SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material
Under Rule 14a-12
Weingarten Realty Investors
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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5. Total fee paid:
[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1. Amount previously paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
WEINGARTEN REALTY INVESTORS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 25, 2003
To Our Shareholders:
You are invited to attend our annual meeting of shareholders which will be
held at our corporate office located at 2600 Citadel Plaza Drive, Houston,
Texas, on Friday, April 25, 2003, at 9:00 a.m., Houston time. The purpose of the
meeting is to vote on the following proposals:
Proposal 1: To elect nine trust managers to serve for a one year term,
and until their successors are elected and qualified.
Proposal 2: To ratify the appointment of Deloitte & Touche LLP as
independent auditors for the fiscal year ending December 31,
2003.
Proposal 3: To take action upon any other business which properly may
come before the meeting.
Shareholders of record at the close of business on March 7, 2003 are
entitled to notice of, and to vote at, the annual meeting. A proxy card and a
copy of our annual report to shareholders for the fiscal year ended December 31,
2002 are enclosed with this notice of annual meeting and proxy statement.
Your vote is important. Accordingly, you are asked to vote whether or not
you plan to attend the annual meeting. You may vote by: (i) mail by marking,
signing, dating and returning the accompanying proxy card in the postage-paid
envelope we have provided, or returning it to Weingarten Realty Investors, c/o
ADP, 51 Mercedes Way, Edgewood, NY 11717, (ii) Internet at www.proxyvote.com,
(iii) phone by calling 1-800-690-6903, or (iv) attending the annual meeting in
person. If you plan to attend the annual meeting to vote in person and your
shares are registered with our transfer agent, Mellon Investor Services LLC, in
the name of a broker or bank, you must secure a proxy from the broker or bank
assigning voting rights to you for your shares.
By Order of the Board of Trust Managers
M. Candace DuFour,
Vice President and Secretary
March 19, 2003
Houston, Texas
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
Monday, April 25, 2003
Weingarten Realty Investors
2600 Citadel Plaza Drive
Houston, Texas 77008
The board of trust managers is soliciting proxies to be used at the 2003
annual meeting of shareholders to be held at our corporate office located at
2600 Citadel Plaza Drive, Houston, Texas, on Friday, April 25, 2003, at 9:00
a.m., Houston time. This proxy statement, accompanying proxy card and annual
report to shareholders for the fiscal year ended December 31, 2002 are first
being mailed to shareholders on or about March 19, 2003. Although the annual
report is being mailed to shareholders with this proxy statement, it does not
constitute part of this proxy statement.
Who May Vote
Only shareholders of record at the close of business on March 7, 2003 are
entitled to notice of, and to vote at, the annual meeting. As of March 7, 2003,
we had 52,107,933 common shares of beneficial interest issued and outstanding.
Each common shareholder of record on the record date is entitled to one vote on
each matter properly brought before the annual meeting for each common share
held.
In accordance with our amended and restated bylaws, a list of shareholders
entitled to vote at the annual meeting will be available at the annual meeting
and for 10 days prior to the annual meeting, between the hours of 9:00 a.m. and
4:00 p.m. local time, at our principal executive offices listed above.
How You May Vote
You may vote using any of the following methods:
. BY MAIL: Mark, sign, and date your proxy card and return it in the
postage-paid envelope we have provided, or return it to Weingarten
Realty Investors, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717. The
named proxies will vote your shares according to your directions. If
you submit a signed proxy card without indicating your vote, the person
voting the proxy will vote your shares according to the board's
recommendation.
. BY INTERNET: Go to www.proxyvote.com and use the Internet to transmit
your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time the day before the cut-off date or
meeting date. Have your proxy card in hand when you access the web
site. You will be prompted to enter your 12-digit Control Number which
is located on your proxy card to obtain your records and to create an
electronic voting instruction form.
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. BY PHONE: Call 1-800-690-6903 and use any touch-tone telephone to
transmit your voting instructions up until 11:59 P.M. Eastern Time the
day before the cut-off date or meeting date. Have your proxy card in
hand when you call. You will be prompted to enter your 12-digit Control
Number which is located on your proxy card and then follow the simple
instructions the Vote Voice provides you.
. BY ATTENDING THE ANNUAL MEETING IN PERSON.
You may revoke your proxy at any time before it is exercised by:
. giving written notice of revocation to our Secretary, M.
Candace DuFour, at Weingarten Realty Investors, P.O. Box
924133, Houston, Texas, 77292-4133;
. timely delivering a properly executed, later-dated proxy; or
. voting in person at the annual meeting.
Voting by proxy will in no way limit your right to vote at the annual
meeting if you later decide to attend in person. If you hold common shares
through any of our share purchase or savings plans, you will receive voting
instructions. Please sign and return those instructions promptly to assure that
your shares are represented at the annual meeting. If your shares are held in
the name of a bank, broker or other holder of record, you must obtain a proxy,
executed in your favor, to be able to vote at the annual meeting. If no
direction is given and the proxy is validly executed, the shares represented by
the proxy will be voted as recommended by the board of trust managers. The
persons authorized under the proxies will vote upon any other business that may
properly come before the annual meeting according to their best judgment to the
same extent as the person delivering the proxy would be entitled to vote. We do
not anticipate that any other matters will be raised at the annual meeting.
Required Vote
The presence, in person or represented by proxy, of the holders of a
majority of the common shares (26,053,967 shares) entitled to vote at the annual
meeting is necessary to constitute a quorum at the annual meeting. However, if a
quorum is not present at the annual meeting, the shareholders, present in person
or represented by proxy, have the power to adjourn the annual meeting until a
quorum is present or represented. Pursuant to our amended and restated bylaws,
abstentions and broker "non-votes" are counted as present and entitled to vote
for purposes of determining a quorum at the annual meeting. A broker "non-vote"
occurs when a nominee holding common shares for a beneficial owner does not vote
on a particular proposal because the nominee does not have discretionary voting
power with respect to that item and has not received instructions from the
beneficial owner.
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The affirmative vote of the holders of 66 2/3% of the outstanding
common shares (34,738,622 shares) is required for the election of trust manager
nominees who have not been previously elected as trust managers. The affirmative
vote of the holders of a majority of the common shares (26,053,967 shares)
present in person or represented by proxy is required to re-elect trust
managers. Any trust manager who is currently on the board shall remain on the
board, regardless of the number of votes he receives, unless he is replaced by a
nominee who receives the requisite vote to become a new trust manager. All of
the nominees for trust manager served as our trust managers, except Mr. Bowden,
in 2002. Abstentions and broker non-votes are not counted for purposes of the
election of trust managers.
The ratification of the appointment of Deloitte & Touche LLP requires
the affirmative vote of the holders of a majority of the common shares
represented at the annual meeting and entitled to vote thereon in order to be
approved.
Cost of Proxy Solicitation
The cost of soliciting proxies will be borne by us. Proxies may be
solicited on our behalf by our trust managers, officers, employees or soliciting
service in person, by telephone, facsimile or by other electronic means. In
accordance with SEC regulations and the rules of the New York Stock Exchange, we
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for their expenses incurred in sending proxies and proxy materials and
soliciting proxies from the beneficial owners of our common shares.
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PROPOSAL ONE
ELECTION OF TRUST MANAGERS
Pursuant to the Texas Real Estate Investment Trust Act, our amended and
restated declaration of trust and our amended and restated bylaws, our business,
property and affairs are managed under the direction of the board of trust
managers. At the annual meeting, nine trust managers will be elected by the
shareholders, each to serve until his successor has been duly elected and
qualified, or until the earliest of his death, resignation or retirement.
Regardless of the number of votes each nominee receives (excluding Mr. Bowden),
pursuant to the Texas Real Estate Investment Trust Act, each trust manager will
continue to serve unless another nominee receives the affirmative vote of the
holders of 66 2/3% of our outstanding common shares.
The persons named in the enclosed proxy will vote your shares as you
specify on the enclosed proxy. If you return your properly executed proxy but
fail to specify how you want your shares voted, the shares will be voted in
favor of the nominees listed below. The board of trust managers has proposed the
following nominees for election as trust managers at the annual meeting. Each of
the nominees is currently a member of the board of trust managers.
Nominees
Stanford Alexander, Chairman of the Board of Trust Managers. Chief
Executive Officer from 1993 to December 2000. President and Chief Executive
Officer from 1962 to 1993. Trust manager since 1956 and our employee since 1955.
