SCHEDULE 14A
(RULE 14A-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
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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 Pursuant to Section240.14a-12
MACK-CALI REALTY CORPORATION
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by
/ / Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid:
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[LOGO]
MACK-CALI REALTY CORPORATION
11 COMMERCE DRIVE
CRANFORD, NEW JERSEY 07016
--------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 2002
--------------------------
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Mack-Cali Realty Corporation (the "Company") will be held at the
Marriott at Glenpointe, 100 Frank W. Burr Boulevard, Teaneck, New Jersey 07666
on May 14, 2002 at 2:00 p.m., local time, for the following purposes:
1. To elect four persons to the Board of Directors of the Company, each to
serve a three-year term or until their respective successors are elected
and qualified.
2. To consider and vote upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP, independent accountants, as the Company's
independent accountants for the ensuing year.
3. To consider and vote upon a proposal to approve and adopt an amendment
to the 2000 Employee Stock Option Plan to increase the number of shares
authorized thereunder by 1,500,000, from 2,500,000 to 4,000,000.
4. To consider and vote upon a proposal to approve and adopt an amendment
to the 2000 Director Stock Option Plan to increase the number of shares
authorized thereunder by 150,000, from 200,000 to 350,000.
5. To consider and vote upon a stockholder proposal, if presented to the
Annual Meeting, requesting that the Company seek advance stockholder
approval for future executive officer severance arrangements.
The enclosed Proxy Statement includes information relating to these
proposals. Additional purposes of the Annual Meeting are to receive reports of
officers (without taking action thereon) and to transact such other business as
may properly come before the Annual Meeting or any adjournment or postponement
thereof.
All stockholders of record as of the close of business on April 1, 2002 are
entitled to notice of and to vote at the Annual Meeting. At least a majority of
the outstanding shares of common stock of the Company present in person or by
proxy is required for a quorum. You may vote electronically through the Internet
or by telephone. The instructions on your proxy card describe how to use these
convenient services. Of course, if you prefer, you can vote by mail by
completing your proxy card and returning it in the enclosed postage-paid
envelope.
By Order of the Board of Directors
/s/ ROGER W. THOMAS
--------------------------------------------------
Roger W. Thomas
SECRETARY
April 5, 2002
Cranford, New Jersey
THE BOARD OF DIRECTORS APPRECIATES AND ENCOURAGES YOUR PARTICIPATION IN THE
COMPANY'S ANNUAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED. ACCORDINGLY, PLEASE AUTHORIZE A
PROXY TO VOTE YOUR SHARES BY INTERNET, TELEPHONE OR MAIL. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY WITHDRAW YOUR PROXY, IF YOU WISH, AND VOTE IN PERSON.
YOUR PROXY IS REVOCABLE IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN THIS
PROXY STATEMENT.
MACK-CALI REALTY CORPORATION
11 COMMERCE DRIVE
CRANFORD, NEW JERSEY 07016
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished to stockholders of Mack-Cali Realty
Corporation, a Maryland corporation (the "Company"), in connection with the
solicitation by the Board of Directors of the Company (the "Board of Directors")
of proxies in the accompanying form for use in voting at the Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held on Tuesday,
May 14, 2002, at 2:00 p.m., local time, at the Marriott at Glenpointe, 100 Frank
W. Burr Boulevard, Teaneck, New Jersey 07666, and any adjournment or
postponement thereof.
This Proxy Statement, the Notice of Annual Meeting of Stockholders and the
accompanying proxy card are first being mailed to the Company's stockholders on
or about April 5, 2002.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised in the same manner in which it was
given or by delivering to the Company (to the attention of Roger W. Thomas, the
Company's Secretary) a written notice of revocation or a properly executed proxy
bearing a later date, or by attending the Annual Meeting and giving notice of
your intention to vote in person.
SOLICITATION AND VOTING PROCEDURES
The solicitation of proxies will be conducted by mail, and the Company will
bear all attendant costs. These costs will include the expense of preparing and
mailing proxy materials for the Annual Meeting and reimbursements paid to
brokerage firms and others for their expenses incurred in forwarding
solicitation material regarding the Annual Meeting to beneficial owners of the
Company's common stock, par value $.01 per share (the "Common Stock"). The
Company intends to use the services of MacKenzie Partners, Inc., 105 Madison
Avenue, 14th Floor, New York, New York 10016, in soliciting proxies and, in such
event, the Company expects to pay an amount not to exceed $10,000, plus
out-of-pocket expenses, for such services. The Company may conduct further
solicitation personally, telephonically, electronically or by facsimile through
its officers, directors and regular employees, none of whom would receive
additional compensation for assisting with the solicitation.
The presence at the Annual Meeting of a majority of the outstanding shares
of Common Stock of the Company, represented either in person or by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting. The
close of business on April 1, 2002 has been fixed as the record date (the
"Record Date") for determining the holders of shares of Common Stock entitled to
notice of and to vote at the Annual Meeting. Each share of Common Stock
outstanding on the Record Date is entitled to one vote on all matters. As of the
Record Date, there were 57,207,810 shares of Common Stock outstanding. Under
Maryland law, stockholders will not have appraisal or similar rights in
connection with any proposal set forth in this Proxy Statement.
