-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WQA25dPNxCuDZQdggPzpGsd1JJi+hbzmbyv12Xsw7bdmKqI1gCeLclJCm9mNonKp av/wlQw8FCMRjRRE3rZ3kg== 0000912057-95-010488.txt : 19951130 0000912057-95-010488.hdr.sgml : 19951130 ACCESSION NUMBER: 0000912057-95-010488 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950731 FILED AS OF DATE: 19951128 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRE PROPERTIES INC CENTRAL INDEX KEY: 0000009677 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 941722214 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-07993 FILM NUMBER: 95596788 BUSINESS ADDRESS: STREET 1: 1 MONTGOMERY ST STREET 2: TELESIS TWR STE 2500 CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4154456530 FORMER COMPANY: FORMER CONFORMED NAME: BANKAMERICA REALTY INVESTORS DATE OF NAME CHANGE: 19870927 10-K/A 1 FORM 10-K/A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- AMENDMENT NO. 1 TO FORM 10-K ON FORM 10-K/A (MARK ONE) (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JULY 31, 1995 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NO. 0-5303 BRE PROPERTIES, INC. (Exact name of registrant as specified in its charter)
DELAWARE 94-1722214 (State or other jurisdiction of incorporation (I.R.S. Employer Identification Number) or organization) ONE MONTGOMERY STREET TELESIS TOWER, SUITE 2500 SAN FRANCISCO, CALIFORNIA 94104-5525 (Address of principal executive offices) (Zip Code) (415) 445-6530 (Registrant's telephone number, including area code)
------------------------ Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED - -------------------------------------------------------- -------------------------------------------------------- Class A common stock, $.01 par value New York Stock Exchange Common Stock Purchase Rights New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ----
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K (SECTION 229.405 OF THIS CHAPTER) IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [ ] At September 5, 1995, the aggregate market value of the registrant's shares of Class A common stock, $.01 par value, held by nonaffiliates of the registrant was approximately $346,976,000. At that date 10,970,865 shares were outstanding. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DOCUMENTS INCORPORATED BY REFERENCE Excerpts of the BRE Properties, Inc. Annual Report to Shareholders for the year ended July 31, 1995 (the "Annual Report") (Exhibit 13.1 hereto) are incorporated by reference into Parts I and II of this report. 1 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT EXECUTIVE OFFICERS. See "Executive Officers of the Registrant" in Part I of this report. DIRECTORS. Registrant's Board of Directors (the "Board") consists of six members, divided into three classes designated Class I, Class II and Class III. Currently, there are two Class I directors, two Class II directors and two Class III directors. At the next annual meeting of shareholders, two Class II directors are to be elected for a term of three years (expiring 1998) or until the election and qualification of their successors. The persons proposed for reelection as the Class II directors of the company are Mr. L. Michael Foley and Mr. John McMahan. The following table sets forth certain information as to the nominees, as well as the other current members of the Board, including their ages, principal business experience during the past five years, the year they each first became a director, Board committee membership and other directorships currently held in companies with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (the "Exchange Act") or subject to the requirements of Section 15(d) of that Act or any company registered as an investment company under the Investment Company Act of 1940. 2 NOMINEES - CLASS II DIRECTORS
Principal Business Experience During Past Director Board Committee Name Five Years Age Since (1) Membership - ---- -------------------------------------------- --- --------- ---------- L. Michael Foley Senior Vice President and Chief Financial 56 1994 Audit, Compensation Officer, Coldwell Banker Corporation, since 1995. Consultant, L. Michael Foley & Associates, 1994-95. Consultant, Sears Roebuck and Co., 1993-94. Chairman and Chief Executive Officer, Sears Savings Bank, 1989-93. Senior Executive Vice President, Coldwell Banker Real Estate Group, Inc., 1986-93. John McMahan President, John McMahan Associates, Inc., a 58 1993 Audit, management consulting firm, and McMahan Compensation, Real Estate Securities, Inc., a real estate Executive investment firm, since 1994. President and Chief Executive Officer, Mellon/McMahan Real Estate Advisors, Inc., a real estate advisory firm, 1990-94. Chairman, Peregrine Real Estate Trust, and Trustee, California Real Estate Investment Trust. Trustee, Mellon Participating Mortgage Trust, Inc., a real estate investment trust.
