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CALI REALTY CORPORATION
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[LOGO]
CALI REALTY CORPORATION
11 COMMERCE DRIVE
CRANFORD, NEW JERSEY 07016
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 1997
------------------------
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Cali Realty Corporation (the "Company") will be held at The
Marriott at Glenpointe, Teaneck, New Jersey on Thursday, May 15, 1997, at 3:00
p.m. for the following purposes:
1. The election of five 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. Ratification of the appointment of Price Waterhouse LLP, independent
accountants, as the Company's independent accountants for the ensuing
year.
3. Approval of an amendment to the Employee Stock Option Plan of Cali
Realty Corporation (the "Employee Stock Option Plan") to increase the
number of shares authorized for issuance thereunder.
4. Approval of an amendment to the Director Stock Option Plan of Cali
Realty Corporation (the "Director Stock Option Plan") to increase the
number of shares authorized for issuance thereunder.
5. Approval of an amendment to the Amended and Restated Articles of
Incorporation of the Company to increase the number of shares of
Common Stock authorized for issuance thereunder.
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 24, 1997 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.
By Order of the Board of Directors
/s/ Brant Cali
BRANT CALI
SECRETARY
March 26, 1997
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 SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE PROVIDED. 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.
MAILED TO STOCKHOLDERS
ON OR ABOUT MARCH 27, 1997
CALI REALTY CORPORATION
11 COMMERCE DRIVE
CRANFORD, NEW JERSEY 07016
PROXY STATEMENT
GENERAL INFORMATION:
This Proxy Statement is furnished to stockholders of Cali Realty
Corporation, a Maryland corporation (the "Company"), in connection with the
solicitation by the Board of Directors (the "Board") of the Company 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 May 15, 1997, at 3:00 p.m.,
local time, at The Marriott at Glenpointe, Teaneck, New Jersey, and any
adjournment or postponement thereof.
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 Brant Cali, 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 voting 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 may use the services of ChaseMellon Shareholder Services, LLC, Proxy
Solicitation Department, 450 West 33rd Street, 15th Floor, New York, New York
10001, in soliciting proxies and, in such event, the Company expects to pay
approximately $5,500, plus out-of-pocket expenses, for such services. The
Company may conduct further solicitation personally, telephonically 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 at March 24, 1997 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 36,791,685 shares of Common Stock outstanding.
Stockholder votes will be tabulated by the persons appointed by the Board to
act as inspectors of election for the Annual Meeting. The New York Stock
Exchange 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 Nos. 2, 3, 4 and
5. 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 five nominees
for director named below and FOR Proposal Nos. 2, 3, 4 and 5. Abstentions and
broker non-votes will each be counted as present for purposes of determining the
presence of a quorum. Abstentions will have the same effect as a negative vote
on Proposal Nos. 3, 4 and 5, but will have no effect on the outcome of the
election of directors or Proposal No. 2. Broker non-votes will have no effect on
the outcome of the election of directors or Proposal Nos. 2, 3 and 4, but will
have the same effect as a negative vote on Proposal No. 5.
VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table sets forth information as of the Record Date with
respect to each person who is known by the Company 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
listed with sole voting and/or investment power.
AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT OF SHARES
BENEFICIAL OWNER OWNERSHIP OUTSTANDING (%)(1)
--------------------------- ------------------ -------------------
Cohen & Steers Capital Management, Inc.(2)............ 4,492,800(3) 12.37
The Cali Group(4)..................................... 3,123,362(5) 7.92
- ------------------------
(1) The total number of shares outstanding used in calculating this percentage
does not include 4,091,170 shares reserved for issuance upon redemption of
outstanding units of limited partnership interest ("Units") in Cali Realty,
L.P., a Delaware limited partnership (the "Operating Partnership") through
which the Company conducts its real estate activities, or 2,280,188 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. Of the 4,091,170 shares reserved for issuance upon redemption of
outstanding Units, 1,956,396 shares, or 4.5% of the total number of shares
outstanding or reserved for issuance, are reserved for issuance upon
redemption of outstanding Units that are owned by executive officers,
directors, their immediate family members and related trusts. Of the
2,280,188 shares reserved for issuance upon the exercise of options or
warrants, 1,479,666 shares, or 3.4% of the total number of shares
outstanding or reserved for issuance, are reserved for the exercise of
options or warrants held by executive officers and directors.
(2) Address: 757 Third Avenue, New York, New York 10017. Based upon discussions
between the Company and executives of 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 dated February 4, 1997 of Cohen & Steers filed with the
Securities and Exchange Commission ("SEC").
(3) Represents shares for which Cohen & Steers has sole dispositive power, and
includes 3,939,700 shares for which Cohen & Steers has sole voting power.
2
(4) Address: 11 Commerce Drive, Cranford, New Jersey 07016. The Cali Group (not
a legal entity) is
composed of certain directors and executive officers of the Company and
their immediate families and related trusts. Share information is furnished
in reliance on the Schedule 13G dated February 14, 1997 of The Cali Group
filed with the SEC.
(5) Represents shares for which The Cali Group has shared dispositive and voting
power, and includes limited partnership Units redeemable for shares of
Common Stock and options outstanding to purchase shares of Common Stock.
NOTE: FMR Corp. manages certain mutual funds and is an affiliate of the
Fidelity family of mutual funds, certain of which mutual funds the Company
believes collectively own more than 5% of the Company's outstanding Common
Stock. FMR Corp. takes the position, however, that since the mutual funds have
only an investment manager in common, they do not constitute a "group" under the
applicable rules of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and accordingly, FMR Corp. is not required to file a Schedule
13G or Schedule 13D with respect to the Company's Common Stock. As such, the
Company is unable to disclose the aggregate number of shares collectively owned
by mutual funds managed by FMR Corp. and the corresponding percent of ownership
of shares outstanding.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation divides the Company's Board of
Directors into three classes, with the members of each such class serving
staggered three-year terms. In connection with the acquisition on January 31,
1997 (the "RM Transaction"), by the Company of certain properties of Robert
Martin Company LLC and affiliates ("RM"), the Board of Directors authorized (i)
an increase in the number of members of the Board of Directors from nine to
thirteen, (ii) the designation by RM of two members of the Board of Directors
and the designation by the then current members of the Board of Directors of two
additional independent members of the Board of Directors to fill the four vacant
positions on the Board of Directors created by such increase in the number of
directors, and (iii) the appointment of certain principals of RM to executive
officer positions with the Company, each effective upon the consummation of the
RM Transaction. On January 31, 1997, upon the consummation of the RM
Transaction, Brad W. Berger and Robert F. Weinberg, as designees of RM, were
appointed to the Board of Directors, and Timothy M. Jones and Mr. Berger were
each appointed to the office of Executive Vice President. On March 14, 1997,
Alan G. Philibosian was appointed an independent member of the Board of
Directors. Mr. Berger and Mr. Weinberg were classified as Class III directors
and Mr. Philibosian was classified as a Class II director. The Company intends
to appoint an additional independent member to the Board of Directors in the
near future, who will be classified as a Class I Director. The new members'
terms will expire upon the election and qualification of Class III, I and II
directors at the Annual Meetings of Stockholders to be held in 1997, 1998 and
1999, respectively.
The Board of Directors presently consists of twelve members and one vacancy
as follows: Class I directors, Angelo R. Cali, Brendan T. Byrne, James W. Hughes
and one vacancy, whose terms expire in 1998; Class II directors, Edward
Leshowitz, Kenneth A. DeGhetto, Alan Turtletaub and Alan G. Philibosian, whose
terms expire in 1999; and Class III directors, John J. Cali, Thomas A. Rizk,
Irvin D.
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Reid, Brad W. Berger and Robert F. Weinberg, whose terms expire in 1997 (and, if
re-elected at the Annual Meeting, in the year 2000).
At the Annual Meeting, the stockholders will elect five directors to serve
as Class III directors. The Class III directors who are elected at the Annual
Meeting will serve until the Annual Meeting of Stockholders to be held in 2000
and until such directors' respective successors are elected or appointed and
qualify or until any such director's earlier resignation or removal. The Board
believes that nominees John J. Cali, Thomas A. Rizk, Irvin D. Reid, Brad W.
Berger and Robert F. Weinberg will stand for election and will, if elected,
serve as such Class III directors. However, in the event any nominee is unable
or unwilling to serve as a Class III 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 or the proxy holders to fill
such vacancy or for the balance of those nominees named without nomination of a
substitute, or the Board may be reduced in accordance with the By-laws of the
Company.
The affirmative vote of a plurality of all the votes cast at the Annual
Meeting, assuming a quorum is present, is necessary for the election of a
director. For purposes of the election of directors, abstentions and other
shares not voted will not be counted as votes cast and will have no effect on
the result of the vote.
JOHN J. CALI, director nominee, has served as Chairman of the Board of
Directors of the Company since its formation. Since the Company's formation
until December 31, 1995, Mr. Cali also served as the Chief Executive Officer of
the Company. In addition, Mr. Cali was a principal of Cali Associates and a
member of its Executive and Long Range Planning Committees. Mr. Cali co-founded
Cali Associates in 1949 and since such date has been responsible for its and the
Company's overall development strategies and policies. Mr. Cali graduated from
Indiana University. Mr. Cali is the brother of Angelo R. Cali and the father of
Brant Cali.
THOMAS A. RIZK, director nominee, served as President, Chief Financial
Officer and a member of the Board of the Company since its formation until
December 31, 1995. Since January 1, 1996, Mr. Rizk has served as President,
Chief Executive Officer and as a member of the Board of Directors of the
Corporation. In addition, Mr. Rizk was a principal of Cali Associates and served
as its General Counsel and as a member of its Executive Committee from 1989 to
1994 and as its Chief Financial Officer from 1991 to 1994. Mr. Rizk was
responsible for coordinating all financial activities for Cali Associates,
including federal income tax planning, and for developing its strategic
direction and investment strategies. Mr. Rizk has remained responsible for
conducting these activities for the Company. Prior to joining Cali Associates,
Mr. Rizk was vice president and general counsel of Dubnoff & Koch, a New
Jersey-based real estate development firm. He received his J.D. from Rutgers
School of Law and his L.L.M. in taxation from New York University School of Law.