Stockholder votes will be tabulated by the persons appointed by the Board of
Directors to act as inspectors of election for the Annual Meeting. The New York
Stock Exchange (the "NYSE") permits member organizations to give proxies,
whether or not instructions have been received from beneficial owners, to vote
as to the election of directors and also on matters of the type contained in
Proposal Nos. 2, 3 and 4, but not as to matters of the type contained in
Proposal No. 5. Shares represented by a properly executed and delivered proxy
will be voted at the Annual Meeting and, when instructions have
1
been given by the stockholder, will be voted in accordance with those
instructions. If no instructions are given, the shares will be voted FOR the
election of each of the four nominees for director named below and FOR Proposal
Nos. 2, 3 and 4. Abstentions and broker non-votes will have no effect on the
outcome of the election of directors or Proposal Nos. 2 and 5, but will have the
same effect as a negative vote on each of Proposal Nos. 3 and 4 (unless, with
respect to such Proposal Nos. 3 and 4, the total votes cast on the Proposal
represent more than 50% in interest of all securities entitled to vote on the
Proposal, in which event abstentions and broker non-votes will not have any
effect on the result of the vote on Proposal Nos. 3 or 4). Abstentions and
broker non-votes will each be counted as present for purposes of determining the
presence of a quorum.
VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table sets forth information as of March 15, 2002 with respect
to each person or group who is known by the Company, in reliance on Schedules
13D and 13G filed with the Securities and Exchange Commission (the "SEC"), to
beneficially own more than 5% of the Company's outstanding shares of Common
Stock. Except as otherwise noted below, all shares of Common Stock are owned
beneficially by the individual or group listed with sole voting and/or
investment power.
AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT OF SHARES
BENEFICIAL OWNER OWNERSHIP OUTSTANDING(%)(1)
---------------- ----------------- -----------------
The Mack Group (2).......................................... 11,605,704 16.9
Security Capital Group Incorporated (3)..................... 4,817,330 8.4
Pacific Financial Research, Inc. (4)........................ 3,762,000 6.6
Cohen & Steers Capital Management, Inc. (5)................. 3,475,040 6.1
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(1) The total number of shares outstanding used in calculating this percentage
does not include 14,310,794 shares reserved for issuance upon redemption or
conversion of outstanding units of limited partnership interest ("Units") in
Mack-Cali Realty, L.P., a Delaware limited partnership (the "Operating
Partnership") through which the Company conducts its real estate activities,
2,000,000 shares reserved for issuance upon exercise of outstanding warrants
to purchase Units, which outstanding warrants to purchase Units will expire
on December 11, 2002 ("Unit Warrants"), or 6,645,921 shares reserved for
issuance upon the exercise of stock options or warrants granted or reserved
for possible grant to certain employees and directors of the Company, except
in all cases where such Units, Unit Warrants, stock options or warrants are
owned by the reporting person or group. This information is as of March 15,
2002.
(2) Address: 11 Commerce Drive, Cranford, New Jersey 07016. The Mack Group
(which is not a legal entity) is composed of, among others, William L. Mack,
the Chairman of the Board of Directors of the Company, Earle I. Mack, a
director of the Company, David Mack and Fredric Mack, each a member of the
Company's Advisory Board, their immediate family members and related trusts,
and Mitchell E. Hersh, the Chief Executive Officer and a director of the
Company. Share information is furnished in reliance on the Schedule 13G/A
dated February 14, 2002 of the Mack Group filed with the SEC, which
represents holdings as of December 31, 2001. This number represents shares
for which the Mack Group has shared dispositive and voting power, and
includes 3,361,560 common Units and 210,821 preferred Units convertible into
6,084,300 common Units, for a total of 9,445,860 common Units, redeemable
for shares of Common Stock on a one-for-one basis, 1,681,368 vested Unit
Warrants redeemable for shares of Common Stock and 415,976 vested stock
options and warrants to purchase shares of Common Stock.
(3) Address: 125 Lincoln Avenue, Santa Fe, New Mexico 87501. Share information
is furnished in reliance on the Schedule 13G dated February 13, 2002 of
Security Capital Group Incorporated ("SCGI") filed with the SEC, which
represents holdings as of December 31, 2001. This number
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represents shares for which SCGI has shared dispositive and voting power by
virtue of its position as the parent of Security Capital Research &
Management Incorporated.
(4) Address: 9601 Wilshire Boulevard, Suite 800, Beverly Hills, California
90210. Share information is furnished in reliance on the Schedule 13G dated
February 13, 2002 of Pacific Financial Research, Inc. ("Pacific") filed with
the SEC, which represents holdings as of December 31, 2001. This number
represents shares for which Pacific has sole dispositive power, and includes
3,524,500 shares for which Pacific has sole voting power and 237,500 shares
for which Pacific has no voting power.
