18,500(23) * *
Irvin D. Reid, Director (8)............. 60 1994 2003 13,000(24) * *
Vincent Tese, Director (7)(9)........... 58 1997 2001 35,000(25) * *
Roy J. Zuckerberg, Director (5)(6)(8)... 64 1999 2001 30,000(26) * *
------------- ----- -----
All directors and executive officers as
a group............................... 10,270,526(27) 15.37 13.40
============= ===== =====
- ------------------------
* Beneficial Ownership of less than 1.0% is omitted.
(1) The limited partners of the Operating Partnership share with the Company,
as general partner, in the net income or loss and any distributions of the
Operating Partnership. Pursuant to the partnership agreement of the
Operating Partnership, common Units are redeemable into shares of Common
Stock on a one-for-one basis.
(2) Except as otherwise noted below, all shares of Common Stock, common Units,
preferred Units (as converted into common Units), vested options, vested
warrants and all restricted stock are owned beneficially by the individual
listed with sole voting and/or investment power.
(3) Assumes redemption or conversion of only the Units in the Operating
Partnership and Unit Warrants beneficially owned by such owner into shares
of Common Stock (disregarding any waiting periods before such redemption is
legally permitted) and the exercise of vested options, vested warrants and
all restricted stock held only by such owner.
(4) Assumes redemption or conversion of all outstanding Units in the Operating
Partnership and Unit Warrants into shares of Common Stock (disregarding any
waiting periods before such redemption is legally permitted) and the
exercise of all vested options, vested warrants and all restricted stock.
6
(5) Member of the Executive Committee of the Board of Directors.
(6) Member of the Strategic Planning Committee of the Board of Directors.
(7) Member of the Nominating Committee of the Board of Directors.
(8) Member of the Audit Committee of the Board of Directors.
(9) Member of the Executive Compensation and Option Committee of the Board of
Directors.
(10) Includes 2,846,787 shares of Common Stock that may be issued upon the
redemption of all of William L. Mack's limited partnership interests in the
Operating Partnership (433,368 of which result from the exercise of Unit
Warrants), 212,078 shares of Common Stock that may be issued upon the
redemption of all of the limited partnership interests in the Operating
Partnership held by members of William L. Mack's immediate family and
trusts of which he is a trustee (32,518 of which result from the exercise
of Unit Warrants) and vested options to purchase 13,000 shares of Common
Stock. Also includes 983,699 shares of Common Stock that may be issued upon
the redemption of all of the limited partnership interests in the Operating
Partnership (149,930 of which result from the exercise of Unit Warrants)
held by trusts of which Mr. Mack or his wife is a trustee, of which
Mr. Mack disclaims beneficial ownership. Also includes 413,137 shares of
Common Stock that may be issued upon the redemption of all of the limited
partnership interests in the Operating Partnership (63,334 of which results
from the exercise of Unit Warrants) held by a partnership to which
Mr. Mack possesses sole or shared dispositive or voting power.
(11) Includes 290,561 shares of Common Stock that may be issued upon the
redemption of all of John J. Cali's limited partnership interests in the
Operating Partnership and 189,889 shares of Common Stock that may be issued
upon the redemption of all of the limited partnership interests in the
Operating Partnership held by members of John J. Cali's immediate family
and trusts of which he is a trustee. Also includes vested options to
purchase 48,855 shares of Common Stock.
(12) Includes 121,424 shares of Common Stock that may be issued upon the
redemption of all of Mitchell E. Hersh's limited partnership interests in
the Operating Partnership. Also includes vested warrants to purchase
271,980 shares of Common Stock and vested options to purchase 40,000 shares
of Common Stock.
(13) Includes 102,280 shares of Common Stock that may be issued upon the
redemption of all of Timothy M. Jones' limited partnership interests in the
Operating Partnership. Also includes vested warrants to purchase 170,000
shares of Common Stock and vested options to purchase 117,236 shares of
Common Stock.
(14) Includes vested options to purchase 97,709 shares of Common Stock.
(15) Includes vested options to purchase 97,709 shares of Common Stock.
(16) Includes vested options to purchase 73,465 shares of Common Stock.
(17) Includes 521,532 shares of Common Stock that may be issued upon the
redemption of all of Mr. Berger's limited partnership interests in the
Operating Partnership and vested options to purchase 13,000 shares of
Common Stock.
(18) Includes vested options to purchase 20,000 shares of Common Stock.
(19) Includes 164,225 shares of Common Stock that may be issued upon the
redemption of all of John R. Cali's limited partnership interests in the
Operating Partnership. Also includes vested options to purchase 346,195
shares of Common Stock.
(20) Includes vested options to purchase 5,000 shares of Common Stock.
7
(21) Includes 10,000 shares of Common Stock held by trusts of which Mr. Gruss is
a trustee, of which Mr. Gruss disclaims beneficial ownership. Also includes
vested options to purchase 13,000 shares of Common Stock.
(22) Includes 2,459,811 shares of Common Stock that may be issued upon the
redemption of all of Earle I. Mack's limited partnership interests in the
Operating Partnership (377,678 of which result from the exercise of Unit
Warrants) and 212,106 shares of Common Stock that may be issued upon the
redemption of all of the limited partnership interests in the Operating
Partnership held by members of Earle I. Mack's immediate family and trusts
of which he is a trustee (32,517 of which result from the exercise of Unit
Warrants). Also includes vested options to purchase 13,000 shares of Common
Stock.
(23) Includes 250 shares of Common Stock owned by Mr. Philibosian's family of
which Mr. Philibosian disclaims beneficial ownership. Also includes vested
options to purchase 18,000 shares of Common Stock.
(24) Includes vested options to purchase 13,000 shares of Common Stock.
(25) Includes vested options to purchase 13,000 shares of Common Stock.
(26) Includes vested options to purchase 5,000 shares of Common Stock.
(27) Includes all restricted stock, whether vested or unvested, together with
5,695,574 shares of Common Stock that may be issued upon the redemption of
all of the executive officers' and directors' limited partnership interests
in the Operating Partnership. Includes 1,732,610 shares of Common Stock
that may be issued upon the conversion and/or redemption of all of the
limited partnership interests in the Operating Partnership held by members
of the directors' and executive officers' immediate families, trusts of
which they or their wives are trustees or entities over which they possess
sole or shared dispositive or voting power. Also includes vested options to
purchase 947,169 shares of Common Stock, vested warrants to purchase
441,980 shares of Common Stock and vested Unit Warrants to purchase
1,089,345 shares of Common Stock held by directors, executive officers,
members of the directors' and executive officers' immediate families,
trusts of which they or their wives are trustees or entities over which
they possess sole or shared dispositive or voting power.
(28) Resigned as Chairman of the Board of Directors as of June 27, 2000.
(29) Resigned as Executive Vice President--Development as of June 27, 2000.
(30) In connection with the Company's acquisition of 65 Class A properties from
the Robert Martin Company LLC ("Robert Martin") in January 1997, as
subsequently modified, the Company granted Robert Martin the right to
designate one member to the Board of Directors of the Company for six years
(the "RM Board Seat"). Robert Martin has designated Martin S. Berger and
Robert F. Weinberg to jointly share the RM Board Seat as follows:
Mr. Weinberg served as a member of the Board of Directors of the Company
from January 1997 until December 1, 1998, at which time Mr. Weinberg
resigned and Mr. Berger was appointed to serve in such capacity. Upon his
resignation from the Board, Mr. Weinberg became a member of the Advisory
Board. Mr. Berger served as a member of the Board of Directors of the
Company from December 1, 1998 until March 6, 2001, at which time
Mr. Berger resigned and Mr. Weinberg was appointed to serve in such
capacity until the Company's 2003 annual meeting of stockholders. Upon his
resignation from the Board, Mr. Berger became a member of the Advisory
Board. If the Company elects to nominate for re-election to its Board of
Directors a designee of Robert Martin at the Company's 2003 annual meeting
of stockholders, then Mr. Berger and Mr. Weinberg have agreed that
Mr. Berger will be so nominated and the seat will be rotated among
Mr. Berger and Mr. Weinberg every 12 months commencing on the 12 month
anniversary of the 2003 annual meeting of stockholders. Upon the death of
Mr. Berger or Mr. Weinberg, the surviving person
8
shall solely fill the remainder of the term of the RM Board Seat.
Mr. Weinberg owns 536,532 shares of our Common Stock, which includes
521,532 shares of Common Stock that may be issued upon the redemption of
all of Mr. Weinberg's limited partnership interests in the Operating
Partnership and vested options to purchase 15,000 shares of Common Stock.