IRVIN D. REID, director nominee, has served as President of Montclair State
University (formerly Montclair State College) in New Jersey since August 1989.
Prior to becoming the President of Montclair State University, Dr. Reid held the
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 is also 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
4
M.A. and Ph.D. degrees in business and applied economics from The Wharton School
of the University of Pennsylvania.
BRAD W. BERGER, director nominee, was appointed a director of the Company on
January 31, 1997, as a designee of RM in connection with the RM Transaction upon
the increase in number of members of the Board of Directors, and was also at
such time appointed to the office of Executive Vice President. Prior to the RM
Transaction in January 1997, Mr. Berger served as Robert Martin's President and
Chief Executive Officer from 1994 to 1996, leading the Company's strategic,
organizational and financial endeavors. Employed with Robert Martin since 1977,
Mr. Berger became Director of Commercial Leasing of RM in 1979, was promoted to
Vice President in 1982 and appointed to Executive Vice President in 1986, upon
which he assumed the daily operations responsibilities of the commercial real
estate portfolio from Robert Martin's founders, Martin S. Berger (the father of
Mr. Berger) and Robert F. Weinberg. He received his B.A. degree in economics
from Yale University.
ROBERT F. WEINBERG, director nominee, was appointed as a director of the
Company on January 31, 1997, as a designee of RM in connection with the RM
Transaction upon the increase in number of members of the Board of Directors.
Prior to the RM Transaction in January 1997, Mr. Weinberg served as Co-Chairman
and General Partner of RM since its founding in 1957, where he, along with
Martin S. Berger, developed Robert Martin into the largest real estate
development company in Westchester, Rockland and Fairfield counties. 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. 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.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION
OF ALL NOMINEES NAMED ABOVE.
5
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information as of March 14, 1997 for (i) the
members of the present Board, (ii) the executive officers of the Company and
(iii) the directors and executive officers of the Company as a group:
PERCENT OF
NUMBER OF SHARES
FIRST TERM SHARES OUTSTANDING
NAME AND POSITION(1) AGE ELECTED EXPIRES (2) (%)(3)
- ------------------------------------------------- --- ----------- ----------- ---------- ---------------
John J. Cali, Chairman of the Board 78 1994 1997 497,255(7) 1.3
Thomas A. Rizk, President, Chief Executive 39 1994 1997 317,938(8) *
Officer and Director
John R. Cali, Chief Administrative Officer 49 -- -- 297,839(9) *
Brant Cali, Chief Operating Officer 43 -- -- 363,389 10) *
and Secretary
Brad W. Berger, Executive Vice President and 41 1997 1997 600 *
Director
Timothy M. Jones, Executive Vice President 41 -- -- -- *
Barry Lefkowitz, Chief Financial Officer 35 -- -- 25,356 11) *
Roger W. Thomas, General Counsel and Assistant 39 -- -- 25,630 12) *
Secretary
James Nugent, Vice President-Leasing 44 -- -- 61,322 13) *
Albert Spring, Vice President- 51 -- -- 81,376 14) *
Operations
Angelo R. Cali, Director (5) 81 1994 1998 502,949 15) 1.3
Edward Leshowitz, Director (5) 81 1994 1999 569,644 16) 1.5
Brendan T. Byrne, Director 72 1994 1998 7,100 17) *
Kenneth A. DeGhetto, Director (5) 72 1994 1999 9,000 18) *
James W. Hughes, Director (6) 53 1994 1998 7,000 19) *
Irvin D. Reid, Director (6) 56 1994 1997 2,000 20) *
Alan Turtletaub, Director (5) 83 1994 1999 8,000 21) *
Robert F. Weinberg, Director 68 1997 1997 -- 22) --
Alan G. Philibosian, Director 43 1997 1999 -- --
All directors and executive officers
as a group..................................... -- -- -- 2,776,398 23) 6.8
PERCENT OF
SHARES
OUTSTANDING
(CALCULATED ON A
FULLY-DILUTED
BASIS)
NAME AND POSITION(1) (%)(4)
- ------------------------------------------------- -------------------
John J. Cali, Chairman of the Board 1.2
Thomas A. Rizk, President, Chief Executive *
Officer and Director
John R. Cali, Chief Administrative Officer *
Brant Cali, Chief Operating Officer *
and Secretary
Brad W. Berger, Executive Vice President and *
Director
Timothy M. Jones, Executive Vice President *
Barry Lefkowitz, Chief Financial Officer *
Roger W. Thomas, General Counsel and Assistant *
Secretary
James Nugent, Vice President-Leasing *
Albert Spring, Vice President- *
Operations
Angelo R. Cali, Director (5) 1.2
Edward Leshowitz, Director (5) 1.3
Brendan T. Byrne, Director *
Kenneth A. DeGhetto, Director (5) *
James W. Hughes, Director (6) *
Irvin D. Reid, Director (6) *
Alan Turtletaub, Director (5) *
Robert F. Weinberg, Director --
Alan G. Philibosian, Director --
All directors and executive officers
as a group..................................... 6.2
- ------------------------
* Beneficial ownership of less than 1% is omitted.
(1) Certain executive officers and directors of the Company and various other
persons and entities beneficially own in the aggregate, calculated on a
fully diluted basis, approximately 10.0% of the limited partnership
interests in Cali Realty, L.P., a Delaware limited partnership (the
"Operating Partnership") in which the Company has a 90.0% general
partnership interest. 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, limited partnership interests are
redeemable into shares of Common Stock.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
6
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
(2) Except as otherwise noted below, all shares of Common Stock are owned
beneficially by the individual listed with sole voting and/or investment
power.
(3) Assumes redemption of only the limited partnership interests in the
Operating Partnership beneficially owned by such owner into shares of Common
Stock and the exercise of options held only by such owner. The total number
of shares outstanding used in calculating this percentage assumes that none
of the limited partnership interests held by trusts unrelated to such owners
and persons not in such owner's immediate family are redeemed into shares of
Common Stock, and that none of the options held by other individuals are
exercised.
(4) Assumes the redemption of all outstanding limited partnership interests in
the Operating Partnership into shares of Common Stock and the exercise of
all options and warrants granted or reserved for possible grant.
(5) Member of Executive Compensation and Option Committee.
(6) Member of Audit Committee.
(7) 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 158,569 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 a vested option to purchase
3,734 shares of Common Stock.
(8) Includes 141,383 shares of Common Stock that may be issued upon the
redemption of all of Thomas A. Rizk's limited partnership interests in the
Operating Partnership. Also includes 55,555 shares of restricted stock and
96,000 shares of Common Stock purchased with the proceeds of a non-recourse
loan from the Company.* Also includes a vested option to purchase 25,000
shares of Common Stock.
(9) Includes 83,951 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 a vested option to purchase 148,333
shares of Common Stock, and 55,555 shares of restricted stock.*
(10) Includes 149,501 shares of Common Stock that may be issued upon the
redemption of all of Brant Cali's limited partnership interests in the
Operating Partnership. Also includes a vested option to purchase 158,333
shares of Common Stock, and 55,555 shares of restricted stock.*
(11) Includes 9,260 shares of restricted stock and 16,000 shares of Common Stock
purchased with the proceeds of a non-recourse loan from the Company.*
(12) Includes 9,260 shares of restricted stock and 16,000 shares of Common Stock
purchased with the proceeds of a non-recourse loan from the Company.*
(13) Includes 14,783 shares of Common Stock that may be issued upon the
redemption of all of James Nugent's limited partnership interests in the
Operating Partnership. Also includes a vested option to purchase 26,334
shares of Common Stock, 7,405 shares of restricted stock and 12,800 shares
of Common Stock purchased with the proceeds of a non-recourse loan from the
Company.*
(14) Includes 42,029 shares of Common Stock that may be issued upon the
redemption of all of Albert Spring's limited partnership interests in the
Operating Partnership. Does not include 2,335 shares of Common Stock owned
by Albert Spring's wife and brother-in-law as tenants-in-common of which Mr.
Spring disclaims beneficial ownership. Also includes a vested option to
purchase 14,334 shares of Common Stock, 6,480 shares of restricted stock and
11,200 shares of Common Stock purchased with the proceeds of a non-recourse
loan from the Company.*
- ------------------------
* See "Employment Agreements, Termination of Employment" for a general
description of the terms of the stock acquisition loans and restricted stock
grants.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
7
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
(15) Includes 261,090 shares of Common Stock that may be issued upon the
redemption of all of Angelo R. Cali's limited partnership interests in the
Operating Partnership and 234,859 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 Angelo R. Cali's immediate family
and trusts of which he is a trustee. Also includes a vested option to
purchase 5,000 shares of Common Stock and an option to purchase 2,000 shares
of Common Stock which vests on April 10, 1997.
(16) Includes 307,916 shares of Common Stock that may be issued upon the
redemption of all of Edward Leshowitz's limited partnership interests in the
Operating Partnership and 254,728 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 Edward Leshowitz's immediate family
and trusts of which he is a trustee. Also includes a vested option to
purchase 5,000 shares of Common Stock and an option to purchase 2,000 shares
of Common Stock which vests on April 10, 1997.
(17) Includes a vested option to purchase 5,000 shares of Common Stock and an
option to purchase 2,000 shares of Common Stock which vests on April 10,
1997.
(18) Includes an option to purchase 2,000 shares of Common Stock which vests on
April 10, 1997.
(19) Includes a vested option to purchase 5,000 shares of Common Stock and an
option to purchase 2,000 shares of Common Stock which vests on April 10,
1997.
(20) Includes an option to purchase 2,000 shares of Common Stock which vests on
April 10, 1997.
(21) Includes a vested option to purchase 5,000 shares of Common Stock and an
option to purchase 2,000 shares of Common Stock which vests on April 10,
1997.
(22) Does not include 1,000 shares of Common Stock owned by Mr. Weinberg's wife
of which Mr. Weinberg disclaims beneficial ownership. Includes an option to
purchase 2,000 shares of Common Stock which vests on April 10, 1997.
(23) Includes 2,124,173 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 and 648,156 shares of the
Common Stock that may be issued upon the redemption of all of the limited
partnership interests in the Operating Partnership held by members of the
directors' and executive officers' immediate families and trusts of which
they are trustees. Also includes vested options to purchase 401,068 shares
of Common Stock and options to purchase 14,000 shares of Common Stock which
vest on April 10, 1997.