(5) Address: 757 Third Avenue, New York, New York 10017. Based upon information
provided to the Company by Cohen & Steers Capital Management, Inc.
("Cohen & Steers"), the Company believes that such shares are held for
investment advisory clients and that Cohen & Steers disclaims beneficial
ownership of those shares. Share information is furnished in reliance on the
Schedule 13G/A dated February 13, 2002 of Cohen & Steers filed with the SEC,
which represents holdings as of December 31, 2001. This number represents
shares for which Cohen & Steers has sole dispositive power and includes
3,066,740 shares for which it has sole voting power.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's charter divides the Company's Board of Directors into three
classes, with the members of each such class serving staggered three-year terms.
The Board of Directors presently consists of thirteen members as follows:
Class I directors, Brendan T. Byrne, Martin D. Gruss, Vincent Tese and Roy J.
Zuckerberg, whose terms expire in 2004; Class II directors, Nathan Gantcher,
Earle I. Mack, William L. Mack and Alan G. Philibosian, whose terms expire in
2002 (and if re-elected at the Annual Meeting, in 2005); and Class III
directors, Robert F. Weinberg, John J. Cali, John R. Cali, Mitchell E. Hersh and
Irvin D. Reid, whose terms expire in 2003.
At the Annual Meeting, the stockholders will elect four directors to serve
as Class II directors. The Class II directors who are elected at the Annual
Meeting will serve until the Annual Meeting of Stockholders to be held in 2005
and until such directors' respective successors are elected or appointed and
qualify or until any such director's earlier resignation or removal. The Board
of Directors, acting upon the unanimous recommendation of its Nominating
Committee, has nominated Nathan Gantcher, Earle I. Mack, William L. Mack and
Alan G. Philibosian for election as Class II directors at the Annual Meeting. In
the event any nominee is unable or unwilling to serve as a Class II director at
the time of the Annual Meeting, the proxies may be voted for the balance of
those nominees named and for any substitute nominee designated by the present
Board of Directors or the proxy holders to fill such vacancy or for the balance
of those nominees named without nomination of a substitute, or the Board of
Directors may be reduced in accordance with the By-laws of the Company.
NATHAN GANTCHER, director nominee, was appointed as a member of the Board of
Directors of the Company in 1999, as a member of the Audit Committee of the
Board of Directors of the Company in 1999, and as a member of each of the
Nominating Committee of the Board of Directors and the Executive Committee of
the Board of Directors in 2000. Mr. Gantcher has served as the Co-Chairman,
President and Chief Executive Officer of Alpha Investment Management L.L.C.
since 2001. Prior to joining Alpha Investment Management L.L.C., Mr. Gantcher
was a private investor from 1999 to 2001. Mr. Gantcher served as vice chairman
of CIBC Oppenheimer Corp. from 1997 to 1999. Prior to becoming vice chairman of
CIBC Oppenheimer Corp., Mr. Gantcher served as co-chief executive officer of
Oppenheimer & Co., Inc. Mr. Gantcher currently serves as chairman of the board
of trustees of Tufts University and as a member of each of the Council of
Foreign Relations and the Overseers Committee of the Columbia University
Graduate School of Business. Mr. Gantcher received his A.B. in economics and
biology from Tufts University and his M.B.A. from the Columbia University
Graduate School of Business.
EARLE I. MACK, director nominee, was appointed as a member of the Board of
Directors of the Company in 1997. Prior to December 1997, Mr. Mack served as
senior partner, chief financial officer and a director of the Mack organization,
where he pioneered the development of large, Class A office properties and
helped to increase the Mack organization's portfolio to approximately
20 million square feet. Mr. Mack serves as a member of the board of directors of
DiGiorgio/White Rose Corp. and as a member of its executive and executive
compensation committees. Mr. Mack also is the chairman of the board of directors
of the Benjamin N. Cardozo School of Law and the chairman emeritus of the New
York State Council on the Arts. Mr. Mack has a B.S. degree in business
administration from Drexel University and also attended Fordham Law School.
Mr. Mack serves as a member of the Board of Directors of the Company pursuant to
an agreement with the Company entered into at the time of the Company's
combination with the Mack organization in December 1997. See "Certain
Relationships and Related Transactions." Mr. Mack is the brother of William L.
Mack.
WILLIAM L. MACK, director nominee, was appointed as a member of the Board of
Directors of the Company in 1997 and as its Chairman in 2000. Mr. Mack also
serves as Chairman of the Company's Executive Committee. Prior to
December 1997, Mr. Mack served as managing partner of the Mack
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organization, where he pioneered the development of large, Class A office
properties and helped to increase the Mack organization's portfolio to
approximately 20 million square feet. In addition, Mr. Mack is a founder and
managing partner of Apollo Real Estate Advisors, L.P. Mr. Mack also currently
serves as a member of the board of directors of The Bear Stearns
Companies, Inc., Metropolis Realty Trust, Inc., Wyndham International, Inc. and
Vail Resorts, Inc. Mr. Mack is a trustee and is on the executive committee of
the North Shore-Long Island Jewish Health System. He also is a trustee of the
University of Pennsylvania and serves on the board of overseers of The Wharton
School. Mr. Mack attended The Wharton School of Business and Finance at the
University of Pennsylvania and has a B.S. degree in business administration,
finance and real estate from New York University. Mr. Mack serves as a member of
the Board of Directors of the Company pursuant to an agreement with the Company
entered into at the time of the Company's combination with the Mack organization
in December 1997. See "Certain Relationships and Related Transactions."