President, Chief Executive Officer and a trust manager of Weingarten Properties
Trust ("Properties"). Age: 74
Andrew M. Alexander, trust manager since 1983. Chief Executive Officer
since January 2001. President since 1996. Executive Vice President/asset manager
from 1993 to 1996 and President of Weingarten Realty Management Company since
1993. Senior Vice President/asset manager of Weingarten Realty Management
Company from 1991 to 1993, and Vice President from 1990 to 1991 and, prior to
our reorganization in 1984, Vice President from 1988 to 1990. Mr. Alexander has
been our employee since 1978. He is a trust manager of Properties and a director
of Academy Sports & Outdoors, Inc. Age: 46
J. Murry Bowden, trust manager nominee for 2003. Mr. Bowden was
appointed to the board on February 21, 2003 to fill a vacancy created by an
increase in the number of trust managers constituting the board of trust
managers. Mr. Bowden is Co-Chairman of The Hanover Company and has been involved
in all aspects of apartment development, construction management and finance for
more than 25 years. Prior to forming The Hanover Company in 1982, he was an
attorney in private practice. Age: 54
James W. Crownover, trust manager since April 2001. Since 1998, Mr.
Crownover has managed his personal investments. Mr. Crownover completed a 30
year career with McKinsey & Company, Inc. in 1998 where he was managing director
of its southwest practice and a member of the firm's board of directors. He
currently serves as a director on the boards of Unocal Corporation, Great Lakes
Chemical Corporation and Allied Waste Industries. Age: 59
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Robert J. Cruikshank, trust manager since 1997. Senior partner of
Deloitte & Touche LLP from 1989 to 1993. Since 1993, Mr. Cruikshank has managed
his personal investments. Director of CenterPoint Energy, Inc., MAXXAM, Inc.,
Kaiser Aluminum Corp. and Texas Biotechnology Corp. Age: 72
Melvin A. Dow, trust manager since 1984. Shareholder, Winstead,
Sechrest & Minick P. C. since August 2001. Chairman/Chief Executive Officer of
Dow, Cogburn & Friedman, P.C. (which merged with Winstead, Sechrest & Minick
P.C. in 2001) from 1995 to 2001. Trust manager of Properties. Age: 75
Stephen A. Lasher, trust manager since 1980. President of The GulfStar
Group, Inc. since January 1991. Trust manager of Properties. Age: 55
Douglas W. Schnitzer, trust manager since 1984. Chairman/Chief
Executive Officer of Senterra Real Estate Group, L.L.C. since 1994. Age: 46
Marc J. Shapiro, trust manager since 1985. Vice Chairman of J. P.
Morgan Chase & Co. since 1997. Chairman and Chief Executive Officer of Texas
Commerce Bank from January 1989 to 1997. Director of Kimberly-Clark Corporation
and Burlington Northern Santa Fe Corporation. Age: 55
Andrew M. Alexander is the son of Stanford Alexander. Stephen A. Lasher
is a first cousin of Douglas W. Schnitzer.
The number of trust managers constituting our board of trust managers
is 12. Mr. Martin Debrovner has elected not to seek re-election as a trust
manager. As a result, following the annual meeting there will be three vacancies
on our board. The governance committee is currently conducting a search for
additional qualified independent trust managers. The governance committee will
consider trust manager candidates nominated by shareholders. Recommendations
should be sent to Candace DuFour, Secretary, at P.O. Box 924133, Houston, Texas
77292-4133. The procedure for nominating a person for election as a trust manger
is described under "Shareholder Proposals" on page 26.
The board of trust managers unanimously recommends that you vote FOR
the election of trust managers as set forth in Proposal One. Proxies solicited
by the board of trust managers will be so voted unless you specify otherwise in
your proxy.
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Board Meetings and Committees
During fiscal 2002, the board of trust managers held five meetings. No trust
manager attended less than 75% of the total number of board and committee
meetings on which the trust manager served that were held while the trust
manager was a member. The board's current standing committees are as follows:
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Management
Development
&
Governance Audit Compensation Executive Pricing
Name Committee Committee Committee Committee Committee
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Stanford Alexander X X
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Andrew M. Alexander X (1) X (1)
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J. Murry Bowden X X
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James W. Crownover X X (1)
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Robert J. Cruikshank X X (1) X
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Melvin A. Dow X X
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Stephen A. Lasher X X X
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Marc J. Shapiro X (1) X
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(1) Chairman
Our board has adopted written charters for the audit and governance
committees setting forth the roles and responsibilities of each committee. Those
charters are available at www.weingarten.com A copy of the audit committee
charter is attached to this proxy statement.
The governance committee has the responsibility to (1) oversee the
nomination of individuals to the board, including the identification of
individuals qualified to become board members and recommending such nominees;
(2) develop and recommend to the board a set of governance principles; and (3)
oversee matters of governance to insure that the board is appropriately
constituted and operated to meet its fiduciary obligations, including advising
the board on matters of board organization, membership and function and
committee structure and membership. The committee also recommends trust manager
compensation and benefits. The governance committee will consider nominees made
by shareholders. Shareholders should send nominations to the company's
secretary, Candace DuFour. See "Shareholder Proposals" on page 26. The
governance committee was established in 2002 and met twice that year.
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The audit committee assists the board in filling its oversight
responsibilities to shareholders, the investment community and others by
monitoring (1) the quality and integrity of the financial statements of the
company; (2) the company's compliance with ethical policies contained in the
company's code of conduct and ethics, and legal and regulatory requirements; (3)
the independence, qualification and performance of the company's independent
auditors; and (4) the company's accounting and financial reporting processes and
audits of the company's financial statements. The committee has the
responsibility for selecting the company's independent auditors and
pre-approving audit and non-audit services. The audit committee met five times
in 2002.
The management development and executive compensation committee
establishes the compensation of executive officers and administers management
incentive compensation plans. The committee met twice in 2002. Additionally, the
committee reviews the development progress of key members of management.
The executive committee has the authority to enter into transactions to
acquire and dispose of real property valued at up to $200,000,000. The executive
committee also has the authority to execute certain contracts and agreements,
including agreements to borrow money and enter into financial derivative
contracts. The committee was established by the board to create and reinforce
the approval and decision making process around these significant transactions.
We have a detailed process that is followed for all of these transactions and
the execution of unanimous consents for such transactions is the final
documentation of such process. The executive committee did not meet in person
during 2002, but conducted business by the execution of 21 unanimous written
consents during that year.
The pricing committee is authorized to exercise all the powers of the
board of trust managers in connection with the offering, issuance and sale of
our securities. The pricing committee did not meet in person during 2002, but
conducted business by the execution of one unanimous written consent during that
year.
Corporate Governance
Our board of trust managers has maintained corporate governance
policies for many years and has updated them in 2002. Our board has put into
place several of the NYSE's proposed corporate governance requirements.
Upon election of the nominees for trust manager, our board will have a
substantial majority (67%) of non-employee directors who are independent within
the current definition of "independence" under the rules and regulations of the
SEC and the standards of the NYSE. Only non-employee and independent trust
managers comprise our audit, management development and compensation, and
governance committees.
All of our audit committee members meet the current NYSE standards for
independence, financial literacy and financial management expertise. Our audit
committee hires, determines the compensation of, and decides the scope of
services performed by, our independent auditors.
Our policies prohibit any trust manager who serves on the audit
committee from entering into paid consulting agreements with the company.
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All of our compensation committee members are independent. The
committee has the authority to retain independent consultants. It evaluates the
CEO and discusses the evaluation with the non-employee trust managers in
executive session.
Our governance committee reviewed various corporate governance
proposals during 2002 and recommended changes to existing policies and practices
to the full board.
Our board has adopted: (1) a governance charter and a revised audit
committee charter; (2) a revised and expanded definition of independence for our
trust managers for fiscal 2003; and (3) a code of conduct and ethics for all
trust managers, officers and employees. The governance charter and audit
committee charters are available at www.weingarten.com. A copy of the audit
committee charter is attached to this proxy statement.
Compensation of Trust Managers
During fiscal 2002, our six non-employee trust managers received
compensation as follows:
Annual retainer fee ............................. $20,000
Fee for each board meeting attended ............. 1,000
Fee for each committee meeting attended ......... 500
Employee trust managers receive no compensation for board service.
During 2003, our non-employee trust managers will receive the following
compensation:
Annual retainer fee ............................. $15,000
Fee for each board meeting attended ............. 1,000
Audit committee chairman retainer ............... 10,000
Audit committee member retainer ................. 5,000
Chairman retainer for other committees .......... 6,000
Other committee members retainer ................ 4,000
Additionally, each non-employee trust manager shall receive an award of
500 restricted shares. Members of the executive and pricing committees receive
no additional compensation for their services.
Compensation Committee Interlocks and Insider Participation
During fiscal 2002, three of our independent trust managers served on
the management development and compensation committee. The committee members for
2002 were Messrs. Crownover, Lasher and Shapiro. Properties is a Texas real
estate investment trust that is owned 77% by our company. Mr. Lasher is a trust
manager of Properties.