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.
JOHN R. CALI has served as Chief Administrative Officer of the Company since
its formation. 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. Mr. Cali was responsible for the
development of Cali Associates' office system and the management of its office
personnel and he remains responsible for such duties with the Company. Mr. Cali
also developed and organized the leasing and property management departments of
Cali Associates and he is now responsible for directing the acquisition
functions of the Company. Mr. Cali has a M.Ed. degree in counseling,
organizational development and personnel from the University of Missouri.
BRANT CALI has served as Chief Operating Officer and Secretary of the
Company since its formation. In addition, Mr. Cali was a principal of Cali
Associates and served as a member of its Executive and Long
8
Range Planning Committees from 1981 to 1994. Mr. Cali is responsible for
directing the leasing and property management departments and providing overall
strategic direction for the Company. Mr. Cali holds a Ph.D. degree in plant
pathology from North Carolina State University.
TIMOTHY M. JONES was appointed to the office of Executive Vice President of
the Company on January 31, 1997, in connection with the RM Transaction. Prior to
the RM Transaction in January 1997, Mr. Jones served as Executive Vice President
and Chief Operating Officer of Robert Martin, 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. Mr. Jones joined RM in 1990 as Vice
President of Construction, where he was responsible for the organization,
administration and coordination of all the properties, both in the construction
and planning stages. In 1992, he became Senior Vice President, continuing to
direct all construction activities and was involved in the coordination of the
firm's finance, property management and construction divisions. Mr. Jones
previously served as Vice President of Chemical Bank Real Estate, President of
Federated National Corporation in State College, Pennsylvania, and President of
Clifton Companies in Stamford, Connecticut. Mr. Jones has a B.A. degree in
economics from Yale University and a M.S. degree in business from Columbia
University.
BARRY LEFKOWITZ serves as Chief Financial Officer of the Company. Mr.
Lefkowitz is responsible for all financial reporting matters, strategic
financial planning, long-term forecasting, investor relations and management of
capital markets activities. Before joining the Company, Mr. Lefkowitz was a
Senior Manager specializing in real estate with the accounting firm of Deloitte
& Touche LLP. Mr. Lefkowitz is a certified public accountant and a graduate of
Brooklyn College.
ROGER W. THOMAS serves as General Counsel and Assistant 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 preparation of required disclosure
documents. Mr. Thomas also assists the Company in investor relations and in
implementing the Company's investment strategies and financial activities. Prior
to joining the Company, Mr. Thomas was a partner at the law firm Dreyer & Traub,
New York, specializing in real estate and commercial transactions. Mr. Thomas
holds a BSBA in finance and a J.D. from the University of Denver.
JAMES NUGENT has served as Vice President-Leasing of the Company since its
formation. In addition, from 1991 to 1994, Mr. Nugent served as the Senior
Director of Leasing at Cali Associates, supervising all leasing activity and
analyzing the financial aspects of all major leases, and he remains responsible
for such duties with the Company. From 1984 to 1991, Mr. Nugent's
responsibilities included negotiating the financial and business terms of leases
for the Cali Associates portfolio of properties, analyzing future projects and
formulating the structure of potential development opportunities. Mr. Nugent is
a certified public accountant and a graduate of Western Illinois University.
ALBERT SPRING has served as Vice President-Operations of the Company since
its formation. In addition, Mr. Spring was responsible from 1977 to 1994 for
construction management at Cali Associates, including engineering, processing
approvals, estimating costs and supervising contractors. Mr. Spring has a B.S.
degree in civil engineering from City College of New York and has a MBA degree
from Bernard Baruch Graduate School of Business.
ANGELO CALI has served as a member of the Board of the Company since its
formation. Prior to the formation of the Company, Mr. Cali was a principal of
Cali Associates, the real estate development company which was the predecessor
of the Company, and a member of its Executive and Long Range Planning
Committees. Mr. Cali co-founded Cali Associates in 1949 and was responsible for
its organizational development from such date until the completion of the
Company's initial public offering in 1994.
9
Mr. Cali graduated from Montclair State Teacher's College. Mr. Cali is the
brother of John J. Cali and the father of John R. Cali.
BRENDAN T. BYRNE has been a director of the Company since the completion of
its initial public offering in 1994. He 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.
JAMES W. HUGHES has been a director of the Company since the completion of
its initial public offering in 1994. He currently serves as Dean of the Edward
J. Bloustein School of Planning and Public Policy at Rutgers University and
Professor of Urban Planning and Policy Development, after serving as Associate
Dean for more than five years. He is also the Director of The Rutgers Regional
Report which, during its six-year existence, has produced 17 major
economic/demographic studies on New Jersey and the region. Dr. Hughes received
each of his B.S. degree in engineering, his M.S. degree in city and regional
planning and his Ph.D. degree in urban planning and policy development from
Rutgers University.
EDWARD LESHOWITZ has served as a member of the Board of the Company since
its formation. Prior to the formation of the Company, Mr. Leshowitz was a
principal of Cali Associates, the real estate development company which was the
predecessor of the Company, and a member of its Executive and Long Range
Planning Committees. Mr Leshowitz co-founded Cali Associates in 1949 and was
responsible for the financial and leasing strategies of Cali Associates'
portfolio and was the senior executive responsible for lease approvals. Mr.
Leshowitz graduated from Montclair State Teacher's College.
KENNETH A. DEGHETTO has been a director of the Company since the completion
of its initial public offering in 1994. Mr. DeGhetto currently serves as
Chairman Emeritus of the Board of Directors of Foster Wheeler Corporation. Mr.
DeGhetto earned his B.S. degree from the U.S. Merchant Marine Academy and his
B.M.E. degree from Rensselaer Polytechnic Institute.
ALAN TURTLETAUB was elected as a director of the Company after the
resignation of John J. McMullen. Prior to founding The Money Store, Inc., Mr.
Turtletaub served on the New Jersey State Advisory Council to the Small Business
Administration. Mr. Turtletaub is the founder and a board member of the National
Second Mortgage Association and is also on the advisory board of Valley National
Bank. Mr. Turtletaub attended New York University and Seton Hall University.
ALAN G. PHILIBOSIAN was appointed a director of the Company on March 14,
1997, upon the increase in number of members of the Board of Directors in
connection with the RM Transaction. Mr. Philibosian is a partner in the law firm
of Profita & Philibosian, Englewood, New Jersey. Mr. Philibosian is currently a
Commissioner on The Port Authority of New York & New Jersey, and also serves on
the Board of Directors of 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 LL.M. (in Taxation) from New York
University.
CERTAIN RELATIONSHIPS AND RELATED 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:
10
- In August 1994, John J. Cali, John R. Cali, Brant Cali and Thomas A. Rizk each
contributed $50 to Cali Services, Inc. ("Cali Services") in exchange for an
aggregate of 200 shares of common stock of Cali Services (which represents 100% of
the outstanding voting common stock and 1% of the economic value of Cali Services).
Cali Services provides fee-based, third party property management services to
properties not owned by the Company. Cali Services received revenue of $253,200 for
the fiscal year 1996.
- Certain former principals of Cali Associates (including John J. Cali, Angelo R. Cali
and Edward Leshowitz) (collectively, the "Principals") own a 50% partnership
interest in an office building located in Union, New Jersey which was not
contributed to the Company as part of the formation of the Company and the Operating
Partnership. Following the consummation of the Company's initial public offering,
the Principals continued to own a 50% partnership interest in such office building.
Cali Services manages this office building and received management fees of $169,200
for the fiscal year 1996.
- In January 1997, pursuant to their employment agreements, Thomas A. Rizk, Roger W.
Thomas, Barry Lefkowitz, James Nugent and Albert Spring purchased 96,000, 16,000,
16,000, 12,800 and 11,200 shares, respectively, of the Company's Common Stock, and
were provided fixed-rate, non-recourse loans by the Company in the amounts of
$3,000,000, $500,000, $500,000, $400,000 and $350,000, respectively, to finance such
purchases, which the Company has agreed to forgive ratably over five years under
certain terms and conditions, including the continued employment of the executive
with the Company. In addition, John R. Cali, Brant Cali, Thomas A. Rizk, Roger W.
Thomas, Barry Lefkowitz, James Nugent and Albert Spring were issued 55,555, 55,555,
55,555, 9,260, 9,260, 7,405 and 6,480 restricted shares, respectively, of Common
Stock pursuant to their employment agreements, which will vest over a five-year
period based on the attainment of certain performance goals. SEE "EMPLOYMENT
AGREEMENTS, TERMINATION OF EMPLOYMENT" FOR A GENERAL DESCRIPTION OF THE TERMS OF THE
STOCK ACQUISITION LOANS AND RESTRICTED STOCK GRANTS.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's 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 New York Stock Exchange.
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 1996, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with.
MEETINGS OF COMMITTEES AND THE BOARD OF DIRECTORS
During 1996, the entire Board of Directors met twelve times. No director
attended fewer than 75 percent of all of the meetings of the Board of Directors.
The Board of Directors has two committees: the Audit Committee and the
Executive Compensation and Option Committee. Upon appointment to a committee, no
member of a committee attended fewer then 100% of all the meetings of the
Committee of which he was a member. The Board of Directors does
11
not have a nominating committee or a committee performing the functions of a
nominating committee. 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 addressed to Brant Cali, the
Company's Secretary, at the Company's address set forth on the first page of
this Proxy Statement.
The Audit Committee consists of James W. Hughes and Irvin D. Reid. 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 once during 1996.
The Executive Compensation and Option Committee consists of Angelo R. Cali,
Kenneth A. DeGhetto, Edward Leshowitz and Alan Turtletaub. 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 twice during 1996.
COMPENSATION OF DIRECTORS
DIRECTORS' FEES. Each director is paid an annual fee of $10,000, plus $1,000
per board meeting attended, $500 per committee meeting attended and $250 per
telephonic meeting participation. Each director is also reimbursed for expenses
incurred in attending director and committee meetings. For fiscal 1996, Brendan
Byrne, Angelo R. Cali, John J. Cali, Kenneth DeGhetto, James W. Hughes, Edward
Leshowitz, Irvin D. Reid, Thomas A. Rizk and Alan Turtletaub received directors'
fees in the amount of $14,250, $15,250, $15,250, $15,250, $14,250, $15,250,
$13,250, $14,250 and $14,250, respectively.