3 CLASS III DIRECTORS - TERM EXPIRES IN 1996
Principal Business Experience During Director Board Committee Name Past Five Years Age Since (1) Membership - ---- ----------------------------------------- --- --------- ---------- C. Preston Butcher President and Chief Executive Officer, 56 1985 Audit, Compensation Lincoln Property Company, N.C., Inc., real estate developer, and President and Chief Executive Officer, Lincoln Property Company Management Services, Inc., real estate management company, for more than five years. Director, The Charles Schwab Corporation. Frank C. McDowell President and Chief Executive Officer of 47 June 1995 Executive the company, since June 1995. Chief Executive Officer and Chairman of Cardinal Realty Services, Inc., 1992-95. Senior Vice President, Head of Real Estate, First Interstate Bank of Texas, 1988-92. CLASS I DIRECTORS - TERM EXPIRES IN 1997 Arthur G. von Thaden Chairman of the Board of the company. 63 1981 Executive President and Chief Executive Officer of the company from 1970 to June 1995. Chief Executive Officer, BankAmerica Realty Services, Inc., a real estate investment advisory firm, from 1970 to September 1987. Malcolm R. Riley Partner, Riley/Pearlman Company, a 63 1990 Audit, shopping center developer and manager, Compensation, since 1986. President, Plaza Management Executive Company, a wholly owned subsidiary of Riley/Pearlman, since 1992, and Chairman, La Cagnina/Riley & Associates, since 1994.
_____________________ (1) Years indicated are calendar years. For Messrs. von Thaden and Butcher, includes service as a trustee of the company's predecessor, BankAmerica Realty Investors. Mr. Butcher is a managing general partner in approximately 240 partnerships which act as the general partner of single purpose limited partnerships, each of which owns a rental real estate property. To date, 14 of these single purpose limited partnerships have filed for protection under the Federal bankruptcy laws. 4 During the fiscal year ended July 31, 1995, the Board held 14 meetings. All of the directors attended 75% or more of the meetings of the Board and each of the committees on which they served during fiscal 1995, except Mr. McMahan. The Board of Directors has established an Audit Committee, an Executive Committee and a Compensation Committee. The Audit Committee reviews the annual financial statements with both management and the independent auditors. Such review includes an assessment as to whether the financial statements are complete and consistent with information known to them and reflect appropriate accounting principles. The Audit Committee meets annually with the independent auditors in preparation for, and in review of, the annual audit. During fiscal 1995, the Audit Committee met twice. The Executive Committee has all powers of the Board in the management and affairs of BRE, subject to limitations prescribed by the Board and by Delaware law. The Executive Committee did not meet during fiscal 1995. The Compensation Committee reviews the compensation of officers of BRE and administers BRE's stock option plans. The Compensation Committee met once during fiscal 1995. Registrant's prior policy regarding compensation of directors was to pay the Chairman of the Board (unless an employee of the company) an annual retainer of $30,000 and to pay each other director who is not an employee an annual retainer of $10,000. Directors (including the Chairman) who are not employees receive an additional $1,000 for each Board meeting attended, and they are also reimbursed for reasonable expenses incurred in attending Board and Committee meetings. In addition, during the fiscal year ended July 31, 1995, Mr. McMahan was paid $10,000 per month from January to July 1995 (a total of $64,000) for serving as interim Chairman of the Board following former Chairman Carver's resignation and for performing other strategic planning duties at the request of the Board; and Mr. Foley was paid, as chairman of the CEO search committee, $5,000 per month (totaling $30,000). On October 2, 1995, the Board adopted a policy of paying retainer and meeting fees of non-employee directors solely in stock options, subject to approval by BRE's shareholders of the Amended and Restated Non-Employee Director Stock Option Plan. Under the 1994 Non-Employee Director Stock Plan, for fiscal 1995 directors who were not employees received a stock option to purchase 2,500 shares of Common Stock at $30.50 per share, the closing market price on the date of grant. This grant applied to the non-employee directors (i.e., all current directors except Messrs. McDowell and von Thaden). On October 2, 1995, this plan was amended to provide each non-employee director annual stock options for 12,500 shares of Common Stock in lieu of cash compensation plus options for an additional 2,500 shares depending on performance. On October 16, 1995, pursuant to the amended plan, the non-employee directors were granted options to purchase 12,500 shares at $33.25 per share, subject to shareholder approval of the amended plan. 5 COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934. Section 16(a) of the Exchange Act requires the company's directors and executive officers, and persons who own more than ten percent of a registered class of its equity securities, to file with the Securities and Exchange Commission and the New York Stock Exchange initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the company. To registrant's knowledge, based solely on review of the copies of such reports furnished to it and written representations that no other reports were required during the fiscal year ended July 31, 1995, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent shareholders were complied with, except that Mr. McMahan inadvertently failed to timely file a report showing a change in ownership of Common Stock arising from the acquisition of 1,000 shares of Common Stock in November 1994. 6 ITEM 11. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table shows the compensation for the past three fiscal years of Registrant's Chief Executive Officer and each other executive officer with salary and bonus of over $100,000 for the fiscal year ended July 31, 1995 (the "named executive officers").