As this Proxy Statement relates principally to the 2000 fiscal year of the
Company, disclosure herein will treat Mr. Berger as a director and
Mr. Weinberg as a member of the Advisory Board, even though such roles were
reversed as of March 6, 2001.
Biographical information concerning the director nominees is set forth above
under the caption "Proposal No. 1--Election of Directors." Biographical
information concerning the remaining directors and executive officers is set
forth below.
WILLIAM L. MACK has served as a member of the Board of Directors of the
Company since 1997 and became its Chairman in 2000. Mr. Mack also serves as
Chairman of the Company's Executive Committee. Prior to December 1997, Mr. Mack
served as managing partner of the Mack organization, where he pioneered the
development of large, Class A office properties and helped to increase the Mack
organization's portfolio to approximately 20 million square feet. In addition,
Mr. Mack is a managing partner of Apollo Real Estate Advisors, L.P. whose
investment funds have invested in greater than $10 billion of various
diversified real estate ventures. Mr. Mack also currently serves as a member of
the board of directors of The Bear Stearns Companies, Inc., Metropolis Realty
Trust, Inc., Wyndham International, Inc. and Vail Resorts, Inc. Mr. Mack is a
trustee of the North Shore-Long Island Jewish Health System and the University
of Pennsylvania, a member of the board of overseers of The Wharton School and
serves on the executive committee for the Real Estate Center of The Wharton
School. Mr. Mack attended the Wharton School of Business and Finance at the
University of Pennsylvania and has a B.S. degree in business administration,
finance and real estate from New York University. Mr. Mack serves as a member of
the Board of Directors of the Company pursuant to an agreement with the Company
entered into at the time of the Company's combination with the Mack organization
in December 1997. Mr. Mack is the brother of Earle I. Mack.
JOHN J. CALI has served as Chairman Emeritus of the Board of Directors of
the Company, and as a member of the Strategic Planning Committee of the Board of
Directors of the Company since 2000. Mr. Cali served as Chairman of the Board of
Directors of the Company from 1994 to June 2000, as a member of the Executive
Committee of the Board of Directors of the Company from 1997 to June 2000 and as
Chief Executive Officer of the Company from 1994 to 1995. In addition, Mr. Cali
was a principal of Cali Associates and a member of its Executive and Long Range
Planning Committees from 1949 to 1994. Mr. Cali co-founded Cali Associates in
1949. Mr. Cali graduated from Indiana University. Mr. Cali serves as a member of
the Board of Directors of the Company pursuant to an agreement dated as of
June 27, 2000, among the Company and members of the Cali family. See "Certain
Relationships and Related Transactions." Mr. Cali is the uncle of John R. Cali.
MITCHELL E. HERSH has served as a member of the Board of Directors of the
Company and as a member of the Executive Committee of the Board of Directors of
the Company since 1997 and as a member of the Strategic Planning Committee of
the Board of Directors of the Company since 2000. Mr. Hersh also serves as Chief
Executive Officer of the Company. Mr. Hersh is responsible for the strategic
direction and long-term planning for the Company. He is also responsible for
creating and implementing the Company's capital markets strategy and overall
investment strategy. Previously, Mr. Hersh held the position of President and
Chief Operating Officer of the Company. Prior to joining the Company, Mr. Hersh
served as a partner of the Mack organization since 1982 and as chief operating
officer of the Mack organization since 1990, where he was responsible for
overseeing the development, operations, leasing and acquisitions of the Mack
organization's office and industrial portfolio. Mr. Hersh serves on the board of
directors of the National Association of Real Estate Investment Trusts (NAREIT)
and the New Jersey Chapter of the National Association of Industrial and Office
Properties (NAIOP). Mr. Hersh has a B.A. degree in architecture from
Ohio University.
9
Mr. Hersh serves as a member of the Board of Directors of the Company pursuant
to an agreement with the Company entered into at the time of the Company's
combination with the Mack organization in December 1997.
TIMOTHY M. JONES serves as President of the Company. He is responsible for
overseeing the portfolio management, leasing, development and operations areas
of the Company. Previously, he served as Executive Vice President and Chief
Investment Officer of the Company. Prior to joining the Company, Mr. Jones
served as executive vice president and chief operating officer of The Robert
Martin Company, where he was responsible for the daily corporate operations and
management of the firm's six-million square foot portfolio in New York and
Connecticut. Prior to joining The Robert Martin Company, Mr. Jones served as a
vice president in Chemical Bank's Real Estate Division, as president of Clifton
Companies in Stamford, Connecticut and president of Federated National Company
in State College, Pennsylvania. Mr. Jones has a B.A. degree in economics from
Yale University and a Masters degree in business from Columbia University.
BARRY LEFKOWITZ serves as Executive Vice President and Chief Financial
Officer of the Company. Mr. Lefkowitz oversees the firm's strategic financial
planning and forecasting, financial accounting and reporting, capital markets
activities and investor relations. Prior to joining the Company, Mr. Lefkowitz
served as a senior manager with the international accounting firm of Deloitte &
Touche LLP, specializing in real estate, with emphasis on mergers and
acquisitions. In addition to serving as co-chairman of the National Association
of Real Estate Investment Trusts (NAREIT) Accounting Committee, he is a member
of the American Institute of Certified Public Accountants (AICPA), the New
Jersey Society of Certified Public Accountants (NJSCPA) and the New York State
Society of Certified Public Accountants (NYSSCPA). Mr. Lefkowitz holds a B.S.
degree in accounting from Brooklyn College.
ROGER W. THOMAS serves as Executive Vice President, General Counsel and
Secretary of the Company. Mr. Thomas' responsibilities include structuring and
implementing the Company's acquisitions and mergers, corporate governance,
supervising outside legal counsel, insuring legal compliance and the preparation
of required disclosure documents. Mr. Thomas also assists the Company in
investment strategies, financial activities, acquisitions and dispositions.
Prior to joining the Company, Mr. Thomas was a partner at the law firm of
Dreyer & Traub in New York, specializing in real estate and commercial
transactions. Mr. Thomas holds a B.S.B.A. in finance and a J.D. degree (with
honors) from the University of Denver.
MICHAEL A. GROSSMAN serves as Executive Vice President of the Company. He is
responsible for overseeing the Company's New York, Connecticut and Northern New
Jersey (Bergen and Passaic counties) regions. Previously, Mr. Grossman served as
Senior Vice President of the Company in 2000, and as Vice President of the
Company from 1997 to January 2000. Prior to joining the Company, Mr. Grossman
served as Vice President of Leasing for The Robert Martin Company since 1991,
where he was responsible for leasing throughout Westchester and Fairfield
counties. Mr. Grossman is a member of the Westchester Board of Realtors,
Commercial and Industrial Division, treasurer of the National Association of
Industrial and Office Parks from 1997 to 1998, and a member of the March of
Dimes Real Estate Committee, Westchester chapter. Mr. Grossman attended the
University of South Florida and is a graduate of New York City Technical
College.
MARTIN S. BERGER has served a member of the Board of Directors of the
Company since 1998 and as Chairman of the Strategic Planning Committee of the
Board of Directors of the Company since 2000. Mr. Berger resigned as director of
Company on March 6, 2001, and became a member of the Advisory Board. Mr. Berger
also served on the Company's Advisory Board from January 1997 to 1998. Prior to
January 1997, Mr. Berger served as co-chairman and general partner of The Robert
Martin Company since its founding in 1957. Mr. Berger is chairman of the board
and chief executive officer of City & Suburban Federal Savings Bank, president
of the Construction Industry Foundation, and a board member of The White Plains
Hospital Medical Center. Mr. Berger holds a B.S. degree in
10
finance from New York University. Mr. Berger serves as a member of the Board of
Directors pursuant to an agreement with the Company entered into at the time of
the Company's acquisition of The Robert Martin Company in January 1997, as
modified.
JOHN R. CALI has served as a member of the Board of Directors of the Company
and as a member of the Executive Committee of the Board of Directors of the
Company since 2000. Mr. Cali served as Executive Vice President-Development of
the Company until June 2000, and as Chief Administrative Officer of the Company
until December 1997. In addition, Mr. Cali was a principal of Cali Associates
and served as a member of its Long Range Planning Committee from 1981 to 1994
and its Executive Committee from 1987 to 1994 and was responsible for the
development of Cali Associates' office system and the management of its office
personnel. Mr. Cali also developed and organized the leasing and property
management departments of Cali Associates and he was responsible for directing
the development functions of the Company. Mr. Cali is a member of the University
of Pennsylvania Health System Trustee Board. Mr. Cali has an M.Ed. degree in
counseling, organizational development and personnel from the University of
Missouri. Mr. Cali serves as a member of the Board of Directors of the Company
pursuant to an agreement dated as of June 27, 2000, among the Company and
members of the Cali family. See "Certain Relationships and Related
Transactions." Mr. Cali is the nephew of John J. Cali.