Mr. Mack is the brother of Earle I. Mack.
ALAN G. PHILIBOSIAN, director nominee, was appointed as a member of the
Board of Directors of the Company and as a member of the Executive Compensation
and Option Committee of the Board of Directors of the Company in 1997, and as a
member of the Nominating Committee of the Board of Directors in 2000.
Mr. Philibosian is an attorney practicing in Englewood, New Jersey, and since
1997 has his own practice. Mr. Philibosian is currently a commissioner of The
Port Authority of New York and New Jersey, and also serves on the board of
directors of NorCrown Bank, the Armenian Missionary Association of America,
Paramus, New Jersey and John Harms Center for the Arts, Englewood, New Jersey.
Mr. Philibosian graduated from Rutgers College, and received his J.D. degree
from Boston College Law School and his LL.M. degree in taxation from New York
University.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Assuming a quorum is present, the affirmative vote of a plurality of the
votes cast at the Annual Meeting, either in person or by proxy, is required for
the election of a director. For purposes of the election of directors,
abstentions and broker non-votes will have no effect on the result of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES
NAMED ABOVE.
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DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information as of March 15, 2002 for (i) the
members of the Board of Directors of the Company, (ii) the executive officers of
the Company and (iii) the directors and executive officers of the Company as a
group:
PERCENT OF
SHARES
PERCENT OF OUTSTANDING
SHARES (CALCULATED ON A
FIRST TERM NUMBER OF OUTSTANDING FULLY-DILUTED
NAME AND POSITION AGE ELECTED EXPIRES SHARES (1)(2) (%)(3) BASIS)(%)(4)
----------------- -------- -------- -------- ------------- ----------- ----------------
William L. Mack, Chairman of the
Board (5)............................. 62 1997 2002 4,473,701(9) 7.27 5.85
John J. Cali, Chairman Emeritus......... 83 1994 2003 478,689(10) * *
Mitchell E. Hersh, Chief Executive
Officer and Director (5).............. 51 1997 2003 563,900(11) * *
Timothy M. Jones, President............. 46 -- -- 451,575(12) * *
Barry Lefkowitz, Executive Vice
President and Chief Financial
Officer............................... 39 -- -- 168,587(13) * *
Roger W. Thomas, Executive Vice
President, General Counsel and
Secretary............................. 44 -- -- 165,798(14) * *
Michael A. Grossman, Executive Vice
President............................. 40 -- -- 91,232(15) * *
Brendan T. Byrne, Director (7).......... 77 1994 2004 25,600 (16) * *
John R. Cali, Director (5).............. 54 2000 2003 353,106(17) * *
Nathan Gantcher, Director (5)(6)(7)..... 61 1999 2002 40,000(18) * *
Martin D. Gruss, Director (8)........... 59 1997 2004 38,000(19) * *
Earle I. Mack, Director................. 65 1997 2002 2,689,917(20) 4.50 3.52
Alan G. Philibosian, Director (6)(8).... 48 1997 2002 23,500(21) * *
Irvin D. Reid, Director (7)............. 61 1994 2003 18,000(22) * *
Vincent Tese, Director (6)(8)........... 59 1997 2004 40,000(23) * *
Robert F. Weinberg, Director (27)....... 73 1997 2003 536,532(24) * *
Roy J. Zuckerberg, Director (5)(7)...... 65 1999 2004 35,000(25) * *
------------- ----- -----
All directors and executive officers as
a group............................... 10,193,137(26) 15.24 13.34
============= ===== =====
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* Beneficial Ownership of less than 1.0% is omitted.
(1) The limited partners of the Operating Partnership share with the Company,
as general partner, in the net income or loss and any distributions of the
Operating Partnership. Pursuant to the partnership agreement of the
Operating Partnership, common Units are redeemable into shares of Common
Stock on a one-for-one basis.
(2) Except as otherwise noted below, all shares of Common Stock, common Units,
preferred Units (as converted into common Units), vested options, vested
warrants and all restricted stock are owned beneficially by the individual
listed with sole voting and/or investment power.
(3) Assumes redemption or conversion of only the Units in the Operating
Partnership and Unit Warrants beneficially owned by such owner into shares
of Common Stock (disregarding any waiting periods before such redemption is
legally permitted) and the exercise of vested options, vested warrants and
all restricted stock held only by such owner.