Annual Long-Term Compensation Compensation Awards ------------ ------------------- Salary Bonus Restricted Share Options/ All Other Name and Principal Position Year ($) ($) Awards ($)(1) SARs(#) Compensation (2) - --------------------------- ---- --- --- ------------- ------- ---------------- Arthur G. von Thaden 1995 $262,500 $108,000 $ 68,200 35,000 $17,843 President and Chief 1994 260,417 -0- 21,113 35,000 21,559 Executive Officer until June 1993 247,883 95,000 19,125 35,000 22,034 5, 1995, then Chairman of the Board Frank C. McDowell 1995 $ 33,333 $ -0- $125,011 70,000 $ -0- President and Chief 1994 Executive Officer (since 1993 June 5, 1995) Byron M. Fox 1995 $169,792 $ 62,000 $ 52,700 5,000 $17,834 Executive Vice President, 1994 159,375 -0- 10,556 3,000 21,320 Acquisitions and Asset 1993 151,667 45,000 9,563 5,000 17,582 Management Howard E. Mason, Jr. 1995 $108,833 $ 38,000 $ 34,100 5,000 $11,068 Senior Vice President, 1994 102,167 -0- 10,556 2,500 14,326 Finance 1993 98,000 30,000 9,563 3,000 10,611 Ronald P. Wargo 1995 $113,333 $ 48,000 $ 49,600 5,000 $11,573 Senior Vice President, 1994 103,333 -0- 14,075 4,000 15,572 Asset Management 1993 93,500 40,000 6,375 5,000 9,941 Ellen G. Breslauer 1995 $ 88,833 $ 30,000 $ 31,000 3,000 $ 8,712 Secretary and Treasurer 1994 82,417 -0- 7,038 2,000 11,479 1993 78,917 27,000 6,375 2,500 8,049
7 ______________________ (1) The amounts reported represent the aggregate value of restricted share awards at the date of award. In fiscal 1995, 1994 and 1993, the named executive officers received the following numbers of restricted share awards:
1995 1994 1993 ---- ---- ---- von Thaden 2,200 600 600 McDowell 4,082 0 0 Fox 1,700 300 300 Mason 1,100 300 300 Wargo 1,600 400 200 Breslauer 1,000 200 200
The restrictions imposed on restricted share awards severally lapse on the fifth anniversary of the date of grant or, if earlier, upon normal retirement, death or disability. The restrictions on Mr. McDowell's shares lapse on the third anniversary of the grant date. In addition, the restrictions imposed on Mr. von Thaden's and Mr. McDowell's restricted shares may lapse upon termination of employment following a change in control of the company. See "-- Employment Contracts and Termination of Employment and Change-in-Control Arrangements." Dividends are paid on restricted shares at the same rate and at the same time as on the Common Stock. At July 31, 1995, the aggregate number and value of shares of restricted stock (based on the market price of $31.50 at July 31, 1995) held by each of the named executive officers was as follows:
Number Value ------ ----- von Thaden 5,200 $163,800 McDowell 4,082 128,583 Fox 2,900 91,350 Mason 2,400 75,600 Wargo 2,400 75,600 Breslauer 1,500 47,250
(2) Consists of BRE's contributions to its defined contribution retirement plan (401(k) Plan) on behalf of the named executive officers. Also includes $1,250 for Mr. Fox representing the company's allocation for him pursuant to the Supplemental Retirement Plan which the company established beginning with the fiscal year ended July 31, 8 1995 in order to provide to all employees, other than Messrs. von Thaden and Mason (see "Supplemental Retirement Benefits"), unfunded supplemental retirement benefits equal to the benefits that would have been received from company contributions to the 401(k) Plan absent the various contribution limitations. 9 OPTION GRANTS IN FISCAL 1995 The following table sets forth (i) all individual grants of stock options made by the company during fiscal 1995 to each of the named executive officers; (ii) the ratio that the number of options granted to each individual bears to the total number of options granted to all employees of the company, (iii) the exercise price and expiration date of these options; and (iv) the estimated potential realizable values assuming certain stock price appreciation over the ten-year option term.