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Certain Transactions
During 2002, we advanced funds to Properties to fund certain capital
needs of Properties under a short-term unsecured note bearing interest at the
prime rate plus 1%, which ranged from 5.25% to 5.75% during the year. As of
December 31, 2002, Properties owed us $2,013,000. The largest amount owed to us
during the year was $2,700,000. Properties paid us $136,000 in interest on funds
borrowed during fiscal year 2002. We currently own 77% of the outstanding common
shares of Properties and contract to manage its day-to-day business and
properties. Properties paid us $296,000 during 2002 for the management of its
properties and the operation of its business.
We have negotiated to purchase a sufficient number of shares of
Properties stock so that we will own over 90% of that company, and we plan to
execute a short form merger of Properties to be completed in the first quarter
of 2003.
Messrs. S. Alexander, A. Alexander, Dow, Lasher, Richter, Schnitzer and
Martin Debrovner are shareholders or officers and/or directors of WRI Holdings,
Inc., a Texas corporation. In December 1984, we contributed certain assets and
cash to WRI Holdings in exchange for, among other consideration, $26.8 million
in original principal amount of debt securities and common stock of WRI
Holdings. The assets contributed by us to WRI Holdings included unimproved land
in the Railwood Industrial Park in northeast Houston and all of the issued and
outstanding capital stock of Plaza Construction, Inc. and Leisure Dynamics, Inc.
The debt securities were issued pursuant to three separate trust indentures and
originally consisted of $16.7 million in principal amount of debt securities
(the "Hospitality Bonds") due December 28, 2004, $7.0 in million principal
amount of debt securities (the "Railwood Bonds") due December 28, 2004, and $3.2
million in principal amount of debt securities (the "Plaza Bonds") due December
28, 1994. The Plaza Bonds were extended and are currently due December 28, 2003.
The Railwood Bonds and Hospitality Bonds have been retired.
The outstanding principal amounts owing on the Plaza Bonds at December
31, 2002 was $2.1 million and the accrued interest outstanding which has not
been recognized for financial accounting purposes was $6.7 million.
Interest on the Plaza Bonds accrues at the rate of 16% per annum (the
"accrual rate"), but is due and payable quarterly at the rate of 10% per annum
(the "pay rate"). The difference between the accrual rate and the amount of
interest paid by WRI Holdings at the pay rate on the debt securities is treated
as unpaid accrued interest, which will not accrue any compound interest and is
payable with the principal at maturity. We recognize as interest income only
amounts actually received for payment under the note. Therefore, we do not carry
the difference between the accrual rate and the pay rate as an asset on our
consolidated balance sheet.
Pursuant to a loan agreement between WRI Holdings and us, and pursuant
to a note dated December 28, 1984, as amended in October 1987, January 1991 and
March 1994, WRI Holdings may borrow from us the amount necessary, up to a
maximum of $40 million, to enable WRI Holdings to pay the interest owing on the
Holdings Bonds. Interest on the note accrues at the highest rate per annum
permitted by Texas law as to a portion of the debt and at the JPMorgan Chase
Bank prime rate plus 2% per annum (but not in excess of the maximum legal rate)
on the
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balance of the debt. The note is payable December 28, 2004. As of December 31,
2002, $18.1 million was outstanding under the note, which represents the
difference between the amount recognized as interest income on the Holdings
Bonds and the pay rate applicable to the bonds, i.e., we did not recognize as
income that portion of the pay rate interest not received by us which had been
borrowed by WRI Holdings under the note.
In November 1982, we entered into a loan agreement with River Point
Venture I, a joint venture in which Plaza Construction was a joint venture
partner. In October of 1987, Plaza Construction acquired all ownership interests
in the joint venture it did not already own from the other joint venturer.
Additionally, Plaza Construction became the successor of the joint venture under
the River Pointe loan agreement, which was amended in December 1991. Under the
terms of the River Pointe loan agreement, we may loan Plaza Construction up to
$12 million for construction and development of River Pointe. Interest accrues
at the prime rate plus 1%, but not in excess of the maximum rate permitted by
law, and payment of the outstanding principal balance is due December 1, 2003.
Beginning in 1990, we discontinued the recognition of interest income on this
note for financial statement purposes. As of December 31, 2002, the principal
amount outstanding under the River Point loan agreement was $2.6 million plus
accrued, but nonrecognized, interest of $18.3 million.
At December 31, 2002, we had a net investment of $2.7 million in the
Plaza Bonds and the River Pointe loan. The estimated fair market value of the
remaining collateral, which is comprised of 9.5 acres of undeveloped land at a
mixed-use development in Conroe, Texas, exceeds our net investment in these
bonds and loan.
Mr. Dow is a shareholder of Winstead, Secrest & Minick P. C., a law
firm that supplied legal services to Weingarten during the 2002 fiscal year.
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SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of our common shares as of February 14, 2003 by (1) each
person known by us to own beneficially more than 5% of our outstanding common
shares, (2) each current trust manager, (3) each named executive officer, and
(4) all current trust managers and executive officers as a group. Unless
otherwise indicated, the shares listed in the table are owned directly by the
individual or entity, or by both the individual and the individual's spouse.
Except as otherwise noted, the individual or entity had sole voting and
investment power as to shares shown or, in the case of the individual, the
voting power is shared with the individual's spouse.
Certain of the shares listed below are deemed to be owned beneficially
by more than one shareholder under SEC rules.
Amount and Nature of
Name Beneficial Ownership* Percent of Class
---- --------------------- ----------------
Stanford Alexander ..................................... 3,508,655 (1) 6.7%
Andrew M. Alexander .................................... 994,404 (2) 1.9%
J. Murry Bowden ........................................ -- --
James W. Crownover ..................................... 5,700 **
Robert J. Cruikshank ................................... 2,500 **
Martin Debrovner ....................................... 323,936 (3) **
Melvin A. Dow .......................................... 753,416 (4) 1.4%
Stephen A. Lasher ...................................... 432,000 (5) **
Douglas W. Schnitzer ................................... 945,420 (6) 1.8%
Marc J. Shapiro ........................................ 13,350 **
Stephen C. Richter ..................................... 97,988 (7) **
All trust managers and executive officers
As a group (11 persons) ................................ 5,750,464 (8) 11.8%
Capital Research and Management Co. .................... 4,074,000 (9) 7.8%
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* All shares have been adjusted to reflect the 3 for 2 share split that
occurred on April 15, 2002.
** Beneficial ownership of less than 1% of the class is omitted.
(1) Includes 578,412 shares held by various trusts for the benefit of Mr.
Alexander's children and 445,012 shares for which voting and investment
power are shared with Andrew M. Alexander and Melvin A. Dow, trust managers,
6,907 shares subject to restrictions on transfer within 60 days of February
14, 2003 for which Mr. Alexander has the right to vote and 58,374 shares
that may be purchased by Mr. Alexander upon exercise of share options that
are currently exercisable or that will become exercisable within 60 days of
February 14, 2003. Also includes 622,870 shares held by a charitable
foundation, over which shares Mr. Alexander and his wife Joan have voting
and investment power. Mr. Alexander's address is 2600 Citadel Plaza Drive,
Houston, Texas 77008.
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(2) Includes 445,012 shares over which Messrs. S. Alexander and Dow have
shared voting and investment power, 2,483 shares are subject to
restrictions on transfer within 60 days of February 14, 2003 and
137,750 shares that Mr. A. Alexander may purchase upon the exercise of
share options that will be exercisable within 60 days of February 14,
2003. Also includes 37,500 shares held by a charitable foundation, over
which shares Mr. A. Alexander and his wife Julie have voting and
investment power.
(3) Includes 40,317 shares held in trust for the benefit of Mr. Debrovner's
children, for which he has voting and investment power, 5,216 shares
subject to restriction on transfer within 60 days of February 14, 2003
as to which Mr. Debrovner votes, 117,000 shares that may be purchased
upon the exercise of share options that will be exercisable within 60
days of February 14, 2003.
(4) Includes 445,012 shares over which Messrs. S. Alexander and A.
Alexander have shared voting and investment power.
(5) Includes 75,000 shares held by trusts for the benefit of Mr. Lasher's
children, over which Mr. Lasher exercises voting and investment power.
(6) Mr. Schnitzer shares voting and investment power with Joan Weingarten
Schnitzer under trusts for Joan Weingarten Schnitzer with respect to
all the shares beneficially owned by Mr. Schnitzer.