NATHAN GANTCHER has served as a member of the Board of Directors of the
Company since 1999, as a member of the Audit Committee of the Board of Directors
of the Company since 1999, and as a member of each of the Nominating Committee
of the Board of Directors and the Executive Committee of the Board of Directors
since 2000. Mr. Gantcher served as vice chairman of CIBC Oppenheimer Corp. Prior
to becoming vice chairman of CIBC Oppenheimer Corp., Mr. Gantcher served as
co-chief executive officer of Oppenheimer & Co., Inc. Mr. Gantcher currently
serves as chairman of the board of trustees of Tufts University and as a member
of each of the Council of Foreign Relations and the Overseers Committee of the
Columbia University Graduate School of Business. Mr. Gantcher received his A.B.
in economics and biology from Tufts University and his M.B.A. from the Columbia
University Graduate School of Business.
EARLE I. MACK has served as a member of the Board of Directors of the
Company since 1997 and as a member of the Strategic Planning Committee of the
Board of Directors of the Company since 2000. Prior to December 1997, Mr. Mack
served as senior partner, chief financial officer and a director of the Mack
organization, where he pioneered the development of large, Class A office
properties and helped to increase the Mack organization's portfolio to
approximately 20 million square feet. Mr. Mack serves as a member of the board
of directors of DiGiorgio/White Rose Corp. and as a member of its executive and
executive compensation committees. Mr. Mack also is the chairman of the board of
directors of the Benjamin N. Cardozo School of Law and the chairman emeritus of
the New York State Council on the Arts. Mr. Mack has a B.S. degree in business
administration from Drexel University and also attended Fordham Law School.
Mr. Mack serves as a member of the Board of Directors of the Company pursuant to
an agreement with the Company entered into at the time of the Company's
combination with the Mack organization in December 1997. Mr. Mack is the brother
of William L. Mack.
ALAN G. PHILIBOSIAN has served as a member of the Board of Directors of the
Company and as a member of the Executive Compensation and Option Committee of
the Board of Directors of the Company since 1997, and as a member of the
Nominating Committee of the Board of Directors since 2000. Mr. Philibosian is an
attorney practicing in Englewood, New Jersey. Mr. Philibosian is currently a
commissioner on The Port Authority of New York and New Jersey, and also serves
on the board of directors of NorCrown Bank, the Armenian Missionary Association
of America, Paramus, New Jersey and John Harms Center for the Arts, Englewood,
New Jersey. Mr. Philibosian graduated from Rutgers College, and received his
J.D. degree from Boston College Law School and his LL.M. degree in taxation from
New York University.
11
IRVIN D. REID has served as a member of the Board of Directors of the
Company since 1994 and as chairman of the Audit Committee of the Board of
Directors of the Company since 1998. Dr. Reid also serves as president of Wayne
State University in Michigan. Prior to becoming the president of Wayne State
University, Dr. Reid served as president of Montclair State University (formerly
Montclair State College) in New Jersey from 1989 to 1997, and held positions of
dean, School of Business Administration, and John Stagmaier Professor of
Economics and Business Administration at the University of Tennessee at
Chattanooga. Dr. Reid also is a member of the board of directors of Fleet Bank,
N.A. Dr. Reid received his B.S. degree and M.S. degree in general and
experimental psychology from Howard University. He earned his M.A. and Ph.D.
degrees in business and applied economics from The Wharton School of the
University of Pennsylvania.
ROBERT F. WEINBERG became a member of the Board of Directors of the Company
as of March 6, 2001. He shares the RM Board Seat with Martin Berger.
Mr. Weinberg had served as a member of the Advisory Board of the Company since
1998 and previously as a member of the Board of Directors of the Company from
1997 until 1998. Mr. Weinberg served as Co-Chairman and General Partner of The
Robert Martin Company since its founding in 1957. Mr. Weinberg is presently the
Chairman of the Outreach Committee on Orderly Growth in Westchester, a Director
of City & Suburban Federal Savings Bank and a Director of the Westchester County
Association. Mr. Weinberg earned a B.S. degree in Mechanical Engineering from
New York University, an M.S. degree in Building Engineering & Construction from
M.I.T. and a J.D. degree from Brooklyn Law School.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CALI AGREEMENT. On June 27, 2000, both Brant Cali and John R. Cali resigned
their positions as officers of the Company, and Brant Cali resigned as a
director of the Company. John R. Cali was appointed to the Board of Directors of
the Company to take the seat previously held by Brant Cali. As required by Brant
Cali and John R. Cali's employment agreements with the Company (i) the Company
made severance payments to Brant Cali and John R. Cali in the amount of
$2,820,156 and $2,805,576, respectively, (ii) the Company will permit Brant Cali
and John R. Cali (and their dependents) to participate in the health and
disability insurance programs of the Company for a period of four years from
such date and (iii) all options to acquire shares of the Company's Common Stock
and shares of restricted stock held by Brant Cali and John R. Cali became fully
vested on the effective dates of their resignations from the Company.
In connection with Brant Cali and John R. Cali's resignations, the Company
agreed to nominate John J. Cali and John R. Cali for election as directors at
the 2000 annual meeting of stockholders. They were so nominated and elected. If
either John J. Cali or John R. Cali resign or are removed from the Board of
Directors during their term, the members of the Cali family are entitled to
designate a successor to John J. Cali, John R. Cali, or both. Any such successor
will be subject to the prior approval of the Board of Directors, which approval
shall not be unreasonably withheld. In addition, for as long as members of the
Cali family (or entities wholly owned by the Cali family, Cali family trusts or
the heirs of any member of the Cali Group maintain at least the "Minimum
Percentage" (as defined below) of the Cali family's aggregate equity position in
the Units in the Operating Partnership (measured exactly as it existed on
June 27, 2000), the Company has agreed to nominate one designee of the Cali
family for election to the Board of Directors for a second and third three-year
term, provided such person shall be subject to the prior approval of the Board
of Directors, which approval shall not be unreasonably withheld. "Minimum
Percentage" shall mean (i) 90% or (ii) 87.5%, if the Cali family's aggregate
equity position in the Units in the Operating Partnership is reduced below 90%
solely as a result of sales of Units to the Company.
For as long as (i) the Cali family is represented on the Board of Directors,
(ii) the Cali family (or entities wholly owned by the Cali family, Cali family
trusts, or the heirs of any member of the Cali Group) maintains at least the
Minimum Percentage of the Cali family's aggregate equity position in the
12
Units of the Operating Partnership (measured exactly as it existed on June 27,
2000) and (iii) the Board of Directors determines in its reasonable discretion
to continue the Executive Committee of the Board of Directors, the Cali family
shall be entitled to designate John R. Cali or another Cali-designated board
member to serve as a member of the Executive Committee of the Board of
Directors, provided such person shall be subject to the prior approval of the
Board of Directors, which approval may not be unreasonably withheld.
In addition, John J. Cali will serve as a consultant to the Company and will
be paid an annual salary of $150,000 until June 27, 2003.
TAX PROTECTION AGREEMENTS. In connection with the completion of the Mack
transaction in December 1997, the Company contractually agreed for a specified
period of time not to sell or otherwise transfer the properties acquired thereby
in a manner that would adversely affect the tax deferral of certain members of
the Mack Group, subject to certain exceptions set forth in the relevant
acquisition agreements. Members of the Mack Group include Mitchell E. Hersh,
William L. Mack and Earle I. Mack.
In connection with the Company's acquisition of 65 Class A properties from
Robert Martin in January 1997 and as recently modified, members of Robert Martin
were granted certain limited protection with respect to the properties they
contributed to the Company similar to that which was granted to members of the
Mack Group. Members of Robert Martin include Martin S. Berger, Timothy M. Jones
and Robert F. Weinberg.
In connection with the agreement entered into on June 27, 2000 among the
Company and certain members of the Cali Group, members of the Cali Group were
granted certain limited tax protection with respect to the properties that they
initially contributed to the Company upon its formation similar to that which
was granted to members of the Mack Group. Members of the Cali Group include John
J. Cali and John R. Cali.
ACQUISITIONS AND OTHER TRANSACTIONS. Certain directors and executive
officers of the Company (or members of their immediate families or related
trusts) and persons who hold more than 5% of the outstanding shares of Common
Stock (or Units in the Operating Partnership) had direct or indirect interests
in certain transactions of the Company or the Operating Partnership in the last
fiscal year as follows:
- The son of Martin S. Berger, a director of the Company, serves as an
officer of a company which provides cleaning and other related services to
certain of the Company's properties. During 2000, the Company incurred
costs to this company for services rendered of approximately $3,164,000.