Individual Grants ----------------- % of Total Potential Realized Value Options at Assumed Annual Rates of Options Granted to Exercise or Stock Price Appreciation for Granted Employees Base Price Expiration Option Term (2) Name (#)(1) in Fiscal 1995 ($/Sh) Date 5% 10% - ---- ------- -------------- ---------- ---------- ---------- ---------- Arthur G. von Thaden 35,000 25.4% $31.00 8/28/04 $ 682,351 $1,729,211 Frank C. McDowell 70,000 50.7 30.63 6/04/05 1,348,193 3,416,585 Byron M. Fox 5,000 3.6 31.00 8/28/04 97,479 247,030 Howard E. Mason, Jr. 5,000 3.6 31.00 8/28/04 97,479 247,030 Ronald P. Wargo 5,000 3.6 31.00 8/28/04 97,479 247,030 Ellen G. Breslauer 3,000 2.2 31.00 8/28/04 58,487 148,218
__________________________ (1) All options shown in the table were granted under the company's 1992 Employee Stock Plan (the "1992 Plan"), except for options for 50,000 shares granted to Mr. McDowell. The exercise price is 100% of fair market value on the date of grant. The options vest 50% on each of the first and second anniversary dates of grant (except as described below for Mr. McDowell's options) and expire ten years from the date of grant. The option price is payable in cash or by delivery of previously acquired shares of Common Stock, and the option holder may in certain circumstances elect to have shares withheld to satisfy tax withholding requirements in connection with the exercise of options. Options granted may become immediately exercisable in certain events such as an optionee's retirement, death or disability, or in connection with a merger, acquisition or "change in control" as defined in the 1992 Plan. All options held by Mr. McDowell may become immediately exercisable upon termination of employment following a change in control of the company. Mr. von Thaden's options will become fully vested on December 31, 1995. See "Employment Contracts and Termination of Employment and Change-in-Control Arrangements." Mr. McDowell exercised his options immediately upon grant with respect to 20,000 shares. See the following table. Mr. McDowell's options for the remaining 50,000 shares vest in equal installments on June 22, 1998, 1999 and 2000. Any portion of these options 10 then remaining unexercised will terminate on July 22, 2000, unless at any time prior to that date the market price for the Common Stock has exceeded $39.00 per share for ten consecutive trading days. (2) Potential realizable value is calculated based on an assumption that the price of the Common Stock appreciates at the annual rate shown (5% and 10%), compounded annually, from the date of grant of the option until the end of the option term (ten years). The value is net of the exercise price but is not adjusted for the taxes that would be due upon exercise. The 5% and 10% assumed rates of appreciation are mandated by the rules of the Securities and Exchange Commission and do not represent the company's estimate or projection of future stock prices. Actual gains, if any, upon future exercise of any of these options will depend on the actual performance of the Common Stock and the continued employment of the executive officer holding the option through its vesting period. At 5% annual appreciation from $31.00 over a ten-year term, the stock price would be $50.50. At 10% annual appreciation from $31.00 over a ten-year term, the stock price would be $80.41. Using a base of $30.63, the stock price would be $49.88 after five years and $79.43 after ten years. 11 AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND FISCAL YEAR-END OPTION VALUES The following table sets forth (i) the number of shares received and the aggregate dollar value realized in connection with each exercise of outstanding stock options during fiscal year 1995 by each of the named executive officers; (ii) the total number of all outstanding unexercised options held by the named executive officers as of the end of fiscal year 1995; and (iii) the aggregate dollar value of all such unexercised options based on the excess of the market price of the Common Stock over the exercise price of the option.