(7) Includes 4,500 shares held in trust for the benefit of Mr. Richter's
children, for which he has voting and investment power, 4,332 shares
subject to restrictions on transfer within 60 days of February 14, 2003
for which Mr. Richter has the right to vote and 30,905 shares that may
be purchased upon the exercise of share options that will be
exercisable within 60 days of February 14, 2003.
(8) Includes 18,938 shares subject to restrictions on transfer for which
the trust managers and executive officers have the right to vote and
367,829 shares that may be purchased upon the exercise of share options
that will be exercisable within 60 days of February 14, 2003.
(9) Pursuant to information contained in a Schedule 13G filed by or on
behalf of the beneficial owners with the SEC on February 10, 2003. The
Schedule 13G lists the address of Capital Research and Management
Company as 333 South Hope Street, Los Angeles, CA 90071.
We are pleased to report that management, employees, trust managers and
their extended families own, in the aggregate, 13.6% of our outstanding common
shares as of February 14, 2003, not including any unexercised stock options.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our trust
managers and executive officers, and persons who own more than 10% of a
registered class of our equity securities, to file reports of holdings and
transactions in our securities with the SEC and the NYSE. Executive officers,
trust managers and greater than 10% beneficial owners are required by applicable
regulations to furnish us with copies of all Section 16(a) forms they file with
the SEC.
Based solely upon a review of the reports furnished to us with respect
to fiscal 2002, we believe that all SEC filing requirements applicable to our
trust managers and executive officers were satisfied.
14
EXECUTIVE OFFICERS
No trust manager or executive officer was selected as a result of any
arrangement or understanding between the trust manager or executive officer or
any other person. All executive officers are elected annually by, and serve at
the discretion of, the board of trust managers.
Our executive officers are as follows:
Name Age Position Recent Business Experience
---- --- -------- --------------------------
Stanford Alexander ...... 74 Chairman of the Board See "Election of Trust Managers."
Martin Debrovner ........ 66 Vice Chairman 1997 to Present - Vice Chairman;
1993 to 1997 - President and Chief
Operating Officer.
Andrew M. Alexander ..... 46 President and Chief Executive See "Election of Trust Managers."
Officer
Stephen C. Richter ...... 48 Senior Vice President and Chief 2000 to Present - Senior Vice President
Financial Officer and Chief Financial Officer; 1997 to
2000 - Senior Vice President and
Treasurer.
15
EXECUTIVE COMPENSATION
Compensation of Executive Officers
The following table summarizes the compensation paid by us for each of the
fiscal years ended December 31, 2002, 2001 and 2000 to the Chief Executive
Officer and the three other most highly compensated executive officers who
received a total annual salary and bonus in excess of $100,000 in fiscal 2002.
Long Term
Annual Compensation Compensation Awards
------------------- -------------------
Restricted Securities
Share Underlying
Name and Salary Bonus Awards Options/SARs All Other
Principal Position Year ($) ($) ($) (#)(1) Compensation
------------------ ---- --- --- --- ------ ------------
Stanford Alexander 2002 $550,000 $288,750 $98,701(2) 34,722 $14,387(6)
Chairman 2001 550,000 278,170 208,328 27,778 19,092
2000 525,000 277,988 176,019 47,185 11,517
Andrew M. Alexander 2002 550,000 288,750 61,683(3) 65,104 145,215(7)
President and Chief 2001 425,000 276,500 75,196 34,722 83,232
Executive Officer 2000 375,000 198,563 73,025 50,670 56,832
Martin Debrovner 2002 410,000 150,982 86,386(4) 30,382 30,626(8)
Vice Chairman 2001 410,000 147,616 141,565 20,822 127,680
2000 410,000 147,688 126,014 39,142 127,820
Stephen C. Richter 2002 275,000 86,136 45,239(5) 15,914 66,939(9)
Senior Vice President 2001 250,000 74,523 73,769 11,574 44,669
and Chief Financial 2000 216,208 64,894 89,149 14,230 40,382
Officer
-----------
(1) No SARs were granted during 2000, 2001 or 2002.
(2) Of the 2,677 restricted shares awarded in 2002, 535 will vest on each of
December 26, 2003, 2004, 2005, 2006 and 2007. Dividends are payable on
restricted shares. As of December 31, 2002, Mr. S. Alexander held 38,930
restricted shares having a market value on that date of $1,434,960.
(3) Of the 1,673 restricted shares awarded in 2002, 335 will vest on each of
December 26, 2003, 2004, 2005, 2006 and 2007. Dividends are payable on
restricted shares. As of December 31, 2002, Mr. A. Alexander held 14,254
restricted shares having a market value on that date of $525,402.
(4) Of the 2,343 restricted shares awarded in 2002, 468 will vest on each of
December 26, 2003, 2004, 2005, 2006 and 2007. Dividends are payable on
restricted shares. As of December 31, 2002, Mr. Debrovner held 26,321
restricted shares having a market value on that date of $970,192.
(5) Of the 1,227 restricted shares awarded in 2002, 245 will vest on each of
December 26, 2003, 2004, 2005, 2006 and 2007. Dividends are payable on
restricted shares. As of December 31, 2002, Mr. Richter held 15,117
restricted shares having a market value on that date of $557,213.
(6) Includes $3,721 of premiums paid by us under "split dollar" life insurance
agreements and $5,500 for our contributions to the 401(k) Savings and
Investment Plan on behalf of Mr. S. Alexander.
(7) Includes $5,500 for our contributions to the 401(k) Savings and Investment
Plan on behalf of Mr. A. Alexander and $132,097 contributed to the
Supplemental Retirement Plan.
16
(8) Includes $2,452 of premiums paid by us under "split dollar" life insurance
agreements, $6,000 for our contributions to the 401(k) Savings and
Investment Plan on behalf of Mr. Debrovner and $18,670 contributed to the
Supplemental Retirement Plan.
(9) Includes $5,500 for our contributions to the 401(k) Savings and Investment
Plan on behalf of Mr. Richter and $53,731 contributed to the Supplemental
Retirement Plan.
Option Grants in 2002
The following table sets forth information concerning grants of share
options during 2002 to each of the executive officers named in the Summary
Compensation Table and the potential realizable value of the options at assumed
annual rates of share price appreciation for the option term.
OPTION GRANTS IN 2002
Individual Grants
----------------------------------------------------
% Of Total Potential Realizable Value
Number Of Options at Assumed Annual Rate
Securities Granted To Exercise of Share Price
Underlying Employees In of Base Appreciation For Option
Options Fiscal Price Expiration Term (2)
--------------------------
Name Granted (#) Year ($/Sh) Date 5% ($) 10%($)
---- ----------- ---- ----- ---- ------ ------
Stanford Alexander ...... 34,737 9.3% $ 36.87 12-26-12 $805,462 $2,041,199
Andrew M. Alexander ..... 65,119 17.5 36.87 12-26-12 1,509,940 3,826,485
Martin Debrovner ........ 30,397 8.1 36.87 12-26-12 704,829 1,786,175
Stephen C. Richter ...... 15,929 4.2 36.87 12-26-12 369,354 936,017
-----------
(1) The plans governing share option grants provide that the option price per
share shall be no less than 100% of the market value per share of our common
shares at the date grant. The term of any option is no more than 10 years
from the date of grant. Options granted in 2002 become exercisable,
commencing in 2005, in five equal annual installments of 20%.
(2) The dollar amounts under these columns are the result of calculations
assuming annual rates of share price appreciation over the option term at
the 5% and 10% rates set by SEC rules and are not intended to forecast
possible future appreciation, if any, in our common share price.
Option Exercises and Fiscal Year-End Option Values
The following table sets forth certain information concerning exercises
of share options during 2002 by our named executive officers and the value of
the unexercised options as of December 31, 2002, based on the closing price of
$36.86 per share of the company's common shares on that date.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2002 AND FISCAL 2002 YEAR-END
OPTION VALUES
Shares Number of Value of Unexercised In-the-
Acquired on Value Unexercised Options Held Money Options at
Name Exercise(#) Received at December 31, 2002 December 31, 2002
---- ----------- -------- -------------------- -----------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Stanford Alexander ......... 105,741 $ 733,671 58,374 147,168 $ 585,299 $ 770,984
Andrew M. Alexander ........ 28,105 350,673 143,750 219,235 1,562,688 964,405
Martin Debrovner ........... 120,015 1,523,229 117,000 120,346 1,173,124 625,756
Stephen C. Richter ......... 9,750 133,888 41,595 68,841 460,967 404,995
17
Retirement Plan
The following table shows the approximate annual retirement benefits
under our non-contributory retirement plan (before the reduction made for social
security benefits) to eligible grandfathered employees in specified compensation
and years of service categories, assuming retirement occurs at age 65 and that
benefits are payable only during the employee's lifetime. Benefits are not
actuarially reduced where survivorship benefits are provided.