As of December 31, 2000, the Company had accounts payable of approximately
$108,000 to this company.
- The Company provides management, leasing and construction services to
properties owned by third parties in which Martin S. Berger, a director of
the Company, Robert F. Weinberg, a former director of the Company and a
member of the Company's Advisory Board, and Timothy M. Jones, President of
the Company, hold an ownership interest. During 2000, the Company
recognized approximately $1,921,000 in revenues from these properties. As
of December 31, 2000, the Company had total receivables from these
properties of approximately $1,000,000.
- William L. Mack, a director of the Company, Earle I. Mack, a director of
the Company, and their brothers David S. Mack and Fredric Mack, each a
member of the Company's Advisory Board, are the executive officers,
directors and shareholders of a corporation that entered into a lease in
2000 with Linwood Realty LLC, an affiliate of the Company, for
approximately 7,801 square feet of office space at an annual rental rate
of $206,727. The lease has a five year term which commenced on
November 13, 2000 and will expire on November 30, 2005. The lease also
provides for other payments as additional rent including electricity
charges and increases in operating costs, utilities and real estate taxes.
13
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers, directors and
persons who beneficially own more than 10% of the Company's Common Stock to file
initial reports of ownership and reports of changes of ownership (Forms 3, 4 and
5) of the Common Stock with the SEC and the NYSE. Executive officers, directors
and greater than 10% holders are required by SEC regulations to furnish the
Company with copies of such forms that they file.
To the Company's knowledge, based solely on the Company's review of the
copies of such reports received by the Company, the Company believes that for
the fiscal year 2000, all Section 16(a) filing requirements applicable to its
executive officers, directors and greater than 10% beneficial owners were
complied with.
MEETINGS OF COMMITTEES AND THE BOARD OF DIRECTORS
During 2000, the entire Board of Directors met nineteen times. With the
exception of Irvin D. Reid, no director attended fewer than 75% of the aggregate
of the total number of meetings of the Board of Directors (held during the
period for which he has been a director) and the total number of meetings held
by all committees of the Board of Directors on which he served (during the
periods that he served).
The Board of Directors has five committees: the Executive Committee, the
Audit Committee, the Executive Compensation and Option Committee, the Strategic
Planning Committee and the Nominating Committee.
The Executive Committee consists of William L. Mack, chairman, John R. Cali,
Nathan Gantcher, Mitchell E. Hersh and Roy J. Zuckerberg. The Executive
Committee acts for the Board of Directors in between regularly scheduled
meetings of the Board of Directors within certain parameters prescribed by the
Board of Directors. The Executive Committee met three times during 2000.
The Audit Committee consists of Irvin D. Reid, chairman, Brendan T. Byrne,
Nathan Gantcher and Roy J. Zuckerberg, each of whom are independent directors of
the Company. The Audit Committee makes recommendations concerning the engagement
of independent accountants, reviews with the independent accountants the scope
and results of the audit engagement, approves professional services provided by
the independent accountants, reviews the independence of the independent
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
seven times during 2000.
The Executive Compensation and Option Committee consists of Vincent Tese,
chairman, Martin D. Gruss and Alan G. Philibosian. The Executive Compensation
and Option Committee establishes remuneration levels for executive officers of
the Company and implements incentive programs, including the Employee Stock
Option Plan and the Director Stock Option Plan. The Executive Compensation and
Option Committee met two times during 2000.
The Strategic Planning Committee consists of Martin S. Berger, chairman,
John J. Cali, Mitchell E. Hersh, Earle I. Mack and Roy J. Zuckerberg. The
Strategic Planning Committee makes recommendations concerning long range
strategic alternatives for the Company. The Strategic Planning Committee met
once during 2000.
The Nominating Committee consists of Vincent Tese, chairman, Nathan Gantcher
and Alan G. Philibosian. The Nominating Committee makes recommendations for
nominees to the Board of Directors of the Company. Although there are no formal
procedures for stockholders to make recommendations for committee appointments
or recommendations for nominees to the Board of Directors, the Board of
Directors will consider recommendations from stockholders, which should be
14
addressed to Roger W. Thomas, the Company's Secretary, at the Company's address
set forth on the first page of this Proxy Statement. The Nominating Committee
was formed in June 2000, and did not meet during 2000.
During 2000, the Board of Directors also had a Special Governance Committee.
The Special Governance Committee consisted of Martin S. Berger, Brendan T.
Byrne, Nathan Gantcher, Martin D. Gruss, Alan Philibosian, Irvin D. Reid,
Vincent Tese and Roy J. Zuckerberg. The Special Governance Committee considered
certain actions taken by the Company in connection with the agreement entered
into on June 27, 2000 between the Company and members of the Cali Group. The
Special Governance Committee met five times during 2000.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors of the Company serves as the
representative of the Board for general oversight of the Company's financial
accounting and reporting process, system of internal control, audit process for
monitoring compliance with laws and regulations and the Company's standards of
business conduct. The Company's management has primary responsibility for
preparing the Company's financial statements and the Company's reporting
process. The Company's independent accountants and auditors,
PricewaterhouseCoopers LLP, are responsible for expressing an opinion on the
conformity of the Company's audited financial statements to accounting
principles generally accepted in the United States of America. The Audit
Committee charter was approved by the Board of Directors of the Company on
June 8, 2000. The Audit Committee met seven times during 2000.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for their respective audits. The Audit Committee met
with the independent auditors, with and without management present, to discuss
the results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting.
In this context, the Audit Committee hereby reports as follows:
1. The Audit Committee has reviewed and discussed the audited financial
statements with the Company's management, including the quality, not just
the acceptability, of the Company's accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in
the financial statements;
2. The Audit Committee has discussed with the independent auditor their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
by SAS 61 (Codification of Statements on Auditing Standard, AU Section380),
as may be modified or supplemented;
3. The Audit Committee has received the written disclosures and the
letter from the independent accountant required by Independence Standards
Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees), as may be modified or
supplemented, and has discussed with the independent accountant the
independent accountant's independence from management and the Company and
considered the compatibility of non-audit services with the auditor's
independence; and
4. Based on the review and discussions referred to in paragraphs
(1) through (3) above, the Audit Committee recommended to the Board of
Directors of the Company (and the Board of Directors has approved) that the
audited financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000, for filing with the
Securities and Exchange Commission.
15
Each of the members of the Audit Committee is independent as defined under
the listing standards of the New York Stock Exchange and meets all other
requirements of such Exchange.
AUDIT COMMITTEE
IRVIN D. REID, CHAIRMAN
BRENDAN T. BYRNE
NATHAN GANTCHER
ROY J. ZUCKERBERG
COMPENSATION OF DIRECTORS
DIRECTORS' FEES. Each non-employee director was paid an annual fee of
$15,000, plus $1,000 per board meeting attended, $500 per committee meeting
attended and $250 per telephonic meeting participation. The Company does not pay
director fees to employee directors, who in fiscal 2000 consisted of Mitchell E.
Hersh. Each director also was reimbursed for expenses incurred in attending
director and committee meetings. For fiscal 2000, William L. Mack, John J. Cali,
Martin S. Berger, Brendan T. Byrne, John R. Cali, Nathan Gantcher, Martin D.
Gruss, Earle I. Mack, Alan G. Philibosian, Irvin D. Reid, Vincent Tese and Roy
J. Zuckerberg received directors' fees or fee equivalents (See "Directors'
Deferred Compensation Plan" below) in the amounts of $25,500, $23,750, $27,250,
$29,000, $8,000, $28,750, $27,500, $24,750, $28,000, $25,500, $25,750 and
$28,500, respectively.
DIRECTORS' DEFERRED COMPENSATION PLAN. Pursuant to the Directors' Deferred
Compensation Plan, effective as of January 1, 1999, each non-employee director
is entitled to defer all or a specified portion of the annual retainer to be
paid to such director. The account of a director who elects to defer such
compensation under the Directors' Deferred Compensation Plan is credited with
the hypothetical number of stock units, calculated to the nearest thousandths of
a unit, determined by dividing the amount of compensation deferred on the
deferral date by the closing market price of the Company's Common Stock as
reported on the Consolidated Tape of NYSE listed shares on the deferral date.
Any stock dividend declared by the Company on its Common Stock results in a
proportionate increase in units in the director's account as if such director
held shares of Common Stock equal to the number of units in such director's
account. Payment of a director's account may only be made in a lump sum in
shares of Common Stock equal to the number of units in a director's account
after either the director's service on the Board of Directors has terminated or
there has been a change in control of the Company. In 2000, the director
accounts of Nathan Gantcher, Martin D. Gruss, William L. Mack, Alan G.