DIRECTORS' STOCK OPTION PLAN. Pursuant to the Director Stock Option Plan,
each non-employee director is 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. These grants under the Director 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 Plan. In 1996, Brendan Byrne, Angelo R. Cali, Kenneth DeGhetto,
James W. Hughes, Edward Leshowitz, Irvin D. Reid and Alan Turtletaub were each
granted 2,000 options at an exercise price of $21.50 per share. The Board may
amend, suspend or discontinue the Director Plan at any time except that certain
specified amendments must be approved (at a meeting held within 12 months before
or after the date of such amendment) by the holders of the majority of issued
and outstanding shares of Common Stock of the Company entitled to vote. SEE,
"PROPOSAL NO. 4--APPROVAL OF AMENDMENT TO THE DIRECTOR STOCK OPTION PLAN" FOR A
GENERAL DESCRIPTION OF THIS PLAN.
12
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation of the chief executive officer and the four most highly compensated
executive officers of the Company other than the chief executive officer
(collectively, the "Named Executive Officers") for each of the Company's last
three fiscal years:
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------------
------------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS (#)
- -------------------------------------------- --------- --------- --------- ---------------- ------------------
Thomas A. Rizk.............................. 1996(1) 300,000 750,000 0 125,000(3)
President and Chief 1995 175,000 225,000 0 0(4)
Executive Officer (2) 1994 53,846 30,000 0 200,000
John R. Cali................................ 1996(1) 175,000 125,000 0 125,000(3)
Chief Administrative Officer 1995 150,000 50,000 0 0(4)
1994 46,154 0 0 200,000
Brant Cali.................................. 1996(1) 175,000 125,000 0 125,000(3)
Chief Operating Officer and Secretary 1995 150,000 50,000 0 0(4)
1994 46,154 0 0 200,000
Roger W. Thomas............................. 1996(1) 165,000 60,000 0 35,000(5)
General Counsel and Assistant Secretary 1995 150,000 30,000 0 29,000(6)
1994 46,154 0 0 0
James Nugent................................ 1996 0 25,000 183,500(7) 35,000(5)
Vice President--Leasing 1995 0 35,000 154,960(7) 29,000(6)
1994 0 0 57,802(7) 0
- ------------------------
(1) Represents amounts earned during 1994 by Messrs. Thomas A. Rizk, John R.
Cali, Brant Cali and Roger Thomas at annual salaries of $175,000, $150,000,
$150,000 and $150,000, respectively. Their employment by the Company began
on or about August 31, 1994 with the completion of the Company's initial
public offering.
(2) Thomas A. Rizk was elected to be Chief Executive Officer on January 1, 1996,
upon the resignation of John J. Cali. Upon his acceptance of such offer, Mr.
Rizk resigned as Chief Financial Officer and since January 1, 1996 has
served as Chief Executive Officer, President and as a director of the
Company. Barry Lefkowitz succeeded Mr. Rizk as Chief Financial Officer of
the Company.
(3) Represents option to acquire shares of Common Stock at an exercise price of
$26.25 per share.
(4) Represents option to acquire shares of Common Stock at an exercise price of
$17.25 per share.
(5) Represents option to acquire shares of Common Stock at an exercise price of
$21.50 per share.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
13
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
(6) Represents an option to purchase an aggregate of 19,000 shares of Common
Stock at an exercise price of $17.25 per share, and an option to purchase
10,000 shares of Common Stock at an exercise price of $19.875 per share.
(7) Represents amounts earned on a commission basis.
OPTION PLANS
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
INDIVIDUAL GRANTS
--------------------------------------------------------
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS/SARS STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS/SARS EMPLOYEES OF BASE OPTION TERM (4)
GRANTED IN FISCAL PRICE EXPIRATION ----------------------
NAME (#)(2) YEAR (%) ($/SH) DATE (3) 5% ($) 10% ($)
- ---------------------------------------- ------------- --------------- ----------- ----------- ---------- ----------
Thomas A. Rizk.......................... 125,000 15.7 26.25 10/24/06 2,063,560 5,229,467
President and Chief
Executive Officer
John R. Cali............................ 125,000 15.7 26.25 10/24/06 2,063,560 5,229,467
Chief Administrative Officer
Brant Cali.............................. 125,000 15.7 26.25 10/24/06 2,063,560 5,229,467
Chief Operating Officer and Secretary
Roger W. Thomas......................... 35,000 4.5 21.50 03/05/06 473,243 1,199,291
General Counsel and
Assistant Secretary
James Nugent............................ 35,000 4.5 21.50 03/05/06 473,243 1,199,291
Vice President--Leasing
- ------------------------
(1) The Company has not, to date, granted any stock appreciation rights under
the Employee Stock Option Plan.
(2) The Company has established Option Plans for the purpose of attracting and
retaining executive officers, directors and employees. Options granted under
the Plans are exercisable for shares of Common Stock.
(3) Each option granted in 1996 has a ten-year term, generally vests one-fifth
each year beginning on the last day of the year in which options were
granted, and generally becomes 100% vested on the fourth anniversary of the
last day of the year in which the options were granted.
(4) The dollar amounts set forth under these columns are the result of
calculations at the 5% and 10% rates set by the SEC and therefore are not
intended to forecast possible further appreciation, if any, in the Company's
stock price.
14
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
SHARES OPTIONS/SARS AT
ACQUIRED FISCAL YEAR-END
ON VALUE (#)
EXERCISE REALIZED --------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------- --------- --------- ----------- -------------
Thomas A. Rizk.................................................. 104,600 937,348 53,733 166,667
John R. Cali.................................................... 0 0 158,333 166,667
Brant Cali...................................................... 0 0 158,333 166,667
Roger W. Thomas................................................. 0 0 26,334 37,666
James Nugent.................................................... 0 0 26,334 37,666
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
THOMAS A. RIZK EMPLOYMENT AGREEMENT. On January 21, 1997, the Company and
Thomas A. Rizk amended and restated Mr. Rizk's employment agreement with the
Company (the "Amended and Restated Rizk Employment Agreement") providing for an
initial five year term, subject to automatic one-year extensions. Mr. Rizk's
annual base salary is $450,000, with annual increases within the discretion of
the Executive Compensation and Option Committee. Mr. Rizk is also eligible to
receive an annual bonus within the discretion of the Board. In addition, the
Company made a non-recourse loan of $3,000,000 to Mr. Rizk, the proceeds of
which were simultaneously used by Mr. Rizk to purchase 96,000 shares of Common
Stock from the Company as required by the terms of the loan (the "Rizk Stock
Acquisition Loan"). The Stock Acquisition Loan (and interest thereon) is to be
forgiven over the initial five year employment period. The Company also granted
Mr. Rizk 55,555 restricted shares of Common Stock (the "Rizk Restricted Shares")
which will vest over the initial five year employment period based on the
attainment of certain performance goals. Generally, one-fifth of the restricted
shares granted will vest in each year of the initial employment period, if in
the fiscal year immediately preceding such vesting (i) the Company achieves an
eight percent (8%) funds from operations per common share increase, or (ii) the
stockholders receive a fifteen percent (15%) total return (dividends plus stock
appreciation per share of Common Stock). In certain circumstances this vesting
period may be increased to seven years. Mr. Rizk is required to devote
substantially all of his business time to the affairs of the Company and is
generally 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 Rizk Agreement) or by him without good reason (as defined in the
Amended and Restated Rizk Agreement), for a period of one year thereafter, from
conducting any office-service, office, industrial, or flex property development
within the states of New York, New Jersey, Pennsylvania or Connecticut. Mr. Rizk
is entitled to a continuation of his annual base salary and bonus through the
end of his employment period (as defined in the Rizk Amended and Restated
Employment Agreement) should the Company terminate his employment other than for
cause or should he terminate his employment for good reason. In addition, upon
such termination or upon a change in control (as defined in the Rizk Amended and
Restated Employment Agreement), the forgiveness of the Rizk Stock Acquisition
Loan and the vesting of his Restricted Shares shall be accelerated. The vesting
of all options granted after January 1, 1995, shall also be accelerated upon a
change in control. The Company
15
has also agreed to make certain tax gross-up payments in connection with the
vesting under all circumstances, whether on a scheduled or accelerated basis, of
the Rizk Restricted Shares and the forgiveness of the Rizk Stock Acquisition
Loan (and interest thereon) and any other applicable benefits under the Amended
and Restated Rizk Employment Agreement. A portion of Mr. Rizk's total
compensation in 1996 exceeded $1,000,000 and will therefore not be deductible,
for federal income tax purposes, to the Company as a result of the provisions of
Section 162(m) of the Internal Revenue Code of 1986, as amended. It is
anticipated that there will be a similar result in 1997 as a result of the
arrangements contained in the Amended and Restated Rizk Employment Agreement.
JOHN R. CALI EMPLOYMENT AGREEMENT. On January 21, 1997, the Company and
John R. Cali amended and restated Mr. Cali's employment agreement with the
Company (the "Amended and Restated J.R. Cali Agreement"). Mr. Cali's annual base
salary is $225,000. In addition, the Company granted Mr. Cali 55,555 restricted
shares of Common Stock (the "J.R. Cali Restricted Shares"). The other terms and
conditions of the Amended and Restated J.R. Cali Agreement, including those
related to the J.R. Cali Restricted Shares, are generally similar to the Amended
and Restated Rizk Employment Agreement and the Rizk Restricted Shares.
BRANT CALI EMPLOYMENT AGREEMENT. On January 21, 1997, the Company and Brant
Cali amended and restated Mr. Cali's employment agreement with the Company (the
"Amended and Restated B. Cali Agreement"). Mr. Cali's annual base salary is
$225,000. In addition, the Company granted Mr. Cali 55,555 restricted shares of
Common Stock (the "B. Cali Restricted Shares"). The other terms and conditions
of the Amended and Restated B. Cali Agreement, including those related to the B.
Cali Restricted Shares, are generally similar to the Amended and Restated Rizk
Employment Agreement and the Rizk Restricted Shares.