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(4) Assumes redemption or conversion of all outstanding Units in the Operating
Partnership and Unit Warrants into shares of Common Stock (disregarding any
waiting periods before such redemption is legally permitted) and the
exercise of all vested options, vested warrants and all restricted stock.
(5) Member of the Executive Committee of the Board of Directors.
(6) Member of the Nominating Committee of the Board of Directors.
(7) Member of the Audit Committee of the Board of Directors.
(8) Member of the Executive Compensation and Option Committee of the Board of
Directors.
(9) Includes 2,846,787 shares of Common Stock that may be issued upon the
redemption of all of William L. Mack's limited partnership interests in the
Operating Partnership (433,368 of which result from the exercise of Unit
Warrants), 212,078 shares of Common Stock that may be issued upon the
redemption of all of the limited partnership interests in the Operating
Partnership held by members of William L. Mack's immediate family and
trusts of which he is a trustee (32,518 of which result from the exercise
of Unit Warrants) and vested options to purchase 18,000 shares of Common
Stock. Also includes 983,699 shares of Common Stock that may be issued upon
the redemption of all of the limited partnership interests in the Operating
Partnership (149,930 of which result from the exercise of Unit Warrants)
held by trusts of which Mr. Mack or his wife is a trustee, of which
Mr. Mack disclaims beneficial ownership. Also includes 413,137 shares of
Common Stock that may be issued upon the redemption of all of the limited
partnership interests in the Operating Partnership (63,334 of which results
from the exercise of Unit Warrants) held by a partnership to which
Mr. Mack possesses sole or shared dispositive or voting power.
(10) Includes 290,561 shares of Common Stock that may be issued upon the
redemption of all of John J. Cali's limited partnership interests in the
Operating Partnership and 123,408 shares of Common Stock that may be issued
upon the redemption of all of the limited partnership interests in the
Operating Partnership held by members of John J. Cali's immediate family
and trusts of which he is a trustee. Also includes vested options to
purchase 63,569 shares of Common Stock.
(11) Includes 121,424 shares of Common Stock that may be issued upon the
redemption of all of Mitchell E. Hersh's limited partnership interests in
the Operating Partnership. Also includes vested warrants to purchase
339,976 shares of Common Stock and vested options to purchase 40,000 shares
of Common Stock.
(12) Includes 102,280 shares of Common Stock that may be issued upon the
redemption of all of Timothy M. Jones' limited partnership interests in the
Operating Partnership. Also includes vested warrants to purchase 170,000
shares of Common Stock and vested options to purchase 141,295 shares of
Common Stock.
(13) Includes vested options to purchase 117,137 shares of Common Stock.
(14) Includes vested options to purchase 117,137 shares of Common Stock.
(15) Includes vested warrants to purchase 20,000 shares of Common Stock and
vested options to purchase 59,832 shares of Common Stock.
(16) Includes vested options to purchase 25,000 shares of Common Stock.
(17) Includes 164,225 shares of Common Stock that may be issued upon the
redemption of all of John R. Cali's limited partnership interests in the
Operating Partnership. Also includes vested options to purchase 110,295
shares of Common Stock.
(18) Includes vested options to purchase 10,000 shares of Common Stock. Also
includes 5,000 shares of Common Stock held by a partnership and 5,000
shares of Common Stock held by a foundation, to which Mr. Gantcher
possesses sole or shared dispositive or voting power.
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(19) Includes 20,000 shares of Common Stock held by trusts of which Mr. Gruss is
a trustee. Also includes vested options to purchase 18,000 shares of Common
Stock.
(20) Includes 2,459,811 shares of Common Stock that may be issued upon the
redemption of all of Earle I. Mack's limited partnership interests in the
Operating Partnership (377,678 of which result from the exercise of Unit
Warrants) and 212,106 shares of Common Stock that may be issued upon the
redemption of all of the limited partnership interests in the Operating
Partnership held by members of Earle I. Mack's immediate family and trusts
of which he is a trustee (32,517 of which result from the exercise of Unit
Warrants). Also includes vested options to purchase 18,000 shares of Common
Stock.
(21) Includes 500 shares of Common Stock owned by Mr. Philibosian's family of
which Mr. Philibosian disclaims beneficial ownership. Also includes vested
options to purchase 23,000 shares of Common Stock.
(22) Includes vested options to purchase 18,000 shares of Common Stock.
(23) Includes vested options to purchase 18,000 shares of Common Stock.
(24) Includes 521,532 shares of Common Stock that may be issued upon the
redemption of all of Mr. Weinberg's limited partnership interests in the
Operating Partnership. Also includes vested options to purchase 15,000
shares of Common Stock.
(25) Includes vested options to purchase 10,000 shares of Common Stock.