Philibosian, Irvin D. Reid, Vincent Tese and Roy J. Zuckerberg were credited
with 636.498, 656.478, 656.478, 328.239, 656.478, 656.478 and 636.498 stock
units, respectively.
DIRECTORS' STOCK OPTION PLAN. The Company has two Director Stock Option
Plans: the Director Stock Option Plan of Mack-Cali Realty Corporation (the
"Director Plan") and the 2000 Director Stock Option Plan (the "2000 Director
Plan"). References to "Director Stock Option Plan" herein refer to the Director
Plan and the 2000 Director Plan, collectively. Pursuant to the Director Stock
Option Plan, each non-employee director is automatically granted a non-statutory
option to purchase 5,000 shares of Common Stock in connection with the
director's initial election or appointment to the Board of Directors. These
grants under the Director Stock Option Plan are made at an exercise price equal
to the "fair market value" (as defined under the Director Stock Option Plan) at
the time of the grant of the shares of Common Stock subject to such option. The
Executive Compensation and Option Committee may make additional discretionary
option grants to eligible directors, consistent with the terms of the Director
Stock Option Plan. In 2000, each non-employee director was granted 5,000
discretionary options. The Board of Directors may amend, suspend or terminate
the Director Stock Option Plan at any time except that any amendments that would
materially increase the cost of the Director Stock Option Plan to the Company
must be approved by the holders of the majority of issued and outstanding shares
of Common Stock of the Company entitled to vote.
16
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation of the chief executive officer and the five most highly compensated
executive officers of the Company other than the chief executive officer
(collectively, the "Named Executive Officers") for each of the Company's last
three fiscal years:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
---------------------------------------------
AWARDS PAYOUTS
---------------------------------- --------
ANNUAL COMPENSATION (1) RESTRICTED SECURITIES LTIP
------------------------------- OTHER ANNUAL STOCK UNDERLYING PAYOUTS
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARD(S)($) OPTIONS/WARRANTS (#) ($) (4)
- --------------------------- -------- --------- -------- ---------------- ----------- -------------------- --------
Mitchell E. Hersh .......... 2000 1,050,000 440,000 104,119(3) 0 200,000(5) 242,138
Chief Executive Officer 1999 1,050,000 440,000 0 0 0 0
1998 1,090,385 440,000 2,179(2) 0 0 0
Timothy M. Jones ........... 2000 515,000 380,000 62,472(3) 0 120,000(5) 145,283
President 1999 421,462 275,000 0 0 0 0
1998 337,500 170,000 2,179(2) 0 15,000(6) 0
Barry Lefkowitz ............ 2000 385,000 250,000 43,469(3) 0 100,000(5) 101,091
Executive Vice President and 1999 360,385 225,000 0 0 0 0
Chief Financial Officer 1998 311,538 205,000 2,179(2) 0 0 0
Roger W. Thomas ............ 2000 325,000 185,000 36,706(3) 0 100,000(5) 85,362
Executive Vice President, 1999 312,692 185,000 0 0 0 0
General Counsel and 1998 311,538 185,000 2,179(2) 0 0 0
Secretary
Michael A. Grossman (9) .... 2000 250,000 160,000 6,664(3) 0 30,000(7) 15,497
Executive Vice President 1999 177,019 75,000 0 0 5,000(8) 0
1998 181,731 65,000 2,179(2) 0 0 0
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION
- --------------------------- -------------
Mitchell E. Hersh .......... 0
Chief Executive Officer 0
0
Timothy M. Jones ........... 0
President 0
0
Barry Lefkowitz ............ 0
Executive Vice President and 0
Chief Financial Officer 0
Roger W. Thomas ............ 0
Executive Vice President, 0
General Counsel and 0
Secretary
Michael A. Grossman (9) .... 0
Executive Vice President 0
0
- ------------------------
(1) The annual compensation portion of this table includes the dollar value of
regular annual payments of base salary, bonus and any other annual
compensation earned by each Named Executive Officer during the stated fiscal
year. Certain base salaries appear slightly higher than the contractual
amounts due to when pay periods accrued during fiscal year 2000.
(2) Represents the value of 10 shares of preferred stock of Mack-Cali Property
Trust issued in January 1998 and $1,179 in tax gross-up payments relating
thereto.
(3) Represents tax gross-up payments relating to restricted stock which vested
on January 1, 2000. See footnote 4 hereto.
(4) In July 1999, the Company entered into amended and restated employment
agreements with each of Mitchell E. Hersh, Timothy M. Jones, Barry Lefkowitz
and Roger W. Thomas, pursuant to which Messrs. Hersh, Jones, Lefkowitz and
Thomas were issued 62,500, 37,500, 26,094 and 22,031 shares of restricted
stock, respectively, the vesting of which is contingent upon the
satisfaction of certain performance requirements. There are certain tax
gross-up payments that will be made upon such vesting. See "Employment
Contracts; Termination of Employment." In addition, in December 1999,
pursuant to the Company's Employee Stock Option Plan, Michael A. Grossman
was issued 4,000 shares of restricted stock, the vesting of which is
contingent upon the satisfaction of certain performance requirements. There
are certain tax gross-up payments that will be made upon such vesting. The
shares of restricted stock vest with respect to the recipient on either an
annual basis over a five year vesting period or on a cumulative basis over a
seven year maximum vesting period. The number of shares of restricted stock
scheduled to be vested and earned on each vesting date on an annual basis,
provided certain performance requirements set forth in the
17
following sentence are satisfied, generally is equal to 15% of the
restricted stock on the vesting date in year one, 15% of the restricted
stock on the vesting date in year two, 20% of the restricted stock on the
vesting date in year three, 25% of the restricted stock on the vesting date
in year four and 25% of the restricted stock on the vesting date in year
five. Vesting of the restricted stock on an annual basis commenced
January 1, 2000, provided one of the following financial tests is met for
the measurement period ending on the last day of the Company's fiscal year
immediately preceding such vesting date: (A) the Company achieves an eight
percent (8%) increase in its funds from operations per common share or
(B) stockholders achieve a twelve and three quarters percent (12.75%) total
return (dividends, assuming reinvestment upon applicable payment date, plus
stock appreciation per share of Common Stock). The Company met the first of
such tests for the measurement period ended December 31, 1999. On
January 1, 2000, the following shares of restricted stock vested: 9,375,
5,625, 3,914, 3,304 and 600 for Messrs. Hersh, Jones, Lefkowitz, Thomas and
Grossman, respectively, together with tax gross-up payments relating
thereto. The value of the vested restricted stock and the tax gross-up
payments relating thereto are based upon a $25.8281 stock price, which was
the price of the Company's Common Stock on the date of vesting.
(5) Represents an option to purchase shares of Common Stock at an exercise price
of $26.8125 per share.
(6) Represents an option to purchase shares of Common Stock at an exercise price
of $37.3125 per share.
(7) Represents an option to purchase shares of Common Stock at an exercise price
of $26.75 per share.
(8) Represents an option to purchase shares of Common Stock at an exercise price
of $24.625 per share.
(9) Michael A. Grossman was appointed Executive Vice President in 2000.
18
OPTION PLANS
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------- VALUE AT
PERCENT OF ASSUMED ANNUAL
NUMBER OF TOTAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION
OPTIONS EMPLOYEES OR BASE TERM(5)
GRANTED IN FISCAL PRICE EXPIRATION ---------------------
NAME (#)(2) 2000(%) ($/SH) (3) DATE(4) 5% ($) 10% ($)
- ---- ---------- ---------- ---------- ---------- --------- ---------
Mitchell E. Hersh ................. 200,000 13.66 26.8125 12/5/10 268,125 536,250
Chief Executive Officer
Timothy M. Jones .................. 120,000 8.20 26.8125 12/5/10 160,875 321,750
President
Barry Lefkowitz ................... 100,000 6.83 26.8125 12/5/10 134,063 268,125
Executive Vice President and Chief
Financial Officer
Roger W. Thomas ................... 100,000 6.83 26.8125 12/5/10 134,063 268,125
Executive Vice President, General
Counsel and Secretary
Michael A. Grossman ............... 30,000 2.05 26.75 9/11/10 40,125 80,250
Executive Vice President
- ------------------------
(1) The Company has not, to date, granted any stock appreciation rights under
its Employee Stock Option Plans.
(2) The Company has established the Director and Employee Stock Option Plans for
the purpose of attracting and retaining officers, directors and employees.
Options granted under the Director and Employee Stock Option Plans are
exercisable for shares of Common Stock.