ROGER W. THOMAS EMPLOYMENT AGREEMENT. On January 21, 1997, Roger W. Thomas
entered into an employment agreement with the Company (the "Thomas Employment
Agreement"). Mr. Thomas' annual base salary is $185,000. In addition, the
Company made a non-recourse loan of $500,000 to Mr. Thomas, the proceeds of
which were simultaneously used by Mr. Thomas to purchase 16,000 shares of Common
Stock from the Company as required by the terms of the loan (the "Thomas Stock
Acquisition Loan"). The Company also granted Mr. Thomas 9,260 restricted shares
of Common Stock (the "Thomas Restricted Shares"). The terms and conditions of
the Thomas Employment Agreement, including those related to the Thomas Stock
Acquisition Loan and Thomas Restricted Shares, are generally similar to those of
the Amended and Restated Rizk Employment Agreement, Rizk Stock Acquisition Loan
and the Rizk Restricted Shares except that there shall be no accelerated vesting
of the Thomas Restricted Shares or forgiveness of the Thomas Stock Acquisition
Loan upon termination by the Company without cause (as defined in the Thomas
Employment Agreement) or by Mr. Thomas for good reason (as defined in the Thomas
Employment Agreement).
BARRY LEFKOWITZ EMPLOYMENT AGREEMENT. On January 21, 1997, Barry Lefkowitz
entered into an employment agreement with the Company (the "Lefkowitz Employment
Agreement"). Mr. Lefkowitz's annual base salary is $150,000. In addition, the
Company made a non-recourse loan of $500,000 to Mr. Lefkowitz, the proceeds of
which were simultaneously used by Mr. Lefkowitz to purchase 16,000 shares of
Common Stock from the Company as required by the terms of the loan (the
"Lefkowitz Stock Acquisition Loan"). The Company also granted Mr. Lefkowitz
9,260 restricted shares of Common Stock (the "Lefkowitz Restricted Shares"). The
terms and conditions of the Lefkowitz Employment Agreement,
16
including those related to the Lefkowitz Stock Acquisition Loan and Lefkowitz
Restricted Shares, are generally similar to those of the Thomas Employment
Agreement, Thomas Stock Acquisition Loan and the Thomas Restricted Shares.
JAMES NUGENT EMPLOYMENT AGREEMENT. On January 21, 1997, James Nugent
entered into an employment agreement with the Company (the "Nugent Employment
Agreement"). Mr. Nugent's annual base salary is $140,000. In addition, the
Company made a non-recourse loan of $400,000 to Mr. Nugent, the proceeds of
which were simultaneously used by Mr. Nugent to purchase 12,800 shares of Common
Stock from the Company as required by the terms of the loan(the "Nugent Stock
Acquisition Loan"). The Company also granted Mr. Nugent 7,405 restricted shares
of Common Stock (the "Nugent Restricted Shares"). The terms and conditions of
the Nugent Employment Agreement, including those related to the Nugent Stock
Acquisition Loan and Nugent Restricted Shares, are generally similar to those of
the Thomas Employment Agreement, Thomas Stock Acquisition Loan and the Thomas
Restricted Shares except that Mr. Nugent's Employment Agreement does not contain
any non-competition provisions.
ALBERT SPRING EMPLOYMENT AGREEMENT. On January 21, 1997, Albert Spring
entered into an employment agreement with the Company (the "Spring Employment
Agreement"). Mr. Spring's annual base salary is $140,000. In addition, the
Company made a non-recourse loan of $350,000 to Mr. Spring, the proceeds of
which were simultaneously used by Mr. Spring to purchase 11,200 shares of Common
Stock from the Company as required by the terms of the loan (the "Spring Stock
Acquisition Loan"). The Company also granted Mr. Spring 6,480 restricted shares
of Common Stock (the "Spring Restricted Shares"). The terms and conditions of
the Spring Employment Agreement, including those related to the Spring Stock
Acquisition Loan and Spring Restricted Shares, are generally similar to those of
the Thomas Employment Agreement, Thomas Stock Acquisition Loan and the Thomas
Restricted Shares.
BRAD W. BERGER EMPLOYMENT AGREEMENT. On January 31, 1997, in connection
with the RM Transaction, Brad W. Berger entered into an employment agreement
with the Company (the "Berger Employment Agreement") providing for an initial
term of three years, subject to automatic one year extensions. Mr. Berger's
annual base salary is $225, 000. In addition, the Company issued Mr. Berger
warrants which entitle Mr. Berger to acquire 170,000 shares of Common Stock (the
"Berger Warrants"), and agreed to grant, in June 1997 and again in June 1998,
options under the Employee Stock Option Plan which will entitle Mr. Berger to
acquire 15,000 shares (for an aggregate of 30,000 shares) of Common Stock. The
terms and conditions of the Berger Warrants, which vest over the initial three
year employment period, are generally similar to stock options granted under the
Employee Stock Option Plan, except that vesting will be accelerated in the case
of a change in control of the Company. The termination and non-competition
provisions of the Berger Employment Agreement are generally similar to the
Amended and Restated Rizk Employment Agreement.
TIMOTHY M. JONES EMPLOYMENT AGREEMENT. On January 31, 1997, in connection
with the RM Transaction, Timothy M. Jones entered into an employment agreement
with the Company (the "Jones Employment Agreement"). Mr. Jones' annual base
salary is $225, 000. In addition, the Company issued Mr. Jones warrants which
entitle Mr. Jones to acquire 170,000 shares of Common Stock (the "Jones
Warrants"), and agreed to grant, in June 1997 and again in June 1998, options
under the Employee Stock Option Plan which will entitle Mr. Jones to acquire
15,000 shares (for an aggregate of 30,000 shares) of Common Stock. The other
terms and conditions of the Jones Employment Agreement, including those related
to the Jones Warrants, are generally similar to those of the Berger Employment
Agreement and the Berger Warrants.
17
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no interlocking relationships involving the Company's Board which
require disclosure under the executive compensation rules of the SEC.
BOARD EXECUTIVE COMPENSATION AND OPTION COMMITTEE REPORT 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 SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, 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.
The amount of compensation paid by the Company to Thomas A. Rizk, John R.
Cali and Brant Cali in the year ended December 31, 1996, in the case of base
salaries, was determined prior to the completion of the Company's initial public
offering based on employment agreements entered into at that time. In the case
of stock option grants and bonuses and with respect to the amount of
compensation paid by the Company during 1996 to executive officers who did not
have employment agreements with the Company, such determinations were made by
the Executive Compensation and Option Committee of the Board based upon the
criteria set forth below. In 1996, executive compensation consisted solely of
base salary, grants of stock options under the Company's Employee Stock Option
Plan that vest over time, and bonuses paid to Thomas A. Rizk, John R. Cali,
Brant Cali, Roger W. Thomas, James Nugent, Albert Spring and Barry Lefkowitz.
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.
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 for the Company's executive officers
in 1996 was established in a manner consistent with the provisions of existing
employment agreements between the Company and Thomas A. Rizk, John R. Cali and
Brant Cali, and through negotiations between the Company and the executive
officers who did not have employment agreements with the Company. The base
compensation levels 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. While no specific formula was used
to determine base compensation levels for the Company's executive officers, the
Company believes that the base salaries are generally in line with those of
other publicly held real estate investment trusts the Company has reviewed, some
of which entities are included in the NAREIT Equity REIT Index. Base salaries
will be reviewed annually and may be increased by the Executive Compensation and
Option Committee in accordance with certain criteria determined primarily on the
basis of growth of revenues and
18
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 and personal
objectives. Actual awards paid are based primarily on actual Company
performance. During 1996 cash bonuses were awarded as follows: $750,000 to
Thomas A. Rizk, $125,000 to each of John R. Cali and Brant Cali, $25,000 to
James Nugent, $60,000 to each of Roger W. Thomas and Barry Lefkowitz and $35,000
to Albert Spring.
EMPLOYEE STOCK OPTION PLAN. 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 1996, 125,000 options at an exercise price of
$26.25 per share were granted to each of Thomas A. Rizk, Brant Cali and John R.
Cali, 35,000 options at $21.50 per share were granted to each of Barry
Lefkowitz, Roger Thomas and James Nugent, and 40,000 options at $21.50 per share
were granted to Albert Spring.
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 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, options generally are not exercisable
immediately upon grant, but instead vest over a period of years. Accordingly, an
employee must remain with the Company for a period of years to enjoy the full
economic benefit of an option. SEE, "PROPOSAL NO. 3--APPROVAL OF AMENDMENT TO
THE EMPLOYEE STOCK OPTION PLAN" FOR A GENERAL DESCRIPTION OF THE PLAN.
401(K) SAVINGS PLAN. The Company also maintains a tax-qualified 401(k)
savings plan for its eligible employees known as the "Cali Realty Corporation
401(k) Savings and Retirement Plan" ("401(k) Plan"). Employees who have attained
age 21 and completed one 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
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 become vested in any matching 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
19
single sum or installment payment or in the form of an annuity upon his
termination of service with the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION. Thomas A. Rizk, the Chief Executive
Officer of the Company since January 1, 1996, received a base salary during 1996
of $300,000 pursuant to the employment agreement entered into with him at the
time of the Company's initial public offering. Mr. Rizk also received an option
to purchase 125,000 shares of Common Stock at an exercise price of $26.25 per
share under the Employee Stock Option Plan during 1996 and fees in the amount of
$14,250 for his service as a Director of the Company. In 1996, Mr. Rizk was also
paid a cash bonus of $750,000. The Executive Compensation and Option Committee
recognizes Mr. Rizk'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 competitive corporations. The Board
of Directors deemed such bonus, option grants and and Mr. Rizk's total
compensation appropriate in light of Mr. Rizk's substantial contribution to the
Company's growth and success in 1996.
On January 21, 1997, the Company entered into employment agreements with
seven of its executive officers and on January 31, 1997, in connection with the
RM Transaction, the Company entered into employment agreements with two of the
former principals of RM. SEE "EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT"
FOR A GENERAL DESCRIPTION OF THE TERMS OF SUCH AGREEMENTS.