Estimated Annual Benefits Upon Retirement
Years of Service
----------------------------------------------------------------------------------------
Average
Compensation** 15 20 25 30 35 40
-------------- -- -- -- -- -- --
$200,000 $45,000 $60,000 $75,000 $90,000 $105,000 $120,000
225,000 50,625 67,500 84,375 101,250 118,125 135,000
250,000 56,250 75,000 93,750 112,500 131,250 150,000
300,000 67,500 90,000 112,500 135,000 157,500 180,000*
400,000 90,000 120,000 150,000 180,000 210,000* 240,000*
450,000 101,250 135,000 168,750* 202,500* 236,250* 270,000*
500,000 112,500 150,000 187,500* 225,000* 262,500* 300,000*
600,000 135,000 180,000* 225,000* 270,000* 315,000* 360,000*
700,000 157,500 210,000* 262,500* 315,000* 367,500* 420,000*
800,000 180,000* 240,000* 300,000* 360,000* 420,000* 480,000*
900,000 202,500* 270,000* 337,500* 405,000* 472,500* 540,000*
1,000,000 225,000* 300,000* 375,000* 450,000* 525,000* 600,000*
-----------
* Currently, the maximum annual pension benefit which currently may be paid
under a qualified plan is $160,000 subject to certain grandfather rules for
limitation years beginning in 2002.
** Compensation in excess of $200,000 is disregarded with respect to all plan
years. Accordingly, the compensation of each named executive officer
included in the Summary Compensation Table which was covered by the
non-contributory retirement plan was limited to $200,000.
The compensation used in computing average monthly compensation is the
total of all amounts paid by us, plus amounts electively deferred by the
employee under our savings plan, 125 cafeteria plan and nonqualified deferred
compensation plan. Credited years of service for named executive officers as of
March 15, 2003 are as follows: Mr. S. Alexander, 49 years; Mr. Debrovner, 35
years; Mr. A. Alexander, 25 years; and Mr. Richter, 23 years. Mr. S. Alexander
and Mr. Debrovner commenced receiving benefits under the Plan in January 1996
and June 2001, respectively.
18
The non-contributory pension plan converted to a cash balance retirement
plan on April 1, 2002. A grandfathered participant will remain covered by the
provisions of the plan prior to the conversion to the cash balance plan. A
grandfathered participant is any participant born prior to January 1, 1952, was
hired prior to January 1,1997, and was an active employee on April 1, 2002. The
retirement plan pays benefits to grandfathered participants in the event of
death, disability, retirement or other termination of employment after the
employee meets certain vesting requirements (all grandfathered participants are
100% vested). The amount of the monthly retirement benefit payable beginning at
age 65, the normal retirement age, is equal to (i) 1.5% of average monthly
compensation during five consecutive years, within the last ten years, which
would yield the highest average monthly compensation multiplied by years of
service rendered after age 21 (not in excess of 40 years), minus (ii) 1.5% of
the monthly social security benefits in effect on the date of retirement
multiplied by years of service rendered after age 21 and after July 1, 1976 (not
in excess of 33.3 years).
Cash Balance Retirement Plan
The following table shows the approximate annual retirement benefits
under our non-contributory cash balance retirement plan to eligible employees in
specified compensation and years of service categories, assuming retirement
occurs at age 65 and that benefits are payable only during the employee's
lifetime. Benefits are not actuarially reduced where survivorship benefits are
provided no opening balance was included in the table.
Years of Service
-------------------------------------------------------------------------------------------
Annual
Compensation** 15 20 25 30 35 40
-------------------- ------------ ------------- ------------ ----------- ------------- -----------
$ 200,000 $11,456 $17,698 $ 26,222 $ 36,563 $ 49,108 $ 64,327
225,000 12,888 19,911 29,500 41,134 55,247 72,368
250,000 14,319 22,123 32,778 45,704 61,385 80,408
300,000 17,183 26,548 39,334 54,845 73,662 96,490
350,000 20,047 30,972 45,889 63,986 85,939 112,572
400,000 22,911 35,397 52,445 73,126 98,216 128,654
450,000 25,775 39,822 59,000 82,267 110,493 144,735
500,000 28,639 44,246 65,556 91,408 122,770 160,817*
600,000 34,367 53,095 78,667 109,689 147,324 192,980*
700,000 40,094 61,945 91,778 127,971 171,878* 225,144*
800,000 45,822 70,794 104,890 146,253 196,432* 257,307*
900,000 51,550 79,643 118,001 164,534* 220,986* 289,471*
1,000,000 57,278 88,492 131,112 182,816* 245,540* 321,634*
-----------
* Currently, the maximum annual pension benefit which currently may be paid
under a qualified plan is $160,000 subject to certain grandfather rules for
limitation years beginning in 2002.
** Compensation in excess of $200,000 is disregarded with respect to all plan
years. Accordingly, the compensation of each named executive officer
included in the Summary Compensation Table which was covered by the
non-contributory retirement plan was limited to $200,000.
19
The non-contributory cash balance retirement plan covers all employee
beginning on April 1, 2002 with no age or service minimum requirement. However,
leased employees and employees covered by a collective bargaining agreement will
not participate in the plan. The cash balance plan pays benefits in the event of
death (if married), retirement or termination of employment after the
participant meets certain vesting requirements (generally 100% vested after 5
years of service). The amount of the monthly retirement benefit payable
beginning at age 65, the normal retirement age, is equal to the greater of (i)
the monthly benefit that is actuarial equivalent of the cash balance account, or
(ii) the accrued monthly benefit under the prior plan as of January 1, 2002. The
opening balance of a cash balance participant, who was an active participant in
the plan on January 2, 2002 and was an active employee on April 1, 2002, is the
actuarial equivalent present value of his frozen accrued benefit on January 1,
2002. Interest Credits are determined on the last day of each plan years based
on the annual rate of interest on the ten-year US Treasury Bill Constant
Maturities on October 1 of the immediately preceding the Plan Year. A Service
Credit will be credited to the cash balance account of any cash balance
participant who is an active participant at any time during the plan year. The
amount of the Service Credit shall be a percentage of the participant's earnings
for the plan year based on the years of credited service on the last day of the
prior Plan Year.
Years of Credited Service Percentage of Earnings
------------------------- ----------------------
0 through 9.99 3%
10 through 19.99 4%
20 or more 5%
Change of Control Arrangements
Messrs. S. Alexander, A. Alexander and M. Debrovner have not entered
into change of control arrangements with us.
We have however, entered into a severance and change in control
agreement with Mr. Richter which becomes operative only upon a change of
control. All other Vice Presidents have entered into the same change of control
agreement with us. A change of control is deemed to occur upon any one of five
events: (1) we merge, consolidate or reorganize into or with another corporation
or legal entity and we are not the surviving entity; (2) we sell or otherwise
transfer 50% or more of our assets to one entity or in a series of related
transactions; (3) any person or group acquires 25% or more of our then
outstanding voting shares; (4) we file a report or proxy statement with the SEC
disclosing that a change of control has occurred or will occur; or (5) if,
during any 12-month period, trust managers at the beginning of the 12-month
period cease to constitute a majority of the trust managers.
If Mr. Richter or any other Vice President is terminated under
specified conditions within one year following a change of control, he will be
entitled to a severance benefit in an amount equal to (1) 2.99 times his
annualized base salary as of the first date constituting a change of control or,
if greater, (2) 2.99 times his highest base salary in the five fiscal years
preceding the first event constituting a change of control, plus 2.99 times his
targeted bonus for the fiscal year in which the first event constituting a
change of control occurs. In addition, Mr. Richter or any other Vice President,
as applicable, is entitled to receive an additional payment or payments to the
extent the severance benefit is subject to the excise tax imposed by Section
4999 of the Code or any similar tax imposed by state or local law, or any
penalties or interest with respect to the tax. Mr. Richter will also receive one
year of employee benefits coverage substantially similar to what he received or
was entitled to receive prior to the change in control.
20
Management Development and Compensation Committee Report On Executive
Compensation
Our executive compensation is supervised by the management development
and compensation committee of the board of trust managers which is comprised
entirely of independent trust managers. The board designates the members and the
chairman of the committee. The committee is responsible for evaluating and
establishing the level of compensation for executive officers and administering
our share option and deferred compensation plans.
Compensation Philosophy and Objectives. We seek to provide executive
compensation that will support the achievement of our financial and growth goals
while attracting and retaining qualified executive officers and rewarding
superior performance. In order to achieve our objectives, we have structured an
incentive based compensation system tied to our financial performance and
portfolio growth. We will attempt to maximize the amount of compensation expense
that is tax deductible where consistent with our compensation philosophy.