(3) The exercise price of all options is equal to the market price of the
underlying Common Stock at the close of business on the date immediately
preceding the date of grant. As of the Record Date, the closing stock price
was $ per share, as opposed to the exercise prices of $26.8125 and
$26.75 per share.
(4) Each option granted in 2000 has a ten-year term, vests one-fifth each year
beginning on the first day following the last day of the year in which
options were granted, and becomes 100% vested on the first day following the
fourth anniversary of the last day of the year in which the options were
granted.
(5) The dollar gains under these columns result from calculations assuming 5%
and 10% growth rates as set by the Securities and Exchange Commission and
are not intended to forecast future price appreciation of the Company's
Common Stock. The gains reflect a future value based upon growth at these
prescribed rates. The Company did not use an alternative formula for a grant
date valuation, an approach which would state gains at present, and
therefore lower, value.
19
AGGREGATED OPTION/WARRANT/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/WARRANTS/SARS AT OPTIONS/WARRANTS/SARS AT
ACQUIRED VALUE FISCAL YEAR-END(#) FISCAL YEAR-END ($)
ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
Mitchell E. Hersh.................. 0 0 311,980 227,996 70,000 280,000
Timothy M. Jones................... 0 0 287,236 123,059 42,000 168,000
Barry Lefkowitz.................... 0 0 97,709 99,428 35,000 140,000
Roger W. Thomas.................... 0 0 97,709 99,428 35,000 140,000
Michael A. Grossman................ 0 0 73,465 38,367 18,750 55,313
EMPLOYMENT CONTRACTS; TERMINATION OF EMPLOYMENT
MITCHELL E. HERSH EMPLOYMENT AGREEMENT. On July 1, 1999, following the
appointment of Mitchell E. Hersh as Chief Executive Officer of the Company on
April 18, 1999, the Company and Mr. Hersh amended and restated Mr. Hersh's
employment agreement with the Company (the "Amended and Restated Hersh
Agreement"), providing for a constant 4 year term. Mr. Hersh's initial annual
base salary was $1,050,000, with annual increases within the discretion of the
Executive Compensation and Option Committee. Mr. Hersh also is eligible to
receive an annual bonus, restricted share awards and options within the
discretion of the Board of Directors or the Executive Compensation and Option
Committee, as the case may be. Pursuant to the Employee Stock Option Plan,
Mr. Hersh was awarded 62,500 shares of restricted stock as of July 1, 1999, and
with respect to each tax year in which such shares of restricted stock vest and
are distributed to him, Mr. Hersh is entitled to receive a tax gross-up payment
from the Company equal to forty-three percent (43%) of the fair market value of
such restricted shares at the time of vesting, exclusive of dividends (the "Tax
Gross-Up Payments"). Mr. Hersh is required to devote substantially all of his
business time to the affairs of the Company and, subject to certain excluded
activities, generally is restricted during the term of his employment and in the
event his employment is terminated by the Company for cause (as defined in the
Amended and Restated Hersh Agreement) or by him without good reason (as defined
in the Amended and Restated Hersh Agreement), for a period of one year
thereafter, from conducting any office-service, flex or office property
development, acquisition or management activities within the continental United
States. Mr. Hersh is entitled to (i) receive the aggregate of a cash payment of
$8,000,000 (the "Fixed Amount"), reimbursement of expenses incurred prior to the
date of termination, and the Tax-Gross-Up Payments applicable to any vested
shares of restricted stock, (ii) immediate vesting of all options and incentive
compensation payments or programs otherwise subject to a vesting schedule,
(iii) require the Company to repurchase his vested options and (iv) receive
continuation of health coverage through the end of his unexpired employment
period should his employment be terminated by the Company without cause, by him
for good reason or on account of his disability (as defined in the Amended and
Restated Hersh Agreement) or death. Should Mr. Hersh terminate his employment on
or within six months following a change in control (as defined in the Amended
and Restated Hersh Agreement), Mr. Hersh's termination shall be treated as a
termination for good reason. In addition, upon a change in control, and
irrespective of whether Mr. Hersh's employment is terminated, the vesting of all
options and other incentive compensation shall be accelerated and Mr. Hersh
would be entitled to receive a tax gross-up payment to cover any excise taxes
payable due to the change in control.
TIMOTHY M. JONES EMPLOYMENT AGREEMENT. On July 1, 1999, following the
appointment of Timothy M. Jones as President of the Company on April 18, 1999,
the Company and Mr. Jones amended and restated Mr. Jones' employment agreement
with the Company (the "Amended and Restated Jones Agreement"). The terms and
conditions of the Amended and Restated Jones Agreement are generally similar to
those of the Amended and Restated Hersh Agreement, except that (i) Mr. Jones'
initial base
20
salary was $515,000, with annual increases within the sole discretion of the
Chief Executive Officer, (ii) Mr. Jones was awarded 37,500 shares of restricted
stock and (iii) the Fixed Amount Mr. Jones will receive is $2,700,000.
BARRY LEFKOWITZ EMPLOYMENT AGREEMENT. On July 1, 1999, the Company and
Barry Lefkowitz amended and restated Mr. Lefkowitz's employment agreement with
the Company (the "Amended and Restated Lefkowitz Agreement"). The terms and
conditions of the Amended and Restated Lefkowitz Agreement are generally similar
to those of the Amended and Restated Jones Agreement, except that
(i) Mr. Lefkowitz's initial base salary was $385,000, (ii) Mr. Lefkowitz was
awarded 26,094 shares of restricted stock and (iii) the Fixed Amount
Mr. Lefkowitz will receive is $2,500,000.
ROGER W. THOMAS EMPLOYMENT AGREEMENT. On July 1, 1999, the Company and
Roger W. Thomas amended and restated Mr. Thomas' employment agreement with the
Company (the "Amended and Restated Thomas Agreement"). The terms and conditions
of the Amended and Restated Thomas Agreement are generally similar to those of
the Amended and Restated Jones Agreement, except that (i) Mr. Thomas' initial
base salary was $325,000, (ii) Mr. Thomas was awarded 22,031 shares of
restricted stock and (iii) the Fixed Amount Mr. Thomas will receive is
$2,500,000. Mr. Thomas was awarded an additional 1,000 shares of restricted
stock in March of 2001.
MICHAEL A. GROSSMAN EMPLOYMENT AGREEMENT. On December 5, 2000, the Company
entered into an employment agreement with Michael A. Grossman (the "Grossman
Agreement"). The terms and conditions of the Grossman Agreement are generally
similar to those of the Amended and Restated Jones Agreement, except that
(i) the Grossman Agreement provides for an initial three year term, and a
constant one year term, (ii) Mr. Grossman's initial base salary is $315,000,
(iii) in March 2001, Mr. Grossman was awarded 18,519 shares of restricted stock
in addition to the 4,000 shares of restricted stock previously granted to him in
1999, and Mr. Grossman's Tax Gross-Up Payments will be made for each tax year
when there is a vesting of restricted stock, (iv) the Fixed Amount Mr. Grossman
will receive is $1,000,000 and (v) should Mr. Grossman terminate his employment
following a change in control, Mr. Grossman's termination will not be treated as
a termination for good reason.
EXECUTIVE COMPENSATION AND OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no interlocking relationships involving the Company's Board of
Directors which require disclosure under the executive compensation rules of the
SEC.
REPORT OF THE EXECUTIVE COMPENSATION AND OPTION COMMITTEE REPORT OF THE BOARD OF
DIRECTORS ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement, in
whole or in part, the following report and the Performance Graph which follows
shall not be deemed to be incorporated by reference into any such filings.
EXECUTIVE COMPENSATION PHILOSOPHY. The Executive Compensation and Option
Committee will annually consider the appropriate combination of cash and
option-based compensation and weigh the competitiveness of the Company's overall
compensation arrangements in relation to comparable real estate investment
trusts. From time to time the Executive Compensation and Option Committee may
retain compensation and other management consultants to assist with, among other
things, structuring the Company's various compensation programs and determining
appropriate levels of salary, bonus and other compensatory awards payable to the
Company's executive officers and key employees, as well as to guide the Company
in the development of near-term and long-term individual performance objectives
necessary to achieve long-term profitability.
21
The Executive Compensation and Option Committee believes that a fundamental
goal of the Company's executive compensation program should be to provide
incentives to create value for the Company's stockholders.
BASE SALARIES. The base compensation levels for the Company's executive
officers in 2000 were set to compensate the executive officers for the functions
they will perform as well as to be consideration for certain non-competition
provisions in the agreements, and were based on the employment agreements
entered into in December 1997, as amended and restated in July 1999. The Company
believes that the base salaries generally are appropriate as base compensation
to compensate the Company's executive officers for the functions they perform
and other considerations. Base salaries will be reviewed annually and may be
increased by the Executive Compensation and Option Committee or the Chief
Executive Officer, as the case may be, in accordance with certain criteria
determined primarily on the basis of growth of revenues and funds from
operations per share of Common Stock and on the basis of certain other factors,
which include (i) individual performance, (ii) the functions performed by the
executive officer and (iii) changes in the compensation peer group in which the
Company competes for executive talent. The weight given such factors by the
Executive Compensation and Option Committee may vary from individual to
individual.