EXECUTIVE COMPENSATION AND OPTION
COMMITTEE OF THE BOARD OF DIRECTORS
EDWARD LESHOWITZ
ALAN TURTLETAUB
ANGELO R. CALI
KENNETH A. DEGHETTO
20
PERFORMANCE GRAPH
Trading of the Company's Common Stock commenced on August 25, 1994, on a
when issued basis. The following graph compares total stockholder returns from
August 31, 1994 through December 31, 1996 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 August 31, 1994
and that all dividends were reinvested. The Common Stock's price on August 31,
1994 (on which the graph is based) and the initial public offering price of the
Common Stock was $17.25.
The stockholder return shown on the following graph is not necessarily
indicative of future performance. The Company does not believe that the graph is
particularly meaningful in that it covers a short period of time.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG CALI REALTY CORPORATION,
THE S&P 500 INDEX AND THE NAREIT EQUITY REIT INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CALI REALTY CORPORATION S&P NAREIT
8/31/94 $ 100.00 $ 100.00 $ 100.00
12/31/94 $ 93.55 $ 97.57 $ 98.30
12/31/95 $ 140.07 $ 127.01 $ 113.31
12/31/96 $ 212.62 $ 164.91 $ 153.05
21
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP served as the Company's independent accountants for the
fiscal year ended December 31, 1996 and has been appointed by the Board of
Directors to continue as the Company's independent accountants for the fiscal
year ending December 31, 1997. 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, proxy
received will be voted for RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE
LLP AS THE INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997.
A representative of Price Waterhouse 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE YEAR
ENDING DECEMBER 31, 1997.
PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO THE EMPLOYEE STOCK OPTION PLAN
TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER
The Board of Directors and the stockholders of the Company approved the
adoption of the Employee Stock Option Plan on August 23, 1994. An aggregate of
1,780,188 shares of the Company's Common Stock is currently reserved for the
issuance of awards under the Employee Stock Option Plan, of which 175,040 shares
remained available for future grants as of March 24, 1997. The Board has amended
the Employee Stock Option Plan, subject to stockholder approval, to increase by
1,000,000, to a total of 2,780,188, the number of shares of Common Stock of the
Company reserved for the issuance of awards under the Option Plan. The Company
intends to register the 1,000,000 share increase on Form S-8 under the
Securities Act of 1933 as soon as practicable after receiving stockholder
approval.
The Board of Directors believes that approval of this amendment to the
Employee Stock Option Plan is in the best interests of the Company and its
stockholders because the availability of an adequate number of shares reserved
for issuance under the Plan and the ability to grant stock options and make
other stock-based awards under the Plan is an important factor in attracting,
motivating and retaining qualified personnel essential to the success of the
Company.
SUMMARY OF THE PROVISIONS OF THE
EMPLOYEE STOCK OPTION PLAN, AS AMENDED
The following summary of the Employee Stock Option Plan, as amended, is
qualified in its entirety by the specific language of the Plan, a copy of which
is available to any stockholder upon request.
GENERAL. The purposes of the Employee Stock Option Plan are to attract and
retain the best available personnel for positions of substantial responsibility
and to provide additional incentives to key
22
employees, officers, consultants and other persons whose efforts are deemed
worthy of encouragement to promote the growth and success of the Company. This
Plan provides for the grant of incentive stock options, within the meaning of
Section 422 of the Code to employees of the Company and for the grant of
nonstatutory stock options, stock appreciation rights ("SARs") and shares of
restricted stock ("Restricted Stock") to employees, consultants and advisors of
the Company. Currently, 1,378,096 of the authorized but unissued shares of the
Common Stock of the Company may be issued upon the exercise of options granted
pursuant to the Employee Stock Option Plan. To date, no SARs or shares of
Restricted Stock have been awarded under the Employee Stock Option Plan. The
Board has amended the Employee Stock Option Plan, subject to stockholder
approval, to increase the number of shares reserved for issuance thereunder from
1,780,188 to 2,780,188 shares. In the event of any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up, exchange of
shares, combination, or like change in the capital structure of the Company,
appropriate adjustments will be made to the shares subject to the Plan and to
any outstanding awards. To the extent any outstanding option under the Employee
Stock Option Plan expires or terminates prior to its exercise in full, or if any
shares of Restricted Stock are forfeited, the shares of Common Stock no longer
subject to the option or restrictions will be returned to the Employee Stock
Option Plan and made available for future grants.
ADMINISTRATION. The Employee Stock Option Plan is administered by the
Executive Compensation and Option Committee of the Board of Directors of the
Company. With respect to the participation of individuals who are subject to
Section 16 of the Exchange Act, the Employee Stock Option Plan is administered
in compliance with the requirements of Rule 16b-3 under the Exchange Act.
Subject to the provisions of the Plan, the Executive Compensation and Option
Committee determines the persons to whom grants of options, SARs, and shares of
Restricted Stock are to be made, the number of shares of Common Stock to be
covered by each grant and all other terms and conditions of the grant. If an
option is granted, the Executive Compensation and Option Committee determines
whether the option is an incentive stock option or a nonstatutory stock option,
the option's term, vesting and exercisability, the amount and type of
consideration to be paid to the Company upon the option's exercise and the other
terms and conditions of the grant. The terms and conditions of Restricted Stock
awards are also determined by the Executive Compensation and Option Committee.
The Committee has the responsibility to interpret the Employee Stock Option Plan
and to make determinations with respect to all awards granted under the Plan.
All determinations of the Executive Compensation and Option Committee are final
and binding on all persons having an interest in the Employee Stock Option Plan
or in any award made under the Plan. The costs and expenses of administering
this Option Plan are borne by the Company.
ELIGIBILITY. All employees, consultants and advisors (including directors
of the Company who are also employees) are eligible to participate in the
Employee Stock Option Plan. As of March 24, 1997, 186 employees, including ten
officers and two directors of the Company were eligible to participate in the
Employee Stock Option Plan. No consultants or advisors were granted options
under the Plan as of such date. Non-employee directors of the Company may not
participate.
TERMS AND CONDITIONS OF OPTION GRANTS. Each option granted under the
Employee Stock Option Plan is evidenced by a written agreement between the
Company and the optionee specifying the number of shares of the Company's Common
Stock subject to the option and all of the other terms and conditions of the
option, consistent with the requirements of the Option Plan. The per share
exercise price of an incentive stock option may not be less than 100% of the
fair market value of a share of the Company's
23
Common Stock on the date of the option's grant. In addition, the per share
exercise price of any option granted to a person who at the time of the grant
owns stock possessing more than 10% of the total combined voting power or value
of all classes of stock of the Company must be at least 110% of the fair market
value of a share of the Company's Common Stock on the date of grant and the term
of any such option cannot exceed five years.
Generally, options may be exercised by the payment of the exercise price in
cash, by check, or in cash equivalents, such as through the tender of shares of
the Company's Common Stock owned by the optionee having a fair market value not
less than the exercise price, or by the assignment of the proceeds of a sale of
some or all of the shares of Common Stock being acquired upon the exercise of
the option, or in any combination of these methods consistent with the terms and
conditions of the applicable stock option agreement.
Options granted under the Employee Stock Option Plan will become exercisable
at such times as may be specified by the Executive Compensation and Option
Committee, and generally become exercisable in equal installments subject to the
optionee's continued employment with the Company. The maximum term of options
granted under the Employee Stock Option Plan is ten years. Options are
nontransferable by the optionee other than by will or by the laws of descent and
distribution and are exercisable during the optionee's lifetime only by the
optionee.
TERMS AND CONDITIONS OF OTHER AWARDS. Each SAR or Restricted Stock award
made under the Employee Stock Option Plan is also evidenced by a written
agreement between the Company and the award holder specifying the number of
shares of Common Stock subject to the award and the other necessary terms and
conditions, consistent with the requirements of the Plan. A SAR or Restricted
Stock award may be granted separately or in conjunction with the grant of an
option. The terms included in the written agreements evidencing these awards are
summarized below.
If a SAR is granted, the written agreement will specify if the SAR is being
granted separately or with respect to an outstanding option. In general, if a
SAR is granted with respect to an option, the exercise of the option will cancel
the SAR and the exercise of the SAR will cancel the option. An agreement
evidencing the SAR will also describe when the SAR will become vested and
exercisable, subject to the award holder's continued employment by the Company,
and the per share grant price. Upon settlement of the SAR award, occurring at
exercise, the award holder will receive a cash distribution of the difference
between the grant price of the Common Stock underlying the SAR and its fair
market value on the date of exercise.
If shares of Restricted Stock are awarded, the agreement will specify the
per share grant price of the Common Stock subject to the restrictions, the
conditions that will result in the automatic and complete forfeiture of the
shares and the time and manner in which the restrictions will lapse, subject to
the award holder's continued employment by the Company. Upon settlement of the
Restricted Stock award, occurring upon the lapse of the restrictions, the shares
of Common Stock subject to the award will become immediately distributable to
the participant.
CHANGE OF CONTROL PROVISIONS. In general, a "Change of Control" will be
deemed to occur upon any of the following events in which the stockholders of
the Company do not retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the Company or its successor: (i) the
direct or indirect sale or exchange by the stockholders of the Company of all or
substantially all of the stock of the Company, (ii) a merger in which the
Company is a party, or (iii) the sale, exchange or transfer of all or
24
substantially all of the assets of the Company. If a participant terminates
employment within six months following a "Change of Control," all of the options
previously granted to him shall automatically become vested and immediately
exercisable; restrictions in Restricted Stock awards will also automatically
lapse upon a "Change of Control" and the Common Stock subject to the award will
become immediately distributable to the participant.
TERMINATION OR AMENDMENT OF THE EMPLOYEE STOCK OPTION PLAN. Unless sooner
terminated, no awards may be granted under the Employee Stock Option Plan after
August 31, 2004. The Board of Directors may terminate or amend the Employee
Stock Option Plan at any time, but the Board of Directors may not amend the Plan
to increase the total number of shares of Common Stock reserved for issuance of
awards or adopt any amendment that would materially increase the cost of this
Plan to the Company without stockholder approval. No amendment may be adopted
that would adversely affect an outstanding option or award without the
participant's consent.