Value of Unexercised Number of Shares Value Number of Unexercised In-the Money Name Acquired on Exercise Realized (1) Options at 7/31/95 Options at 7/31/95(2) ---- -------------------- ------------ ------------------ --------------------- Exercisable/Unexercisable Exercisable/Unexercisable Arthur von Thaden 12,500 $ 1,563 118,000 52,500 $189,831 $17,500 Frank C. McDowell 20,000 0 0 50,000 0 43,750 Byron M. Fox 0 0 18,000 6,500 33,841 2,500 Howard E. Mason, Jr. 0 0 11,250 6,250 13,124 2,500 Ronald P. Wargo 0 0 17,800 7,000 24,674 2,500 Ellen G. Breslauer 0 0 12,400 4,000 20,243 1,500
______________________ (1) Value realized is calculated by subtracting the total exercise price from the market value of the underlying Common Stock on the date of exercise. Because Mr. McDowell purchased 20,000 shares on the date of grant of his options, the exercise price was equal to the market price at the time of exercise. Mr. McDowell was granted a loan of $612,500 by the company representing the full exercise price for the 20,000 shares. See "Employment Contracts and Termination of Employment and Change-in-Control Arrangements." As a result of his option exercise, Mr. McDowell increased his holdings of Common Stock by 20,000 shares. (2) The market value of the Common Stock at July 31, 1995 was $31.50 per share. 12 EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS MR. MCDOWELL Effective as of June 5, 1995 (the "Commencement Date"), registrant entered into a five-year employment agreement with Mr. McDowell. Certain material terms of the agreement are as follows: BASE SALARY AND ANNUAL INCENTIVE BONUS. Mr. McDowell will receive a base salary of $300,000 per year and is eligible to receive an annual incentive bonus of up to 100% of base salary based on achievement of predefined operating or performance criteria (the "Annual Criteria") established by the Board, with emphasis on funds from operations ("FFO"). STOCK LOAN. On the Commencement Date, Mr. McDowell received a loan (the "Employment Stock Loan") of $612,500 to exercise options to purchase 20,000 shares of BRE Common Stock (at an exercise price of $30.625 per share) issued on that date. The Stock Loan bears interest at 8.25% per annum, compounded annually, with all principal and accrued interest payable in full on June 5, 2000 (the "Payment Date"); provided, however, that repayment of any principal and accrued interest under the Employment Stock Loan (the "Loan Amount") will be forgiven in accordance with the following formulas (the "Performance Formulas"): (i) 20% of the Loan Amount will be forgiven if the gross book value of registrant's equity investments in real estate, investments in limited partnerships and mortgages have a value of $937 million or more on the Payment Date, and a pro rata portion of the Loan Amount will be forgiven if such value is between $791 million and $937 million; (ii) 20% of the Loan Amount will be forgiven on the Payment Date if, on the second anniversary date of the Employment Stock Loan, there has been an increase in funds from operations ("FFO") per share of Common Stock for the two year period ending April 30, 1997 which is at or above the 80th percentile of the Indexed REITs for a comparable period, and a pro rata portion of the Loan Amount will be forgiven if any such increase is within the 50th and 80th percentiles; (iii) 30% of the Loan Amount will be forgiven if, on the Payment Date, there has been an increase in FFO per share of Common Stock for the three year period ending April 30, 2000 which is at or above the 80th percentile of the Indexed REITs, and a pro rata portion of the Loan Amount will be forgiven if any such increase is within the 50th and 80th percentiles; and (iv) 30% of the Loan Amount will be forgiven if, as of the Payment Date, the average of the FFO multiples of Common Stock as of December 31 of each of the five preceding years (computed in each case by dividing the market price of Common Stock on the last trading day of the calendar year by the preceding twelve months' FFO) is at or above the 80th percentile of the average multiple of the Indexed REITs for the same five year period, and a pro rata portion of the Loan Amount will be forgiven if such multiple is within the 50th and 80th percentiles. In addition, the Loan Amount will be forgiven by registrant upon termination of Mr. McDowell's employment with registrant under the circumstances described below under "Certain Severance Benefits." STOCK OPTIONS AND RESTRICTED STOCK GRANTS. On the Commencement Date, Mr. McDowell received options to purchase 50,000 shares of Common Stock at an exercise price of $30.63 per share. One third of such options vest on each of June 22, 1998, 1999 and 2000; 13 provided, however, that any unexercised options terminate on July 22, 2000 if the Market Value of the Common Stock has not exceeded $39.00 per share for ten consecutive trading days during the five year employment term. On the Commencement Date, Mr. McDowell was also awarded 4,082 Restricted Shares, all of which shall vest on the third anniversary of the Commencement Date. FUTURE AWARDS. Beginning with the fiscal year commencing August 1, 1996 and for each