ANNUAL BONUS COMPENSATION. The Company's policy of awarding annual cash
bonuses is designed to specifically relate executive pay to Company and
individual performance. As a pay-for-performance program, cash bonuses provide
financial rewards for the achievement of substantive Company objectives. Actual
awards paid are based primarily on actual Company performance. During 2000,
discretionary incentive and merit cash bonuses in recognition of services
performed during fiscal 2000 were awarded as follows: $440,000 to Mitchell E.
Hersh, $380,000 to Timothy M. Jones, $250,000 to Barry Lefkowitz, $185,000 to
Roger W. Thomas and $160,000 to Michael A. Grossman.
EMPLOYEE STOCK OPTION PLAN. The Company has two Employee Stock Option
Plans: the Employee Stock Option Plan of Mack-Cali Realty Corporation (the
"Employee Plan") and the 2000 Employee Stock Option Plan (the "2000 Employee
Plan"). References to "Employee Stock Option Plan" herein refer to the Employee
Plan and the 2000 Employee Plan, collectively. Awards are granted under the
Employee Stock Option Plan based on a number of factors, including (i) the
executive officer's or key employee's position in the Company, (ii) his or her
performance and responsibilities, (iii) the extent to which he or she already
holds an equity stake in the Company, (iv) equity participation levels of
comparable executives and key employees at other companies in the compensation
peer group and (v) individual contribution to the success of the Company's
financial performance. However, the Employee Stock Option Plan does not provide
any formulated method for weighing these factors, and a decision to grant an
award is based primarily upon the Executive Compensation and Option Committee's
evaluation of the past as well as the future anticipated performance and
responsibilities of the individual in question. During 2000, options were
granted to Mitchell E. Hersh 200,000, Timothy M. Jones 120,000, Barry Lefkowitz
100,000, Roger W. Thomas 100,000 and Michael A. Grossman 30,000, subject to a
multi-year vesting schedule. The Company's Employee Stock Option Plan relates
closely to traditional forms of equity oriented compensation in the commercial
real estate industry. The purpose of the option and other stock based grants is
to aid the Company in attracting and retaining quality employees, all advancing
the interest of the Company's stockholders by offering employees an incentive to
maximize their efforts to promote the Company's economic performance. In
addition, to assist the Company in retaining employees and encouraging them to
seek long-term appreciation in the value of the Company's stock, awards
generally are not exercisable immediately upon grant, but instead vest over a
specified period. Accordingly, an employee must remain with the Company for a
specified period to enjoy the full economic benefit of an award.
401(K) SAVINGS PLAN. The Company also maintains a tax-qualified 401(k)
savings plan for its eligible employees known as the "Mack-Cali Realty
Corporation 401(k) Savings/Retirement Plan"
22
("401(k) Plan"). Employees who have attained age 21 and completed one-half year
of service with the Company are eligible to participate and may elect to defer
up to 15% of their base pay on a pre-tax basis to the 401(k) Plan. The Company
may make discretionary matching or profit sharing contributions to the 401(k)
Plan on behalf of eligible participants in any plan year. Participants are
always 100% vested in their pre-tax contributions and will begin vesting in any
matching or profit sharing contributions made on their behalf after two years of
service with the Company at a rate of 20% per year becoming 100% vested after a
total of six years of service with the Company. The assets of the 401(k) Plan
are held in trust and a separate account is established for each participant. A
participant may receive a distribution of his vested account balance in the
401(k) Plan in a single sum or installment payment or in the form of an annuity
upon his termination of service with the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION. Mitchell E. Hersh, the Chief
Executive Officer of the Company, received a base salary during 2000 of
$1,050,000 pursuant to the employment agreement entered into in December 1997,
as amended and restated in July 1999. Mr. Hersh also was paid a cash bonus of
$440,000 in recognition of services performed during fiscal 2000. Mr. Hersh
received no fees for his service as a Director of the Company during fiscal
2000. The Executive Compensation and Option Committee recognizes Mr. Hersh's
contributions to the Company's operations and attempts to ensure that the Chief
Executive Officer's compensation is commensurate with the compensation of chief
executive officers of comparable corporations. The Board of Directors deemed
such bonus and Mr. Hersh's total compensation appropriate in light of
Mr. Hersh's substantial contribution to the Company's growth and success in
2000.
EXECUTIVE COMPENSATION AND OPTION
COMMITTEE OF THE BOARD OF DIRECTORS
VINCENT TESE, CHAIRMAN
MARTIN D. GRUSS
ALAN G. PHILIBOSIAN
23
PERFORMANCE GRAPH
The following graph compares total stockholder returns from December 31,
1995 through December 31, 2000 to the Standard & Poor's 500 Stock Index ("S&P
500") and to the National Association of Real Estate Investment Trusts, Inc.'s
Equity REIT (excluding Health Care REITs) Total Return Index ("NAREIT"). The
graph assumes that the value of the investment in the Company's Common Stock and
in the S&P 500 and NAREIT indices was $100 at December 31, 1995 and that all
dividends were reinvested. The Company's Common Stock's price on December 31,
1995 (on which the graph is based) was $21.875. The stockholder return shown on
the following graph is not necessarily indicative of future performance.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG MACK-CALI REALTY CORPORATION, THE
S&P 500 INDEX AND THE NAREIT EQUITY REIT INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
Mack-Cali 100 151.93 213.15 170.24 155.23 185.83
S&P 500 100 122.96 163.99 210.86 255.2 231.96
NAREIT 100 135.27 162.67 134.2 128 161.75
24
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP served as the Company's independent accountants
for the fiscal year ended December 31, 2000, and has been appointed by the Audit
Committee and the Board of Directors to continue as the Company's independent
accountants for the fiscal year ending December 31, 2001. In the event that
ratification of this appointment of auditors is not approved by the affirmative
vote of a majority of votes cast on the matter, then the appointment of
independent accountants will be reconsidered by the Board of Directors. Unless
marked to the contrary, proxies received will be voted for RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the annual meeting. The representative will have an opportunity to make a
statement and will be able to respond to appropriate questions.
Your ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending December 31, 2001
does not preclude the Board of Directors of the Company from terminating its
engagement of PricewaterhouseCoopers and retaining a new independent accountant,
if it determines that such an action would be in the best interests of the
Company. If the Company elects to retain a new independent accountant, such
accountant will be another "Big 5" accounting firm.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Assuming a quorum is present, the affirmative vote of a majority of the
votes cast at the Annual Meeting, either in person or by proxy, is required for
approval of this proposal. Abstentions and broker non-votes will have no effect
on the outcome of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2001.
AUDIT FEES
The aggregate fees incurred by the Company for professional services
rendered by PricewaterhouseCoopers LLP in connection with the audit of the
Company's fiscal 2000 financial statements and the review of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2000, June 30, 2000 and September 30, 2000 were
$360,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No services were performed by, or fees billed for the professional services
rendered by, PricewaterhouseCoopers LLP in connection with financial information
systems design and implementation projects for the year ended December 31, 2000.
ALL OTHER FEES
All other fees incurred by the Company for services rendered by
PricewaterhouseCoopers LLP for the year ended December 31, 2000 aggregated
$340,334.
The Audit Committee considered whether the provision of services described
above under "All Other Fees" is compatible with maintaining
PricewaterhouseCoopers LLP's independence, and concluded that it was compatible.
25
PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO THE CHARTER OF THE COMPANY TO DECREASE THE
AFFIRMATIVE STOCKHOLDER VOTE REQUIRED TO APPROVE ANY EXTRAORDINARY CORPORATE
ACTION, SUCH AS A MERGER, CONSOLIDATION, SALE OF ALL OR SUBSTANTIALLY ALL OF THE
ASSETS OR DISSOLUTION OF THE COMPANY, FROM TWO-THIRDS TO A MAJORITY OF ALL VOTES
ENTITLED TO BE CAST ON THE ACTION BY THE HOLDERS OF THE OUTSTANDING SHARES OF
STOCK OF THE COMPANY.
The Maryland General Corporation Law (the "MGCL") requires that a charter
amendment or an extraordinary corporate action such as a merger, consolidation,
transfer of substantially all of the assets or dissolution of a Maryland
corporation, be approved by the stockholders of the corporation by the
affirmative vote of two-thirds of all votes entitled to be cast on the matter.