As of March 24, 1997, the Company had outstanding options to purchase an
aggregate of 1,378,096 shares of Common Stock held by seventy persons at a
weighted average exercise price of $20.25 per share. The exercise price of all
options granted under the Employee Stock Option Plan has been no less than 100%
of the fair market value of the Common Stock on the date of the grant as
determined in good faith by the Executive Compensation and Option Committee. As
of March 24, 1997, options to purchase 227,052 shares of Common Stock granted
pursuant to the Employee Stock Option Plan had been exercised and there were
175,040 shares of Common Stock available for future grant under the Plan. On
March 24, 1997, the closing sales price per share of the Company's Common Stock,
as reported on the New York Stock Exchange, was $33.75.
SUMMARY OF FEDERAL INCOME TAX
CONSEQUENCES OF THE EMPLOYEE STOCK OPTION PLAN
The following summary is intended only as a general guide as to the federal
income tax consequences under current law with respect to participation in the
Employee Stock Option Plan and does not attempt to describe all possible federal
or other tax consequences of such participation. Furthermore, the tax
consequences of awards made under the Employee Stock Option Plan are complex and
subject to change, and a taxpayer's particular situation may be such that some
variation of the described rules is applicable.
INCENTIVE STOCK OPTIONS. Options designated as incentive stock options are
intended to fall within the provisions of Section 422 of the Internal Revenue
Code of 1986, as amended (the"Code"). An optionee recognizes no taxable income
for regular income tax purposes as the result of the grant or exercise of such
an option. If an optionee does not dispose of his shares for two years following
the date the option was granted or within one year following the transfer of the
shares upon exercise of the option, the gain on the sale of the shares (which is
the difference between the sale price and the purchase price of the shares) will
be taxed as long-term capital gain. If an optionee satisfies such holding
periods, upon a sale of the shares, the Company will not be entitled to any
deduction for federal income tax purposes. If an optionee disposes of the shares
within two years after the date of grant or within one year from the date of
exercise (a "disqualifying disposition"), the difference between the fair market
value of the shares on the date of exercise and the option exercise price (not
to exceed the gain realized on the sale if the disposition is a transaction with
respect to which a loss, if sustained, would be recognized) will be taxed as
ordinary income at the time of disposition. Any gain in excess of that amount
will be a capital gain. If a loss is recognized, there will be no ordinary
income, and such loss will be a capital loss. A capital gain or loss will be
long-term
25
if the optionee's holding period is more than 12 months. Any ordinary income
recognized by the optionee upon the disposition of the shares should be
deductible by the Company for federal income tax purposes, except to the extent
such deduction is limited by Section 162(m) of the Code. This Section of the
Code disallows a public company's deductions for employee remuneration exceeding
$1,000,000 per year.
NONSTATUTORY STOCK OPTIONS. Options that do not qualify as incentive stock
options are nonstatutory stock options and have no special tax status. An
optionee generally recognizes no taxable income as the result of the grant of
such an option.
Upon the exercise of a nonstatutory stock option, the optionee normally
recognizes ordinary income in the amount of the difference between the option
exercise price and the fair market value of the shares on the determination date
(which is generally the date of exercise). If the optionee is an employee, such
ordinary income generally is subject to withholding of income and employment
taxes. The "determination date" is the date on which the option is exercised
unless the shares are not vested and/or the sale of the shares at a profit would
subject the optionee to suit under Section 16(b) of the Exchange Act, in which
case the determination date is the later of (i) the date on which the shares
vest, or (ii) the date the sale of the shares at a profit would no longer
subject the optionee to suit under Section 16(b) of the Exchange Act. (Section
16(b) of the Exchange Act generally is applicable only to officers, directors
and beneficial owners of more than 10% of the Common Stock of the Company.) Upon
the sale of stock acquired by the exercise of a nonstatutory stock option, any
gain or loss, based on the difference between the sale price and the fair market
value on the date of recognition of income, will be taxed as capital gain or
loss. A capital gain or loss will be long-term if the optionee's holding period
is more than 12 months. No tax deduction is available to the Company with
respect to the grant of a nonstatutory option or the sale of the stock acquired
pursuant to such grant. The Company should be entitled to a deduction equal to
the amount of ordinary income recognized by the optionee as a result of the
exercise of a nonstatutory option, except to the extent such deduction is
limited by Section 162(m) of the Code.
SARS AND RESTRICTED STOCK AWARDS. A participant will not be required to
recognize any income for federal income tax purposes upon the grant of a SAR or
shares of Restricted Stock. However, upon settlement of the SAR award (the date
of its exercise), the participant will be required to recognize as ordinary
income the difference between the grant and exercise price of the shares of
Common Stock on which the SAR award is based. This amount will be taxed at
ordinary federal income tax rates. Upon settlement of the Restricted Stock award
(the date the shares become distributable), the participant will be required to
recognize as ordinary income the fair market value of the shares of Common Stock
on such date. The Company should be entitled to a deduction equal to the amount
of the ordinary income recognized by the participant upon the settlement of the
SAR or Restricted Stock award to the extent permitted by Section 162(m) of the
Code.
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 of Stockholders, either in person or by proxy,
is required for approval of this proposal. Abstentions will have the same effect
as a negative vote on this proposal. Broker non-votes will have no effect on the
outcome of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE INCREASE IN THE
SHARE RESERVE OF THE EMPLOYEE STOCK OPTION PLAN BY 1,000,000 SHARES.
26
PROPOSAL NO. 4
APPROVAL OF AN AMENDMENT TO THE DIRECTOR STOCK OPTION PLAN
TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER
The Company has established and implemented the Director Stock Option Plan
for the benefit of eligible non-employee directors of the Company. This Option
Plan was also approved by the Board of Directors and the stockholders of the
Company on August 23, 1994. An aggregate of 100,000 shares of the Company's
Common Stock is currently reserved for the issuance of awards under this Option
Plan, of which 41,000 shares remained available for future grants as of March
24, 1997. The Board of Directors has amended the Director Stock Option Plan,
subject to stockholder approval, to increase by 100,000, to a total of 200,000,
the number of shares of Common Stock of the Company reserved for the issuance of
awards under the Plan. The Company intends to register the 100,000 share
increase on Form S-8 under the Securities Act of 1933 as soon as practicable
after receiving stockholder approval.
The Board of Directors believes that the 100,000 share reserve increase
under the Director Stock Option Plan is in the best interests of the
stockholders and the Company because the availability of an adequate number of
shares reserved for issuance under this Plan and the ability to grant options
thereunder is an important factor in attracting, motivating and retaining
distinguished personnel with proven ability and vision to serve on the Board of
Directors and chart the Company's course towards continued growth and financial
success.
SUMMARY OF THE PROVISIONS OF THE
DIRECTOR STOCK OPTION PLAN, AS AMENDED
The following summary of the Director Stock Option Plan, as amended, is
qualified in its entirety by the specific language of the Plan, a copy of which
is available to any stockholder upon request.
GENERAL. The Director Stock Option Plan is designed to enable the Company
to attract and retain persons of outstanding competence to serve as members of
the Board of Directors of the Company and to provide a direct link between
directors' compensation and stockholder value. Participation in this Option Plan
is restricted to non-employee directors and only nonstatutory options to
purchase shares of the Common Stock of the Company are granted. Currently,
49,000 of the authorized but unissued shares of the Common Stock of the Company
may be issued upon the exercise of options granted under the Director Stock
Option Plan. The Board of Directors has amended this Plan, subject to
stockholder approval, to increase the number of shares reserved for issuance
thereunder from 100,000 to 200,000 shares. This Plan also provides that in the
event of any stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, exchange of shares, combination, or like change in the
capital structure of the Company, appropriate adjustments will be made to the
shares of Common Stock subject to the Director Stock Option Plan and to any
outstanding awards. To the extent any outstanding option expires or terminates
prior to its exercise in full, the shares of Common Stock no longer subject to
the option will be returned to the Director Stock Option Plan and made available
for future grants.
ADMINISTRATION. The Director Stock Option Plan is administered by the
Executive Compensation and Option Committee of the Board of Directiors of the
Company in compliance with the requirements of Rule 16b-3 of the Exchange Act.
Initial stock option grants, including all conditions of such grants, that are
made to eligible non-employee directors under the Director Stock Option Plan are
non-discretionary and are dictated by the written terms of the Plan. Under the
Plan, upon an eligible director's initial election or
27
appointment to the Board, the director is automatically granted a non-statutory
stock option to purchase 5,000 shares of Common Stock of the Company at its fair
market value on the date of grant. The Executive Compensation and Option
Committee may make additional discretionary option grants to eligible directors,
consistent with the terms of the Plan. All options granted under the Director
Stock Option Plan are non-statutory stock options. Subject to certain specific
limitations and restrictions set forth in this Option Plan, the Committee has
the authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations, if any, relating to the Plan and to make all determinations
necessary or advisable for the administration of the Director Stock Option Plan.
The costs and expenses of administering the Director Stock Option Plan are paid
by the Company.
ELIGIBILITY. Participation in the Director Stock Option Plan is limited to
persons who serve as members of the Board of Directors of the Company and who,
at the time of the option grant, are not employees of the Company. As of March
24, 1997, ten directors of the Company were eligible to participate in this
Option Plan.
TERMS AND CONDITIONS OF OPTION GRANTS. The Plan provides for each director
to receive, upon election to office or appointment to the Board, an option to
acquire 5,000 shares of Common Stock of the Company at a price equal to the
"Fair Market Value" at the time of the grant of the shares of Common Stock
subject to such option. "Fair Market Value" for this purpose means the closing
price as quoted on the New York Stock Exchange at the end of the last business
day preceding the date of grant as reported in the New York Edition of the WALL
STREET JOURNAL. Pursuant to the terms of the Director Stock Option Plan, each
option shall become vested and exercisable on the earlier of (i) the first
anniversary of the grant date, provided the director remains in the continuous
service of the Board during such period, or (ii) upon the director's termination
of Board service due to retirement, death or disability. If a director's service
is terminated for "cause" all awards granted to the director under the Director
Stock Option Plan shall automatically be forfeited. In the event a director's
service on the Board terminates before the options have vested, any unvested
option shall be cancelled and the director shall have no further right or
interest in the forfeited option. The Plan does not provide for the vesting of
outstanding options to be accelerated upon a "Change of Control" of the Company.