subsequent fiscal year, Mr. McDowell is entitled to receive annual long term incentive awards which, assuming achievement of all applicable performance goals, will provide Mr. McDowell with the financial equivalent of (i) a forgivable performance based five-year loan to purchase 5,000 shares of Common Stock and (ii) performance options to purchase 25,000 shares of BRE Common Stock at Market Value on the date of award. CERTAIN SEVERANCE BENEFITS. If, at any time during the five year employment term, the employment of Mr. McDowell is terminated, he shall be entitled to receive the benefits described below. (a) TERMINATION OTHER THAN IN CONNECTION WITH A CHANGE IN CONTROL. (i) TERMINATION BY THE COMPANY WITHOUT CAUSE. If Mr. McDowell is terminated without cause before June 5, 1996, he would receive a lump sum payment equal to 1.5 times his then base salary, all vesting restrictions on the 4,082 Restricted Shares awarded on the Commencement Date would be eliminated and the excess of the Loan Amount over the Market Value of 20,000 shares of Common Stock on the date of termination would be forgiven, with the balance of the Loan Amount payable immediately. If such termination occurs after June 5, 1996, Mr. McDowell will receive a lump sum payment equal to his then base salary plus an amount equal to the average of his annual bonus over the most recent two years (or the previous annual bonus if only one annual bonus period has passed), all vesting restrictions on the 4,082 Restricted Shares awarded to him on the Commencement Date would be eliminated and the Loan Amount would be reduced based on a pro rata application of the Performance Formulas (the "Performance Adjustment"), taking into consideration the number of full months worked and performance data through the last quarter ended 45 days or more prior to the termination date. (ii) TERMINATION DUE TO DEATH OR DISABILITY. Upon termination due to death or disability, Mr. McDowell or his estate will receive a lump sum payment equal to the estimated annual bonus he would have received for the fiscal year in question (based on actual performance relative to Annual Criteria for the fiscal year and Mr. McDowell's contribution to the date of death or disability), calculated on a pro-rated basis to the date of termination. In addition, the Employment Stock Loan will be forgiven based on the Performance Adjustment, with any balance payable 15 days after termination. (iii) VOLUNTARY TERMINATION OR TERMINATION FOR CAUSE. Upon voluntary termination or termination for "cause," no further compensation will be payable to Mr. McDowell and the outstanding balance of the Employment Stock Loan, together with accrued but unpaid interest, will be payable in full within 15 days of termination. 14 (b) TERMINATION FOLLOWING A CHANGE IN CONTROL. (i) TERMINATION WITHOUT CAUSE OR BY MR. MCDOWELL FOR GOOD REASON. If Mr. McDowell is terminated without cause within 12 months following a Change in Control, or if Mr. McDowell terminates his employment for "Good Reason" within 12 months after a Change in Control, he will receive the following benefits: (a) a lump sum payment equal to (x) two times his then base salary plus an amount equal to two times the average of his annual bonus over the most recent two years, or his previous annual bonus if only one annual bonus period has passed (based on his current base salary of $300,000 and assuming average incentive compensation in the maximum amount of $300,000, this payment would be $1,200,000) plus (y) the estimated annual bonus he would have received for the fiscal year in question (based on actual performance relative to Annual Criteria for the fiscal year and Mr. McDowell's contribution to date), calculated on a pro-rated basis to the date of termination; (b) all unvested stock options held by Mr. McDowell would vest and be exercisable for a period of three months; (c) all vesting restrictions on the Restricted Shares would be eliminated; and (d) the Employment Stock Loan will be forgiven based on the Performance Adjustment, with any balance payable upon termination. (ii) TERMINATION DUE TO DEATH OR DISABILITY. Upon termination due to death or disability following a Change in Control, Mr. McDowell or his estate will receive the same benefits described in subparagraph (a)(ii) above. (iii) VOLUNTARY TERMINATION WITHOUT GOOD REASON OR TERMINATION FOR CAUSE. Upon voluntary termination of employment by Mr. McDowell without Good Reason within 12 months following a Change in Control, Mr. McDowell will receive a lump sum payment equal to his then base salary plus an amount equal to the average of his annual bonus over the most recent two years, or the previous annual bonus if only one annual bonus period has passed ($600,000 assuming a $300,000 base salary and maximum incentive bonus). The outstanding balance of the Employment Stock Loan will be due on such termination. Upon termination for "cause" within 12 months following a Change in Control, no further compensation will be payable to Mr. McDowell and the outstanding balance of the Employment Stock Loan, together with accrued but unpaid interest, will be payable in full within 15 days of termination. Any