The MGCL also provides, however, that a corporation's charter may include a
provision which reduces the affirmative vote of stockholders required to approve
a charter amendment or an extraordinary corporate action from two-thirds to a
lesser proportion, but not less than a majority of all votes entitled to be cast
on the matter. The Company's Articles of Restatement, as supplemented (the
"Charter"), already contains such a provision relating to charter amendments,
whereby charter amendments can be approved by a majority of all votes entitled
to be cast by the Company's stockholders on the matter.
The Board of Directors deems it advisable that the Company's Charter be
amended to decrease the affirmative stockholder vote required to approve an
extraordinary corporate action from two-thirds to a majority of all votes
entitled to be cast by the Company's stockholders on the matter. The Board of
Directors believes the adoption of the following amendment is advisable because
it will allow the Company to act pursuant to the affirmative vote of a majority
of its stockholders. Pursuant to the Company's current Charter provisions, a
minority one-third (plus one) vote or non-response could prevent the Company
from pursuing opportunities or taking actions relating to certain extraordinary
corporate actions that the majority of the stockholders of the Company vote in
favor of pursuing. The following amendment will bring the Company in line with
other similar real estate investment trusts, in particular, and with other
public companies, in general, where only a majority in interest of the voting
stock is required to approve an extraordinary corporate action such as a merger.
In addition, this amendment will bring the Charter provisions on extraordinary
corporate actions in line with the current provisions in the Charter which state
that amendments to the Charter require approval by the affirmative vote of a
majority of all votes entitled to be cast by the stockholders of the Company on
the matter.
The Board of Directors unanimously recommends a vote FOR approval of the
amendment of Article VII of the Company's Charter so that, as amended, it shall
read as follows:
"ARTICLE VII
AMENDMENTS AND OTHER EXTRAORDINARY ACTIONS
Section 1. GENERAL POWER TO AMEND CHARTER. The Corporation reserves the
right from time to time to make any amendment to its charter, now or
hereafter authorized by law, including any amendment altering the terms or
contract rights, as expressly set forth in this charter, of any shares of
outstanding stock. All rights and powers conferred by the charter of the
Corporation on stockholders, directors and officers are granted subject to
this reservation.
Section 2. VOTE REQUIRED. Except as specifically required in Article V,
Section 2 of the charter of the Corporation, notwithstanding any provision
of law requiring a greater proportion of the votes entitled to be cast by
the stockholders in order to take or approve any action, such action shall
be valid and effective if taken or approved by the affirmative vote of at
least a majority of all votes entitled to be cast by the stockholders on the
matter."
26
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Assuming a quorum is present, the affirmative vote, either in person or by
proxy, of a majority of all the votes of stockholders entitled to be cast at the
Annual Meeting on this proposal is required for the approval of this proposal.
Abstentions and broker non-votes will have the same effect as a negative vote on
this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE CHARTER OF THE COMPANY.
STOCKHOLDERS PROPOSALS
The Company intends to hold its 2002 annual meeting of stockholders in
May 2002. To be considered for presentation at the annual meeting of the
Company's stockholders to be held in 2002, a stockholder proposal must be
received by Roger W. Thomas, Secretary, Mack-Cali Realty Corporation, 11
Commerce Drive, Cranford, New Jersey 07016, no later than November 30, 2001.
To be considered for presentation at the annual meeting of the Company's
stockholders to be held in 2002, a stockholder proposal submitted outside the
Rule 14a-8 processes must be received by Roger W. Thomas, Secretary, Mack-Cali
Realty Corporation, no earlier than January 15, 2002 and no later than
February 14, 2002, and discretionary authority may be used if untimely
submitted.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented at
the Annual Meeting. If any other business is properly brought before the Annual
Meeting, it is intended that proxies authorized pursuant to this Proxy Statement
will be voted in respect thereof and in accordance with the judgments of the
persons voting the proxies.
It is important that the proxies be returned promptly and that your shares
be represented. Stockholders are urged to mark, date, execute and promptly
return the accompanying proxy card in the enclosed envelope or to promptly
authorize a proxy to vote your shares by Internet or telephone in accordance
with the instructions on the accompanying proxy card.
By Order of the Board of Directors,
/s/ ROGER W. THOMAS
---------------------------------------------
Roger W. Thomas
SECRETARY
Date: March , 2001
Cranford, New Jersey
27
MACK-CALI REALTY CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Mitchell E. Hersh, Timothy M. Jones, Roger W.
Thomas and Barry Lefkowitz, or any of them, lawful attorneys and proxies of the
undersigned, with full power of substitution, for and in the name, place and
stead of the undersigned to attend the Annual Meeting of Stockholders of
Mack-Cali Realty Corporation to be held at the Marriott at Glenpointe, 100 Frank
W. Burr Boulevard, Teaneck, New Jersey 07666, on Tuesday, May 15, 2001, at 2:00
p.m., local time, and any adjournment(s) or postponement(s) thereof, with all
powers the undersigned would possess if personally present, and to vote the
number of shares the undersigned would be entitled to vote if personally
present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3. IF ANY OTHER MATTERS SHOULD PROPERLY COME BEFORE THE
ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF, THIS PROXY WILL BE
VOTED IN THE DISCRETION OF THE PROXY HOLDERS. ANY PRIOR PROXY IS HEREBY REVOKED.
(change of address/comments)
- -----------------------------
- ----------------------------- (to be signed on the other side)
- ----------------------------- SEE REVERSE SIDE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
MACK-CALI REALTY CORPORATION
2001 ANNUAL MEETING OF STOCKHOLDERS
DATE: MAY 15, 2001
TIME: 2:00 P.M.
PLACE: MARRIOTT AT GLENPOINTE
100 FRANK W. BURR BOULEVARD
TEANECK, NEW JERSEY 07666
/X/ PLEASE MARK YOUR VOTES AS INDICATED IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS NUMBER 1, 2 AND 3.
FOR WITHHELD
1. The Election of Directors: / / / /
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
NOMINEES FOR DIRECTOR:
01. Brendan T. Byrne, 02. Martin D. Gruss, 03. Vincent Tese,
04. Roy J. Zuckerberg
FOR AGAINST ABSTAIN
2. Ratification of the appointment of / / / / / /
PricewaterhouseCoopers LLP as the independent
accountants of Mack-Cali Realty Corporation
FOR AGAINST ABSTAIN
3. Approval and adoption of / / / / / /
an amendment to the Charter of Mack-Cali Realty Corporation to decrease the
affirmative stockholder vote required to approve any extraordinary corporate
action from two-thirds to a majority of all votes entitled to be cast on the
action by the holders of the outstanding shares of stock of Mack-Cali Realty
Corporation.
In accordance with their discretion, said Attorneys and Proxies are authorized
to vote upon such other matters or proposals not known at the time of
solicitation of this proxy which may properly come before the meeting. Any prior
proxy authorized by the undersigned is hereby revoked. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting and the related Proxy
Statement dated March 30, 2001.
SIGNATURE(S) DATE
------------------------------------------------ -----------
NOTE: Please sign exactly as your name or names appear hereon. Joint owners
should each sign. When signing as attorney, executor, administrator, trustee,
guardian or corporate officer, give full title.
- --------------------------------------------------------------------------------
FOLD AND DETACH PROXY CARD HERE AND RETURN IN ENCLOSED ENVELOPE
[GRAPHIC APPEARS HERE]
MACK-CALI REALTY CORPORATION
PROXY VOTING INSTRUCTIONS
YOUR VOTE IS IMPORTANT. CASTING YOUR VOTE IN ONE OF THE THREE WAYS DESCRIBED ON
THIS INSTRUCTION CARD, EACH OF WHICH IS PERMITTED BY THE MARYLAND GENERAL
CORPORATION LAW, VOTES ALL COMMON SHARES OF MACK-CALI REALTY CORPORATION THAT
YOU ARE ENTITLED TO VOTE. WE URGE YOU TO PROMPTLY CAST YOUR VOTE BY:
[GRAPHIC OMITTED] o Accessing the World Wide Web site
http: //www.eproxyvote.com/cli to vote via the
Internet.
[GRAPHIC OMITTED] o Using a touch-tone telephone to vote by phone toll
free from the U.S. or Canada. Simply dial
1-877-779-8683 and follow the instructions. When you
are finished voting, your vote will be confirmed and
the call will end.
[GRAPHIC OMITTED] o Completing, dating, signing and mailing the proxy
card in the postage-paid envelope included with the
proxy statement or sending it to Mack-Cali Realty
Corporation, c/o First Chicago Trust Company of New
York, P.O. Box 8595, Edison, New Jersey 08818-9460.