(26) Includes all restricted stock, whether vested or unvested, together with
5,695,574 shares of Common Stock that may be issued upon the redemption of
all of the executive officers' and directors' limited partnership interests
in the Operating Partnership. Includes 1,666,129 shares of Common Stock
that may be issued upon the conversion and/or redemption of all of the
limited partnership interests in the Operating Partnership held by members
of the directors' and executive officers' immediate families, trusts of
which they or their wives are trustees or entities over which they possess
sole or shared dispositive or voting power. Also includes vested options to
purchase 822,265 shares of Common Stock, vested warrants to purchase
529,976 shares of Common Stock and vested Unit Warrants to purchase
1,089,345 shares of Common Stock held by directors, executive officers,
members of the directors' and executive officers' immediate families,
trusts of which they or their wives are trustees or entities over which
they possess sole or shared dispositive or voting power.
(27) In connection with the Company's acquisition of 65 Class A properties from
the Robert Martin Company LLC ("Robert Martin") in January 1997, as
subsequently modified, the Company granted Robert Martin the right to
designate one member to the Board of Directors of the Company for six years
ending at the Company's 2003 annual meeting for stockholders (the "RM Board
Seat"). Robert Martin has designated Martin S. Berger and Robert F.
Weinberg to jointly share the RM Board Seat. Mr. Berger served as a member
of the Board of Directors of the Company from December 1, 1998 until
March 6, 2001, at which time Mr. Berger resigned and Mr. Weinberg was
appointed to serve in such capacity until the Company's 2003 annual meeting
of stockholders. Upon his resignation, Mr. Berger became a member of the
Advisory Board. See "Certain Relationships and Related Transactions."
Mr. Berger owns 536,532 shares of the Company's Common Stock, which
includes 521,532 shares of Common Stock that may be issued upon the
redemption of all of Mr. Berger's limited partnership interests in the
Operating Partnership and vested options to purchase 15,000 shares of the
Company's Common Stock. As this Proxy Statement relates principally to the
2001 fiscal year of the Company, disclosure herein will treat Mr. Weinberg
as a director and Mr. Berger as a member of the Advisory Board, even though
such roles were reversed prior to March 6, 2001.
8
Biographical information concerning the director nominees is set forth above
under the caption "Proposal No. 1--Election of Directors." Biographical
information concerning the remaining directors and executive officers is set
forth below.
JOHN J. CALI has served as Chairman Emeritus of the Board of Directors of
the Company since 2000. Mr. Cali served as Chairman of the Board of Directors of
the Company from 1994 to June 2000, as a member of the Executive Committee of
the Board of Directors of the Company from 1997 to June 2000 and as Chief
Executive Officer of the Company from 1994 to 1995. In addition, Mr. Cali was a
principal of Cali Associates and a member of its Executive and Long Range
Planning Committees from 1949 to 1994. Mr. Cali co-founded Cali Associates in
1949. Mr. Cali graduated from Indiana University. Mr. Cali serves as a member of
the Board of Directors of the Company pursuant to an agreement dated as of
June 27, 2000, among the Company and members of the Cali family. See "Certain
Relationships and Related Transactions." Mr. Cali is the uncle of John R. Cali.
MITCHELL E. HERSH has served as a member of the Board of Directors of the
Company and as a member of the Executive Committee of the Board of Directors of
the Company since 1997. Mr. Hersh also has served as Chief Executive Officer of
the Company since 1999. Mr. Hersh is responsible for the strategic direction and
long-term planning for the Company. He is also responsible for creating and
implementing the Company's capital markets strategy and overall investment
strategy. Previously, Mr. Hersh held the position of President and Chief
Operating Officer of the Company from 1997 to 1999. Prior to joining the
Company, Mr. Hersh served as a partner of the Mack organization since 1982 and
as chief operating officer of the Mack organization since 1990, where he was
responsible for overseeing the development, operations, leasing and acquisitions
of the Mack organization's office and industrial portfolio. Mr. Hersh serves on
the board of directors of the National Association of Real Estate Investment
Trusts (NAREIT) and the New Jersey Chapter of the National Association of
Industrial and Office Properties (NAIOP). Mr. Hersh has a B.A. degree in
architecture from Ohio University. Mr. Hersh serves as a member of the Board of
Directors of the Company pursuant to an agreement with the Company entered into
at the time of the Company's combination with the Mack organization in
December 1997. See "Certain Relationships and Related Transactions."
TIMOTHY M. JONES has served as President of the Company since 1999. He is
responsible for overseeing the portfolio management, leasing, development and
operations areas of the Company. Previously, he served as Executive Vice
President and Chief Investment Officer of the Company from 1997 to 1999. Prior
to joining the Company, Mr. Jones served as executive vice president and chief
operating officer of The Robert Martin Company, where he was responsible for the
daily corporate operations and management of the firm's six-million square foot
portfolio in New York and Connecticut. Prior to joining The Robert Martin
Company, Mr. Jones served as a vice president in Chemical Bank's Real Estate
Division, as president of Clifton Companies in Stamford, Connecticut and
president of Federated National Company in State College, Pennsylvania.
Mr. Jones has a B.A. degree in economics from Yale University and a Masters
degree in business from Columbia University.