The management development and compensation committee annually reviews
our compensation program to ensure that pay levels and incentive opportunities
are competitive and reflect our performance. In general, we compensate our
executive officers through base salary, bonus compensation, share options and
restricted shares. Our annual executive officer compensation package, including
that of the Chairman, Chief Executive Officer and the Vice Chairman, generally
has lower base salaries than comparable companies, coupled with a leveraged
incentive bonus system which will pay more with good performance and less with
performance that is below expectation. Generally, bonuses are within 30% to 50%
of the base compensation of the individual, depending on the size of the
incentive bonus awarded.
Base Salary. Base salary levels for executive officers are largely
derived through an evaluation of the responsibilities of the position held and
the experience of the particular individuals, both compared to companies of
similar size, complexity and, where comparable, in the same industry. The
determination of comparable companies was based upon selections made by both us,
as to comparable companies in the real estate industry, and by independent
compensation consultants, as to other comparable companies. Not all companies
included in the NAREIT All Equity Index described on page 23 are comparable in
size and complexity, and not all comparable real estate companies are REITs.
Actual salaries are based on an executive officer's skill and ability to
influence our financial performance and growth in both the short-term and
long-term. During 2002, the management development and compensation committee
used compensation information provided by outside consultants in establishing
base salaries.
Bonus Compensation. All of our executive officers participate in a
bonus program. Each individual's eligible bonus is based on a percentage of the
individual's base salary. This bonus program has been in effect for more than 20
years. The bonus percentage is also based on a competitive analysis.
21
Again, the executive officer's ability to influence our success is considered in
establishing this percentage. Earned bonuses are determined annually on the
basis of performance against pre-established goals. Other than for the Chairman,
Vice Chairman and Chief Executive Officer, the eligible bonus percentage for
executive officers is generally allocated 50% to our goals and 50% to the
individual's goals. Specific individual goals for each executive officer are
established at the beginning of the year and are tied to the functional
responsibilities of each executive officer. Individual goals include both
objective financial measures as well as subjective factors such as efficiency in
managing capital resources, successful acquisitions, good investor relations and
the continued development of management. Our goals are primarily based on
operating performance, as measured by factors such as our funds from operations,
and achieving the appropriate growth objective, relating primarily to portfolio
acquisitions and new development. Other than the allocation between our goals
and the individual, no specific weights are assigned to the individual goals.
The bonuses of the Chairman, Vice Chairman and Chief Executive Officer are based
entirely on our performance. Our performance targets and all individual goals
were exceeded in fiscal 2002 and, consequently, the executive officers were
eligible for full bonus awards.
Share Incentive Program. The management development and compensation
committee strongly believes that by providing our executive officers with an
opportunity to increase their ownership of common shares, the interests of
shareholders and the executive officers will be closely aligned. Therefore,
executive officers are eligible to receive share awards and options annually,
giving them the right to purchase our common shares. The number of options
granted to an executive officer is based on practices of the same comparable
companies used to define base salary levels. Share awards and options are a
significant part of our executive compensation system, and these awards and
options are issued on an annual basis.
Chief Executive Officer Performance Evaluation. For 2002, the
management development and compensation committee evaluated the Chief Executive
Officer's performance based on our financial performance and growth in real
estate assets. As we met or exceeded both our funds from operations and our
acquisition and new development goals, Mr. A. Alexander received 105% of his
potential bonus based on our performance for 2002. Mr. Alexander's compensation
(i.e. base salary, bonus compensation and the share incentive program) is based
entirely on company-wide performance and is set by the management development
and compensation committee.
The foregoing report is given by the members of the management
development and compensation committee.
Respectfully Submitted,
James W. Crownover, 2002 Chairman
Stephen A. Lasher
Marc J. Shapiro
22
Performance Graph
SEC rules require the presentation of a line graph comparing, over a
period of five years, the cumulative total shareholder return to a performance
indicator of a broad equity market index and either a nationally recognized
industry index or a peer group index constructed by us.
The graph below provides an indicator of cumulative total shareholder
returns for us as compared with the S&P Stock Index and the NAREIT All Equity
Index, weighted by market value at each measurement point. The graph assumes
that $100 was invested on December 31, 1997 in our common shares and that all
dividends were reinvested by the shareholder.
Comparison of Five Year Cumulative Return
[GRAPH]
--------------------------------------------------------------------
1998 1999 2000 2001 2002
--------------------------------------------------------------------
WRI 106 99 120 141 173
--------------------------------------------------------------------
S&P 500 Index 129 156 141 125 97
--------------------------------------------------------------------
The NAREIT All Equity Index 83 79 99 113 118
--------------------------------------------------------------------
There can be no assurance that our share performance will continue into
the future with the same or similar trends depicted in the graph above. We will
not make or endorse any predications as to future share performance.
23
Report of the Audit Committee of the Board of Trust Managers
The audit committee is composed of three independent non-employee trust
managers and operates under a written charter adopted by the board (a copy of
which is attached to this proxy statement). The board has determined that each
committee member is independent as defined by NYSE listing standards currently
in effect.
Management is responsible for the financial reporting process,
including the system of internal controls, and for the preparation of
consolidated financial statements in accordance with GAAP. The company's
independent auditors are responsible for auditing those financial statements and
expressing an opinion as to their conformity with GAAP. Our responsibility is to
oversee and review these processes. We are not, however, professionally engaged
in the practice of accounting or auditing, and do not provide any expert or
other special assurance as to such financial statements concerning compliance
with the laws, regulations or GAAP or as to auditor independence. We rely,
without independent verification, on the information provided to us and on the
representations made by management and the independent auditors. We held five
meetings during fiscal 2002. The meetings were designed, among other things, to
facilitate and encourage communication among the committee, management, the
company's internal accounting department and the company's independent auditors,
Deloitte & Touche LLP. We discussed with Deloitte & Touche the overall scope and
plans for their audit. We met with Deloitte & Touche, with and without
management present, to discuss the results of their examinations and their
evaluations of the company's internal controls.
We have reviewed and discussed the audited consolidated financial
statements for the fiscal year ended December 31, 2002 with management and
Deloitte & Touche. We also discussed with management and Deloitte & Touche the
process used to support certifications by the company's Chief Executive Officer
and Chief Financial Officer that are required by the SEC and the Sarbanes-Oxley
Act of 2002 to accompany the company's periodic filings with the SEC.
In addition, the audit committee obtained from Deloitte & Touche a
formal written statement describing all relationships between the auditors and
the company that might bear on the auditors' independence consistent with
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees," discussed with the auditors any relationships that may impact
their objectivity and independence, and satisfied itself as to the auditors'
independence. When considering Deloitte & Touche's independence, we considered
whether their provision of services to the company beyond those rendered in
connection with their audit of the company's consolidated financial statements
and reviews of the company's consolidated financial statements, including in its
Quarterly Reports on Form 10-Q, was compatible with maintaining their
independence. We also reviewed, among other things, the audit and non-audit
services performed by, and the amount of fees paid for such services to,
Deloitte & Touche. The audit committee also discussed and reviewed with the
independent auditors all communications required by generally accepted auditing
standards, including those described in Statement on Auditing Standards No. 61,
as amended, "Communication with Audit Committees."
Based on our review and these meetings, discussions and reports, and
subject to the limitations on our role and responsibilities referred to above
and in the audit committee charter, we recommended to the board of trust
managers (and the board has approved) that the audited financial statements for
the year ended December 31, 2002 be included in the Annual Report on Form 10-K.
We have selected Deloitte & Touche as the company's independent auditors for the
fiscal year ending December 31, 2003, and have presented the selection to the
shareholders for ratification.
Respectfully Submitted,
James W. Crownover, 2002 Chairman
Robert J. Cruikshank
Marc J. Shapiro
24
PROPOSAL TWO
RATIFICATION OF INDEPENDENT AUDITORS
The audit committee has appointed Deloitte & Touche LLP as independent
auditors for the 2003 fiscal year, and presents this selection to the
shareholders for ratification. Deloitte & Touche, or its predecessors, has
served as our independent auditors for more than 30 years and is familiar with
our affairs and financial procedures. Deloitte & Touche will audit our
consolidated financial statements for fiscal 2003 and perform other services.
Audit Fees. The aggregate fees for professional services rendered by
Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their
respective affiliates (collectively, "Deloitte & Touche"), which includes
Deloitte Consulting, in connection with their audit of our consolidated
financial statements and reviews of the consolidated financial statements
included in our Quarterly Reports on Form 10-Q for the 2002 fiscal year was
approximately $315,000.