Each option shall remain outstanding until the tenth anniversary of the grant
date. All of the terms and conditions of option grants are specified in a
written agreement between the Company and the optionee. Neither the existence of
the Director Stock Option Plan, nor the granting of an option thereunder, will
be construed to limit, in any way, the right of the Company or its stockholders
to elect a person to serve as a director. In addition, nothing in the Director
Stock Option Plan shall be construed to give any director the right to a grant
of an option under the Director Stock Option Plan unless the express terms and
conditions of the Director Stock Option Plan are satisfied. Options may be
exercised by the payment of the exercise price in cash, by check, or in cash
equivalents, such as through the tender of shares of the Company's Common Stock
owned by the optionee having a fair market value not less than the exercise
price, or by the assignment of the proceeds of a sale of some or all of the
shares of Common Stock being acquired upon the exercise of the option, or in any
combination of these methods consistent with the terms and conditions of the
applicable stock option agreement. Options are nontransferable by the optionee
other than by will or by the laws of descent and distribution and are
exercisable during the optionee's lifetime only by the optionee.
TERMINATION OR AMENDMENT OF THE DIRECTOR STOCK OPTION PLAN. Unless sooner
terminated, no awards may be granted under the Director Stock Option Plan after
August 31, 2004. The Board of Directors may terminate or amend the Plan at any
time, but the Board of Directors may not amend the Director Stock
28
Option Plan to increase the total number of shares of Common Stock reserved for
issuance of awards or adopt any amendment that would materially increase the
cost of the Plan to the Company without stockholder approval. No amendment may
be adopted that would adversely affect an outstanding option or award without
the participant's consent.
As of March 24, 1997, the Company had outstanding options to purchase an
aggregate of 49,000 shares of Common Stock held by nine persons at an average
exercise price of $21.56 per share. As of March 24, 1997, options to purchase an
aggregate of 10,000 shares of Common Stock granted pursuant to the Director
Stock Option Plan had been exercised and there were 41,000 shares of Common
Stock available for future grants under this Option Plan. By amending the
Director Stock Option Plan to increase the share reserve by 100,000, there will
be 141,000 shares of Common Stock available for future grants under the Plan. On
March 24, 1997, the closing sales price per share of the Company's Common Stock,
as reported on the New York Stock Exchange, was $33.75.
SUMMARY OF FEDERAL INCOME TAX
CONSEQUENCES OF THE DIRECTOR STOCK OPTION PLAN
In general, no gain or loss is recognized by the option holder at the time
an option is granted under the Director Stock Option Plan. Upon the exercise of
an option, the difference between the fair market value of the Common Stock on
the date of exercise and the option price will be taxable as compensation income
to the option holder and the Company would be entitled to a deduction for
federal income tax purposes for the same amount. Upon a subsequent sale or
exchange of stock acquired pursuant to the exercise of an option, the option
holder would have taxable gain or loss, measured by the difference between the
amount realized on the disposition and the tax basis of such shares.
The foregoing statements are intended to summarize the general principles of
current federal income tax law applicable to options that may be granted under
the Director Stock Option Plan. The tax consequences of awards made under this
Plan are complex, subject to change, and may vary depending on the taxpayer's
particular circumstances.
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 of Stockholders, either in person or by proxy,
is required for approval of this proposal. Abstentions will have the same effect
as a negative vote on this proposal. Broker non-votes will have no effect on the
outcome of this vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE INCREASE IN THE
SHARE RESERVE OF THE DIRECTOR STOCK OPTION PLAN BY 100,000 SHARES.
PROPOSAL NO. 5
APPROVAL OF AN AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION OF THE COMPANY TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK AUTHORIZED FOR ISSUANCE THEREUNDER
The Company's Amended and Restated Articles of Incorporation (the "Articles
of Incorporation") presently authorize the issuance of 100,000,000 shares of
stock, consisting of 5,000,000 shares of Preferred
29
Stock, par value $0.01 per share, and 95,000,000 shares of Common Stock, par
value $0.01 per share. As of March 24, 1997, no shares of Preferred Stock were
issued and outstanding. As of that date, 36,891,685 shares of Common Stock were
issued (of which 36,791,685 shares were outstanding and 100,000 shares were held
in the Company's treasury). There are 1,880,188 shares reserved for issuance
under the Company's existing Option Plans, 400,000 shares reserved for issuance
upon the exercise of outstanding warrants and 4,091,170 shares reserved for
issuance upon redemption of outstanding units of limited partner interest in the
Operating Partnership in exchange for Common Stock, leaving a balance of
30,420,327 authorized, unissued and unreserved shares of Common Stock.
The Board of Directors deems it advisable that the Articles of Incorporation
be further amended, subject to approval by the stockholders, to increase the
authorized Common Stock from 95,000,000 to 190,000,000 shares. Approval of the
amendment to the Articles of Incorporation requires the affirmative vote of two
thirds of all outstanding shares of Common Stock of the Company in person or
represented by proxy and entitled to vote at the Annual Meeting of Stockholders.
Abstention from voting on the proposal will have the same effect as voting
against the proposal.
The Board of Directors unanimously recommends a vote FOR approval of the
amendment of Article IV, Section I of the Company's Articles of Incorporation so
that, as amended, it shall read as follows:
"AUTHORIZED SHARES". The total number of shares of stock which the
Corporation has authority to issue is 195,000,000 shares, of which
190,000,000 shares are shares of Common Stock, $.01 par value per share
("Common Stock"), 5,000,000 shares are shares of Preferred Stock, $.01 par
value per share ("Preferred Stock"), and shares of one or more classes of
"Excess Stock" as provided in Article VI, Section 3 hereof. The aggregate
par value of all authorized shares of stock having par value is $1,950,000."
The additional shares of Common Stock would become part of the existing
class of Common Stock, and the additional shares, when issued, would have the
same rights and privileges as the shares of Common Stock now issued. There are
no pre-emptive rights relating to the Common Stock. If the proposed amendment is
approved by the stockholders, it will become effective upon filing and recording
a Certificate of Amendment to the Articles of Incorporation as required by the
Maryland General Corporation Law.
Although the Company has no present plans, agreements, or understandings
regarding the issuance of the proposed additional shares, the Board of Directors
believes that adoption of the amendment is advisable because it will provide the
Company with greater flexibility in connection with possible future financing
transactions, acquisitions of other companies or business properties, stock
dividends or splits, employee benefit plans and other proper corporate purposes.
Moreover, having such additional authorized shares available will give the
Company the ability to issue shares without the expense and delay of a special
meeting of stockholders. Such a delay might deprive the Company of the
flexibility the Board views as important in facilitating the effective use of
the Company's shares. Except as otherwise required by applicable law or stock
exchange rules, authorized but unissued shares of Common Stock may be issued at
such time, for such purposes, and for such consideration as the Board of
Directors may determine to be appropriate, without further authorization by
stockholders.
Since the issuance of additional shares of Common Stock, other than on a pro
rata basis to all current stockholders, would dilute the ownership interest of a
person seeking to obtain control of the Company,
30
such issuance could be used as an anti-takeover device to discourage a change in
control of the Company by making it more difficult or costly. The Company is not
aware of anyone seeking to accumulate Common Stock or obtain control of the
Company, and has no present intention to use the additional authorized shares of
Common Stock to deter a change in control or otherwise as an anti-takeover
device.
Assuming a quorum is present, the affirmative vote, either in person or by
proxy, of two-thirds of all outstanding shares of Common Stock of the Company
entitled to vote at the Annual Meeting of Stockholders, 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 RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION OF THE COMPANY.
STOCKHOLDERS PROPOSALS
To be considered for presentation at the annual meeting of the Company's
stockholders to be held in 1998, a stockholder proposal must be received by
Brant Cali, Secretary, Cali Realty Corporation, 11 Commerce Drive, Cranford, New
Jersey 07016, no later than November 26, 1997.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented to
the annual meeting. If any other business is property brought before the Annual
Meeting, it is intended that proxies in the enclosed form will be voted in
respect thereof and 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.
By Order of the Board of Directors,
/s/ Brant Cali
______________________________________
BRANT CALI
CHIEF OPERATING OFFICER AND SECRETARY
Date: March 26, 1997
Cranford, New Jersey
31
APPENDIX A--FORM OF PROXY
PROXY PROXY
CALI REALTY CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) John J. Cali, Thomas A. Rizk, 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 Cali
Realty Corporation to be held at The Marriott at Glenpointe, Teaneck, New Jersey
on Thursday, May 15, 1997, at 3:00 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 DESCRIBED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2, 3, 4 AND 5. ANY PRIOR PROXY IS HEREBY REVOKED.
(TO BE SIGNED ON OTHER SIDE)
FOLD AND DETACH HERE
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS NUMBER 1, 2, 3, 4 AND
5.
PROPOSAL 1: The Election of Directors: Instructions: To withhold authority PROPOSAL 2: Ratification of the
John J. Cali, Thomas A. Rizk, Irvin D. to vote for any individual nominee appointment of Price Waterhouse LLP
Reid, Brad W. Berger and Robert F. write that nominee's name here: as the independent auditors of the
Weinberg. Company.
FOR ALL NOMINEES LISTED WITHHOLD FOR AGAINST ABSTAIN
ABOVE (EXCEPT AS MARKED AUTHORITY TO / / / / / /
TO THE CONTRARY) VOTE FOR ALL
/ / NOMINEES LISTED
ABOVE
/ /
PROPOSAL 3: Approval of amendment to the PROPOSAL 4: Approval of amendment to PROPOSAL 5: Approval of an amendment
Employee Stock Option Plan of Cali the Director Stock Option Plan of to the Amended and Restated Articles
Realty Corporation to increase the Cali Realty Corporation to increase of Incorporation of Cali Realty
number of shares authorized for issuance the number of shares authorized for Corporation to increase the number
thereunder. issuance thereunder. of shares of common authorized for
issuance thereunder.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
/ / / / / / / / / / / / / / / / / /
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.
Please sign exactly as your name
appears at the left. When shares are
held by joint tenants, both should
sign. When signing as attorney,
executor, administrator, trustee or
corporation, please sign in full
corporate name by president or other
authorized person. If a partnership,
please sign in partnership name by
authorized person.
Dated: , 1997
Signature
(Signature if held jointly)
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE, THANK YOU