BARRY LEFKOWITZ has served as Chief Financial Officer of the Company since
1994, and as Executive Vice President of the Company since 1997. Mr. Lefkowitz
oversees the firm's strategic financial planning and forecasting, financial
accounting and reporting, capital markets activities and investor relations.
Mr. Lefkowitz served as a Vice President of the Company from 1994 to 1997. Prior
to joining the Company, Mr. Lefkowitz served as a senior manager with the
international accounting firm of Deloitte & Touche LLP, specializing in real
estate, with emphasis on mergers and acquisitions. In addition to having served
as co-chairman of the National Association of Real Estate Investment Trusts
(NAREIT) Accounting Committee, he is a member of the American Institute of
Certified Public Accountants (AICPA), the New Jersey Society of Certified Public
Accountants (NJSCPA) and the New York State Society of Certified Public
Accountants (NYSSCPA). Mr. Lefkowitz holds a B.S. degree in accounting from
Brooklyn College.
9
ROGER W. THOMAS has served as General Counsel of the Company since 1994, and
as Executive Vice President and Secretary of the Company since 1997.
Mr. Thomas' responsibilities include structuring and implementing the Company's
acquisitions and mergers, corporate governance, supervising outside legal
counsel, insuring legal compliance and the preparation of required disclosure
documents. Mr. Thomas also assists the Company in investment strategies,
financial activities, acquisitions and dispositions. Mr. Thomas served as a Vice
President and Assistant Secretary of the Company from 1994 to 1997. Prior to
joining the Company, Mr. Thomas was a partner at the law firm of Dreyer & Traub
in New York, specializing in real estate and commercial transactions.
Mr. Thomas holds a B.S.B.A. in finance and a J.D. degree (with honors) from the
University of Denver.
MICHAEL A. GROSSMAN has served as Executive Vice President of the Company
since 2000. He is responsible for overseeing the Company's New York, Connecticut
and Northern New Jersey (Bergen and Passaic counties) regions. Previously,
Mr. Grossman served as Senior Vice President of the Company in 2000, and as Vice
President of the Company from 1997 to January 2000. Prior to joining the
Company, Mr. Grossman served as Vice President of Leasing for The Robert Martin
Company since 1991, where he was responsible for leasing throughout Westchester
and Fairfield counties. Mr. Grossman is a member of the Westchester Board of
Realtors, Commercial and Industrial Division, treasurer of the National
Association of Industrial and Office Parks from 1997 to 1998, and a member of
the March of Dimes Real Estate Committee, Westchester chapter. Mr. Grossman
attended the University of South Florida and is a graduate of New York City
Technical College.
BRENDAN T. BYRNE has served as a member of the Board of Directors of the
Company since 1994 and as a member of the Audit Committee of the Board of
Directors since 1999. Governor Byrne served two consecutive terms as governor of
the State of New Jersey prior to 1982 and has been a senior partner with
Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein, a Roseland, New
Jersey law firm, since 1982. Governor Byrne graduated from Princeton
University's School of Public Affairs and received his LL.B from Harvard Law
School.
JOHN R. CALI has served as a member of the Board of Directors of the Company
and as a member of the Executive Committee of the Board of Directors of the
Company since 2000. Mr. Cali served as Executive Vice President-Development of
the Company until June 2000, and as Chief Administrative Officer of the Company
until December 1997. In addition, Mr. Cali was a principal of Cali Associates
and served as a member of its Long Range Planning Committee from 1981 to 1994
and its Executive Committee from 1987 to 1994 and was responsible for the
development of Cali Associates' office system and the management of its office
personnel. Mr. Cali also developed and organized the leasing and property
management departments of Cali Associates and he was responsible for directing
the development functions of the Company. Mr. Cali is a member of the University
of Pennsylvania Health System Trustee Board. Mr. Cali has a M.Ed. degree in
counseling, organizational development and personnel from the University of
Missouri. Mr. Cali serves as a member of the Board of Directors of the Company
pursuant to an agreement dated as of June 27, 2000, among the Company and
members of the Cali family. See "Certain Relationships and Related
Transactions." Mr. Cali is the nephew of John J. Cali.
MARTIN D. GRUSS has served as a member of the Board of Directors of the
Company since 1997 and as a member of the Executive Compensation and Option
Committee of the Board of Directors since 1999. Mr. Gruss is the senior partner
of Gruss & Co., a private investment firm. From 1989 to 1993, Mr. Gruss served
as a director of Acme Metals Incorporated. Mr. Gruss currently serves as a
member of the board of overseers of the Wharton School and as a trustee of the
Lawrenceville School. Mr. Gruss has a B.S. degree in economics from the Wharton
School of the University of Pennsylvania and a J.D. degree from New York
University School of Law.