Financial Information Systems Design and Implementation Fees. There
were no professional services rendered by Deloitte & Touche in the 2002 fiscal
year relating to financial information systems design and implementation.
All Other Fees. The aggregate fees for all other services rendered by
Deloitte & Touche in the 2002 fiscal year was approximately $317,900 and can be
sub-categorized as follows:
Attestation Fees. The aggregate fees for attestation services rendered
by Deloitte & Touche for matters such as comfort letters and consents
related to SEC and other registration statements and consultation on
accounting standards or transactions was approximately $66,500.
Other Fees. The aggregate fees for all other services, such as
consultation related to tax planning and compliance rendered by
Deloitte & Touche in the 2002 fiscal year was approximately $251,400.
The audit committee has considered whether the provision of these
services is compatible with maintaining the independent accountants'
independence and has determined that such services have not adversely affected
Deloitte & Touche's independence.
Representatives of Deloitte & Touche will be present at the annual
meeting and will have an opportunity to make a statement, if they desire to do
so, and to respond to appropriate questions from shareholders.
The board of trust managers unanimously recommends that you vote FOR
the ratification of independent auditors as set forth in Proposal Two. Proxies
solicited by the board of trust managers will be so voted unless you specify
otherwise in your proxy.
25
OTHER MATTERS
As of the mailing date of this proxy statement, the board of trust
managers knows of no other matters to be presented at the meeting. Should any
other matter requiring a vote of the shareholders arise at the meeting, the
persons named in the proxy will vote the proxies in accordance with their best
judgment.
SHAREHOLDER PROPOSALS
Any shareholder who intends to present a proposal at the annual meeting
in the year 2004, and who wishes to have the proposal included in our proxy
statement for that meeting, must deliver the proposal to our corporate secretary
M. Candace DuFour, at P.O. Box 924133, Houston, Texas 77292-4133 by November 22,
2003. All proposals must meet the requirements set forth in the rules and
regulations of the SEC in order to be eligible for inclusion in the proxy
statement for that meeting.
Any shareholder who intends to bring business to the annual meeting in
the year 2004, but not include the proposal in our proxy statement, or to
nominate a person to the board of trust managers, must give written notice to
our corporate secretary, M. Candace DuFour, at P.O. Box 924133, Houston, Texas
77292-4133, by January 22, 2004.
ANNUAL REPORT
We have provided without charge a copy of the annual report to
shareholders for fiscal year 2002 to each person being solicited by this proxy
statement. Upon the written request by any person being solicited by this proxy
statement, we will provide without charge a copy of the annual report on Form
10-K as filed with the SEC (excluding exhibits, for which a reasonable charge
shall be imposed). All requests should be directed to: M. Candace DuFour, Vice
President and Secretary at Weingarten Realty Investors, P.O. Box 924133,
Houston, Texas 77292-4133. This information is also available via the Internet
at our world wide web site (www.weingarten.com) and the EDGAR version of such
report (with exhibits) is available at the SEC's world wide web site
(www.sec.gov).
26
Weingarten Realty Investors
Audit Committee Charter
Purpose
The Audit Committee (the "Audit Committee" or the "Committee") shall assist the
Board in fulfilling its oversight responsibilities to shareholders, the
investment community and others for monitoring (1) the quality and integrity of
the financial statements of the Company; (2) the Company's compliance with
ethical policies contained in the Company's Code of Conduct and Ethics and legal
and regulatory requirements; (3) the independence, qualification and performance
of the Company's independent auditors; (4) the performance of the Company's
independent auditors; and (5) the Company's accounting and financial reporting
processes and audits of the Company's financial statements. The Audit Committee
shall have the authority to retain special legal, accounting or other
consultants to advise the Audit Committee. The Audit Committee may request any
officer or employee of the Company or the Company's outside counsel or
independent auditors to attend a meeting of the Audit Committee or to meet with
any members of, or consultants to, the Audit Committee.
Organization
This charter governs the operations of the Audit Committee. The Audit Committee
shall review and reassess the adequacy of this charter annually and recommend
any proposed changes to the charter to the Board for approval. The Company's
Governance and Nominating Committee shall nominate trust managers for
appointment to the Audit Committee. The Board will appoint Committee members
annually. The Board may remove Committee members at any time with or without
cause, by a majority vote. The Board will fill any vacancy on the Committee. The
Audit Committee shall be comprised of at least three directors, each of whom is
independent as determined in accordance with the requirements of the
Sarbanes-Oxley Act of 2002 ("Sarbanes"), the New York Stock Exchange ("NYSE"),
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Securities and Exchange Commission ("SEC"). Members of the Audit
Committee may not receive any compensation from the Company other than
directors' fees. All members of the Audit Committee must be financially
literate, and at least one member must be a "financial expert" pursuant to
Sarbanes and any SEC rules promulgated relating thereto. No committee member may
serve on the audit committee of more than two other public companies without
Board approval. The Audit Committee shall maintain minutes of its meetings and
report to the Board.
Responsibilities and Processes
While the Audit Committee has the responsibilities and powers set forth in this
charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. Management
is responsible for preparing the Company's financial statements and the
Company's independent auditors are responsible for auditing the annual financial
statements and for reviewing the unaudited interim financial statements. Nor is
it the duty of the Audit Committee to conduct investigations to assure
compliance with laws and regulations and the Company's Code of Conduct and
Ethics.
The Audit Committee, in carrying out its responsibilities, believes its policies
and procedures should be reviewed periodically, in order to best react to
changing conditions and circumstances. The Audit Committee should take
appropriate actions to ensure a management environment for quality financial
reporting, sound business risk practices, and ethical behavior. The following
shall be the principal duties and responsibilities of the Audit Committee. These
are set forth as a guide with the understanding that the Audit Committee may
supplement them as appropriate.
In carrying out its responsibilities, the Audit Committee shall:
1. Retain, subject to shareholder ratification, the independent auditors of the
Company to conduct the examination of the books and records of the Company and
its affiliates, and terminate any such engagement if circumstances warrant. The
independent auditors are ultimately accountable to, and shall report directly
to, the
A-1
Audit Committee. The Audit Committee shall provide oversight of the work of the
independent auditors, including resolution of disagreements between management
and the independent auditors regarding financial reporting.
2. Pre-approve all audit services and, to the extent permitted by law, all
non-audit services provided by the independent auditors, as well as the fees and
terms for providing such services. The Audit Committee may delegate pre-approval
authority to a member of the Audit Committee. The decisions of any Audit
Committee member to whom pre-approval authority is delegated must be presented
to the full Audit Committee at its next scheduled meeting. However, pre-approval
of non-audit services is not required if (i) the aggregate amount of non-audit
services is less than 5% of the total amount paid by the Company to the auditor
during the fiscal year in which the non-audit services are provided; (ii) such
services were not recognized by the Company as non-audit services at the time of
the engagement; and (iii) such services are promptly brought to the attention of
the Committee and, prior to completion of the audit, are approved by the
Committee or by one or more Committee members who have been delegated authority
to grant approvals.
3. At least annually, obtain and review a report by the independent auditors
describing: (i) the firm's internal quality-control procedures; (ii) any
material issues raised by the most recent internal quality-control review, or
peer review, of the firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, respecting any
independent audits carried out by the firm and any steps taken to deal with any
such items; and (iii) all relationships between the independent auditors and the
Company.
4. Evaluate the performance of the Company's independent auditors and lead audit
partner, and report its conclusions to the full Board.
5. Meet with the Company's independent auditors and management to review the
scope of the proposed annual audit (and related quarterly reviews), the key
audit procedures to be followed and, at the conclusion of the audit, review the
principal audit findings including any comments or recommendations of the
Company's independent auditors.
6. Obtain assurance from the Company's independent auditors that it has complied
with its obligation to report any fraud identified in connection with its audit
of the financial statements of the Company.
7. Discuss the Company's annual audited financial statements and unaudited
quarterly financial statements with management and the independent auditors,
including management's discussion and analysis of financial condition and
results of operations. Discuss other matters with the Company's independent
auditors as required by the SEC and, if the financial statements are acceptable,
recommend that the audited financial statements be included in the Company's
Form 10-K. While the fundamental responsibility for the Company's financial
statements and disclosures rests with management, the Committee will review: (i)
major issues regarding accounting principles and financial statement
presentations, including any significant changes in the Company's selection or
application of accounting principles, and major issues as to the adequacy of the
Company's internal controls and any special audit steps adopted in light of
material control deficiencies; (ii) analyses prepared by management or the
independent auditors setting forth significant financial reporting issues and
judgments made in connection with the preparation of the financial statements,
including analyses of the effects of alternative GAAP methods on the financial
statements and the treatment preferred by the independent auditors; (iii) the
effect of regulatory and accounting initiatives, as well as off-balance sheet
structures, on the financial statements of the Company; and (iv) earnings press
releases (paying particular attention to any use of pro-forma information and
non-GAAP information).