of the foregoing amounts payable to Mr. McDowell following a Change in Control are subject to reduction to the extent such payments would constitute "parachute payments" as defined in Section 280G of the Internal Revenue Code of 1986. MR. VON THADEN On December 19, 1994, registrant entered into an agreement with Mr. von Thaden contemplating his retirement on December 31, 1995. Pursuant to that agreement, registrant agreed to the acceleration of vesting of all stock options and restricted stock held by Mr. von Thaden as of the retirement date, and to allow exercise of such options for up to three years following that date (but not beyond the original term of any such option). Mr. von Thaden relinquished the position of Chief Executive Officer and became Chairman of the Board on June 5, 1995, when Mr. McDowell became the Chief Executive Officer, and Mr. von Thaden will now retire on December 31, 1995, resulting in acceleration of the existing 4,000 shares of restricted 15 stock and stock options for 17,500 shares of Common Stock, although he remains a director of registrant. Registrant agreed to maintain Mr. von Thaden's compensation and benefits through December 31, 1995 at the same levels as existed on December 19, 1994. SUPPLEMENTAL RETIREMENT BENEFITS In 1988, BRE established an unfunded plan to provide supplemental retirement benefits to Mr. von Thaden and Howard E. Mason, Jr. This plan generally provides for the payment of supplemental benefits to each of Mr. von Thaden and Mr. Mason in an amount equal to the greater of (i) the excess of the benefits he would have received under the defined benefit pension plan of BankAmerica Corporation (assuming his employment with BRE's predecessor, BankAmerica Realty Services, Inc. had continued until retirement at his BRE earnings levels) over the benefits he is entitled to receive under the 401(k) Plan or (ii) the benefits he would have received from company contributions to the 401(k) Plan absent the various contribution limitations. These supplemental benefits are payable upon termination of employment in any actuarially equivalent form. The established supplemental benefits payable to Mr. von Thaden on his proposed retirement on December 31, 1995 are $11,600 (under a five year certain and life annuity) or a lump sum of $100,100. Assuming retirement prior to age 65, the maximum estimated supplemental benefits payable to Mr. Mason are $1,540 (under a five year certain and life annuity), or $13,500 (as a single lump sum payment). Assuming retirement at age 65, the estimated supplemental benefits payable to Mr. Mason are $1,380 (under a five year certain and life annuity), or $11,600 (as a single lump sum payment). See footnote 2 at page 8 herein regarding the company's Supplemental Retirement Plan adopted beginning with the fiscal year ended July 31, 1995. 16 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of September 5, 1995, information regarding the beneficial ownership of Common Stock by each director of the company, by each named executive officer and by all directors and executive officers as a group. The amounts shown are based upon information provided by the individuals named.
Percentage of Outstanding Current Position Shares of Common Stock Shares Owned Beneficially Name With Company Beneficially Owned (1) (1)(2) ---- ------------ ---------------------- ------ Arthur G. von Thaden Director and Chairman 168,035 (3) 1.5% Frank C. McDowell Director, President and Chief 24,082 (4) * Executive Officer C. Preston Butcher Director 3,250 (5) * L. Michael Foley Director 4,250 (6) * John McMahan Director 3,250 (7) * Malcolm R. Riley Director 2,250 (8) * Byron M. Fox Executive Vice President 31,083 (9) * Howard E. Mason, Jr. Senior Vice President, 26,536 (10) * Finance Ronald P. Wargo Senior Vice President 26,956 (11) * Ellen G. Breslauer Secretary and Treasurer 24,364 (12) * All directors and executive 314,056 (13) 2.9% officers as a group (ten persons)
17 _____________________ (1) The amounts and percentages of Common Stock beneficially owned are reported on the basis of regulations of the Securities and Exchange Commission governing the determination of beneficial ownership of securities. Except as otherwise indicated, each individual has sole voting and sole investment power with regard to the shares owned. (2) Except where otherwise indicated, does not exceed 1%. (3) Mr. von Thaden - includes 378 shares held by Mr. von Thaden's wife in her Individual Retirement Account, as to which Mr. von Thaden has no voting or investment power. Also includes 150,500 shares that may be purchased upon the exercise of stock options that are currently exercisable or that will become exercisable on or before November 2, 1995. See also "Employment Contracts and Termination of Employment and Change-in-Control Arrangements - Mr. von Thaden." Also includes 4,000 shares held as restricted shares. (4) Mr. McDowell - includes 4,082 shares held as restricted shares and 20,000 shares which Mr. McDowell acquired June 5, 1995 upon exercise of stock options granted to him at the time of his employment that are collateral for a $612,500 recourse loan from the Company. See "Employment Contracts and Termination of Employment and Change-in-Control Arrangements - Mr. McDowell." (5) Mr. Butcher - includes 1,000 shares held by Mr. Butcher's wife as her separate property and 1,000 shares held by Mr. Butcher and his wife as community property, as to which he has shared voting and investment power. Also includes 1,250 shares that may be purchased upon the exercise of stock options that are currently exercisable or that will become exercisable on or before November 2, 1995. (6) Mr. Foley - includes 3,000 shares owned by a family trust of which Mr. Foley and his wife are trustees, as to which he has shared voting and investment power, and 1,250 shares that may be purchased upon the exercise of stock options that are currently exercisable or that will become exercisable on or before November 2, 1995. (7) Mr. McMahan - owned in joint tenancy by Mr. McMahan and his wife, as to which he has shared voting and investment power. Also includes 1,250 shares that may be purchased upon the exercise of stock options that are currently exercisable or that will become exercisable on or before November 2, 1995. (8) Mr. Riley - includes 500 shares owned in joint tenancy by Mr. Riley and his wife, and 500 shares owned in a family partnership as to which he has shared voting and investment power. Also includes 1,250 shares that may be purchased upon the exercise of stock options that are currently exercisable or that will become exercisable on or before November 2, 1995. (9) Mr. Fox - includes 22,000 shares that may be purchased upon the exercise of stock options that are currently exercisable or that will become exercisable on or before November 2, 1995. Also includes 2,600 shares held as restricted shares, and 5,000 shares which Mr. Fox acquired August 28, 1995 upon exercise of stock options that are 18 collateral for a $159,063 recourse loan from the company. The interest rate on the five-year loan is 8.25%, equal to the initial dividend yield on the shares so purchased. The loan may be forgiven in whole or in part upon the achievement of company performance goals related to growth in assets, funds from operations per share and stock price similar to those applicable to forgiveness of Mr. McDowell's loan as described in "Employment Contracts and Termination of Employment and Change-in-Control Arrangements - Mr. McDowell." (10) Mr. Mason - includes 150 shares held by the estate of the late Mrs. Mason and 700 shares held by the estate as custodian for itself and Mrs. Mason's sisters. With respect to these 850 shares, Mr. Mason has no voting or investment power. Also includes 676 shares held by Mrs. Mason's estate. Also includes 15,000 shares that may be purchased upon the exercise of stock options that are currently exercisable or that will become exercisable on or before November 2, 1995. Also includes 2,400 shares held as restricted shares. (11) Mr. Wargo - includes 21,300 shares that may be purchased upon the exercise of stock options that are currently exercisable or that will become exercisable on or before November 2, 1995. Also includes 2,800 shares held as restricted shares. (12) Ms. Breslauer - includes 798 shares held by Ms. Breslauer's husband in his Individual Retirement Account, as to which Ms. Breslauer has shared investment power and no voting power. Also includes 6,294 shares held by Ms. Breslauer and her husband as community property, for which she has shared voting and investment power. Also includes 14,900 shares that may be purchased upon the exercise of stock options that are currently exercisable or that will become exercisable on or before November 2, 1995. Also includes 1,800 shares held as restricted shares. (13) Includes 228,700 shares that may be purchased upon the exercise of stock options that are currently exercisable or that will become exercisable on or before November 2, 1995. Also includes 17,682 shares held as restricted shares. 19 PRINCIPAL SHAREHOLDER OF BRE The following table indicates the only person known by registrant to be the beneficial owner of more than 5% of the company's shares of Common Stock as of September 5, 1995 and the percentage of all outstanding shares of Common Stock that such shares represented at that date, based on information furnished by such holder or contained in filings made with the Securities and Exchange Commission. Number of Shares Percentage Name and Address of Common Stock of Shares - ---------------- --------------- --------- State Farm Insurance Companies 2,409,479 22% One State Farm Plaza Bloomington, Illinois 61701 20 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Reference is made to the information contained in Note H of Notes to Financial Statements, on page 23 of the 1995 Annual Report under the caption "Transactions with Related Parties," which information is incorporated herein by reference to excerpts of the Annual Report. See also Note 9 on pg. 18 herein regarding a $159,063 loan to Mr. Fox. 21 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BRE PROPERTIES, INC. Dated: November 28, 1995 /s/ ----------------------------- Howard E. Mason, Jr. Senior Vice President, Finance 22 -----END PRIVACY-ENHANCED MESSAGE-----