8. Approve the content of the report of the Audit Committee required by the SEC
to be included in the Company's annual proxy statement.
9. Meet, at least annually, with management to discuss, as appropriate,
significant accounting accruals, estimates and reserves; litigation matters;
management's representations to the independent auditors; new or proposed
regulatory accounting and reporting rules; any significant off-balance sheet
transactions and special purpose entities; and any significant financial
reporting issues or judgments disputed with the Company's independent auditors.
A-2
10. At least annually, receive from and discuss with the independent auditors
and management, separately or together as determined by the Committee, a report
on (i) all critical accounting policies and practices to be used; (ii) all
alternative treatments of financial information within generally accepted
accounting principles that have been discussed with management of the Company,
the ramifications of the use of such alternative disclosures and treatments, and
the treatment preferred by the independent auditors; and (iii) other material
written communications between the independent auditors and management of the
Company, such as any management letter or schedule of unadjusted audit
differences.
11. Review quarterly with the Company's CEO and CFO (i) any significant
deficiencies in the design or operation of internal controls which could
adversely affect the Company's ability to record, process, summarize and report
financial data, (ii) any material weakness in the Company's internal controls
and (iii) any fraud, whether or not material, involving management or other
employees who have a significant role in the Company's internal controls.
12. Review annually with management and the independent auditors (i) the
internal control report contained in the Company's Annual Report on Form 10-K
regarding management's assessment of the effectiveness of the internal control
structure and procedures of the Company for financial reporting, and (ii) the
attestation and report of the independent auditors regarding management's
assessment of internal controls.
13. Discuss with the Company's independent auditors and management information
relating to the auditors' judgments about the quality, not just the
acceptability, of the Company's accounting principles and matters identified by
the auditors during its interim reviews. Also, the Committee shall discuss the
results of the annual audit and any other matters that may be required to be
communicated to the Audit Committee by the Company's independent auditors under
generally accepted auditing standards.
14. Discuss with management an outline of press releases regarding results of
operations, as well as general policies on financial information and earnings
guidance to be provided to analysts, rating agencies, and the general public.
Review any relevant items with management and the Company's independent auditors
prior to release of any such press releases or earnings guidance. The review
shall be with the Chairman of the Audit Committee or the full Audit Committee,
as may be appropriate.
15. At least quarterly, discuss separately with the Company's independent
auditors and management the adequacy and effectiveness of the Company's internal
accounting and financial controls, and elicit any recommendations for
improvement.
16. Review major changes to the Company's auditing and accounting principles and
practices as suggested by the independent auditors, internal auditors or
management.
17. Discuss with management policies with respect to risk assessment and risk
management. While it is the job of the Company's management to assess and manage
the Company's exposure to risk, the Committee will discuss guidelines and
policies that govern the process. This discussion may include the Company's
financial risk exposures and the steps management has taken to monitor and
control exposure.
18. At least annually, receive reports from the Company's independent auditors
regarding the auditors' independence from management and the Company (including
the identification of all relationships between the independent auditors and the
Company), discuss such reports with the independent auditors, consider whether
the provision of non-audit services by the independent auditors is compatible
with the auditors' independence, and, if determined by the Audit Committee,
recommend that the Board take action to satisfy itself of the independence of
the auditors.
19. Confirm that the Company's hiring policies conform to applicable SEC or
other external guidelines for employment by the Company of employees and former
employees of the independent auditors.
20. Confirm that neither the lead audit partner nor the primary reviewing
partner of the independent auditor has performed audit services for the Company
for more than five consecutive fiscal years.
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21. Confirm that none of the Company's CEO, CFO, Chief Accounting Officer,
Controller or equivalent officers were employed by the independent auditor and
participated in any capacity in the audit of the Company during the one-year
period preceding the initiation of the audit.
22. Receive from management a summary of findings from completed audits (and
management's response) and a progress report on the proposed internal audit plan
with explanations for any material deviations from the original plan.
23. Review periodic reports from management with respect to, and advise the
Board regarding compliance with, the Company's Code of Conduct and Ethics.
24. Review with the Company's counsel legal matters that may have a material
impact on the financial statements.
25. Provide sufficient opportunity at its meetings to meet separately in
executive session with the Company's independent auditors and members of
management. Among the items to be discussed with the Company's independent
auditors are (i) the independent auditors' evaluation of the Company's financial
and accounting personnel; (ii) the cooperation that the independent auditors
received during the course of its audit; (iii) any management letter provided by
the independent auditors and management's response; and (iv) any other matters
the Audit Committee may determine from time to time.
26. Report regularly to the Board. The reports will include any significant
issues arising with respect to (i) the quality or integrity of the Company's
financial statements; (ii) the Company's compliance with legal or regulatory
requirements; (iii) the performance and independence of the Company's
independent auditors; and/or (iv) the effectiveness of the Company's control
process for reviewing and approving internal transactions and accounting.
27. Establish procedures for (i) the receipt, retention, and treatment of
complaints received by the Company regarding accounting, internal accounting
controls, or auditing matters; and (ii) the confidential, anonymous submission
by employees of the Company of concerns regarding questionable accounting or
auditing matters.
28. In consultation with the Governance Committee, conduct an annual evaluation
of the performance and effectiveness of the Audit Committee and report the
results of that evaluation to the Board.
29. As the Committee determines necessary to carry out its duties, obtain advice
and assistance from outside advisors, including the Company's legal, accounting
or other advisors.
A-4
WEINGARTEN REALTY
[LOGO] INVESTORS
2600 CITADEL PLAZA DRIVE
SUITE 300
HOUSTON, TX 77008
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you access the
web site. You will be prompted to enter your 12-digit Control Number which is
located below to obtain your records and to create an electronic voting
instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the cut-off date or meeting date. Have your
proxy card in hand when you call. You will be prompted to enter your 12-digit
Control Number which is located below and then follow the simple instructions
the Vote Voice provides you.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid envelope
we have provided, or return it to Weingarten Realty Investors, c/o ADP, 51
Mercedes Way, Edgewood, NY 11717.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
THANK YOU.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: WNGRTN KEEP THIS PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
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WEINGARTEN REALTY INVESTORS
1. Election of Trust Managers.
For Withhold For All To withhold authority to vote, mark "For
01) Stanford Alexander 06) Melvin A. Dow All All Except All Except" and write the nominee's
02) Andrew M. Alexander 07) Stephen A. Lasher number on the line below.
03) J. Murry Bowden 08) Douglas W. Schnitzer [_] [_] [_]
04) James W. Crownover 09) Marc J. Shapiro ----------------------------------------
05) Robert J. Cruikshank
Vote On Proposal For Against Abstain
2. Ratification of Deloitte & Touche LLP as Weingarten's independent auditors. [_] [_] [_]
In their discretion, the proxies are authorized to vote upon all other
matters which may properly come before the annual meeting or any adjournments of
the annual meeting.
The undersigned hereby revokes any proxy previously given with respect to
Weingarten's common shares, and hereby ratifies and confirms all that the
proxies, their substitutes or any of them may lawfully do by virtue hereof.
Note: Please sign exactly as name(s) appear(s) on this proxy. When shares are
held jointly, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. When
executed by a corporation or partnership, please sign in full corporate or
partnership name by a duly authorized officer or partner, giving title.
Please mark, sign, date and mail this proxy card promptly, using the enclosed
envelope. Thank you.
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
--------------------------------------------------------------------------------
Weingarten Realty Investors
Annual Meeting of Shareholders
April 25, 2003
This Proxy is Solicited on Behalf of the Board of Trust Managers
The shareholder of Weingarten Realty Investors, a Texas real estate investment
trust, whose name and signature appear on the reverse side of this card, hereby
appoints Stanford Alexander and Andrew M. Alexander, or each of them, the
proxies of the shareholders, each with full power of substitution, to vote at
the annual meeting, and at any adjournments of the annual meeting, all common
shares of Weingarten that the shareholder is entitled to vote at the annual
meeting, in the manner shown on the reverse side of this card.
The common shares represented hereby will be voted in accordance with the
shareholder's directions on the reverse side of this card. If no direction is
given, then the shares represented by this proxy will be voted FOR all of the
proposals, and in the proxies' discretion, on any other matters that may
properly come before the annual meeting or any adjournments thereof, subject to
limitations set forth in applicable regulations under the Securities Exchange
Act of 1934.
Please mark, sign, date and return this proxy card promptly, using the enclosed
envelope. Thank you.
See reverse side