IRVIN D. REID has served as a member of the Board of Directors of the
Company since 1994 and as chairman of the Audit Committee of the Board of
Directors of the Company since 1998. Dr. Reid also
10
serves as president of Wayne State University in Michigan. Prior to becoming the
president of Wayne State University, Dr. Reid served as president of Montclair
State University (formerly Montclair State College) in New Jersey from 1989 to
1997, and held positions of dean, School of Business Administration, and John
Stagmaier Professor of Economics and Business Administration at the University
of Tennessee at Chattanooga. Dr. Reid also is a member of the Federal Reserve
Board of Chicago-Detroit Branch. Dr. Reid received his B.S. degree and M.S.
degree in general and experimental psychology from Howard University. He earned
his M.A. and Ph.D. degrees in business and applied economics from The Wharton
School of the University of Pennsylvania.
VINCENT TESE has served as a member of the Board of Directors of the Company
since 1997, as chairman of the Executive Compensation and Option Committee of
the Board of Directors of the Company since 1998 and as chairman of the
Nominating Committee of the Board of Directors since 2000. Mr. Tese served as
New York State Superintendent of Banks from 1983 to 1985, chairman and chief
executive officer of the Urban Development Corporation from 1985 to 1994,
director of economic development for New York State from 1987 to 1994 and
commissioner and vice chairman of the Port Authority of New York and New Jersey
from 1991 to 1995. Mr. Tese also served as a partner in the law firm of Tese &
Tese, a partner in the Sinclair Group, a commodities trading and investment
management company, and a co-founder of Cross Country Cable TV. Mr. Tese
currently serves as chairman of Wireless Cable International, Inc. and as a
member of the board of directors of The Bear Stearns Companies, Inc., Allied
Waste Industries, Inc., Bowne & Company, Inc., Cablevision, Inc., and as a
trustee of New York University School of Law and New York Presbyterian Hospital.
Mr. Tese has a B.A. degree in accounting from Pace University, a J.D. degree
from Brooklyn Law School and a LL.M. degree in taxation from New York University
School of Law.
ROBERT F. WEINBERG became a member of the Board of Directors of the Company
as of March 6, 2001. Mr. Weinberg had served as a member of the Advisory Board
of the Company since 1998 and previously as a member of the Board of Directors
of the Company from 1997 until 1998. Mr. Weinberg served as co-chairman and
general partner of The Robert Martin Company since its founding in 1957.
Mr. Weinberg is presently the chairman of the Outreach Committee on Orderly
Growth in Westchester, a director of City & Suburban Federal Savings Bank and a
director of the Westchester County Association. Mr. Weinberg earned a B.S.
degree in Mechanical Engineering from New York University, an M.S. degree in
Building Engineering & Construction from M.I.T. and a J.D. degree from Brooklyn
Law School. Mr. Weinberg serves as a member of the Board of Directors of the
Company and shares his board seat with Martin S. Berger pursuant to an agreement
with the Company entered into at the time of the Company's acquisition of 65
Class A properties from Robert Martin in January 1997, as modified. See "Certain
Relationships and Related Transactions."
ROY J. ZUCKERBERG has served as a member of the Board of Directors of the
Company since 1999, as a member of the Audit Committee of the Board of Directors
of the Company since 1999 and as a member of the Executive Committee of the
Board of Directors since 2000. Mr. Zuckerberg is currently a senior director of
the Goldman Sachs Group, Inc. Mr. Zuckerberg served as vice chairman of Goldman,
Sachs & Co., a member of its executive committee and head of its Equities
Division. Mr. Zuckerberg joined Goldman, Sachs & Co. in 1967 and was made a
partner of Goldman, Sachs & Co. in 1977. Mr. Zuckerberg served as Chairman of
the Securities Industry Association and was a member of the Senior Advisors
Group to the President's Council on Year 2000 Conversion. Mr. Zuckerberg is
Chairman of the Board and a member of the executive committee of North
Shore-Long Island Jewish Health System, Inc., a trustee of the American Red
Cross in Greater New York and a director of the Brookdale Foundation. He has had
a long involvement with the UJA-Federation and served as chairman of the Wall
Street Division. He also serves as chair of the Investment Committee of the
University of Massachusetts Foundation. Mr. Zuckerberg received a B.S. from
Lowell Technological Institute in 1958 and served in the United States Army.
11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CALI AGREEMENT. On June 27, 2000, both Brant Cali and John R. Cali resigned
their positions as officers of the Company, and Brant Cali resigned as a
director of the Company. John R. Cali was appointed to the Board of Directors of
the Company to take the seat previously held by Brant Cali. As required by Brant
Cali and John R. Cali's former employment agreements with the Company, among
other things, the Company will permit Brant Cali and John R. Cali (and their
dependents) to participate in the health and disability insurance programs of
the Company for a period of four years from such date.
In connection with Brant Cali and John R. Cali's resignations, if either
John J. Cali or John R. Cali resign or are removed from the Board of Directors
during their terms (which expire in 2003), the members of the Cali family are
entitled to designate a successor to John J. Cali, John R. Cali, or both. Any
such successor will be subject to the prior approval of the Board of Directors,
which approval shall not be unreasonably withheld. In addition, for as long as
members of the Cali family (or entities wholly owned by the Cali family, Cali
family trusts or the heirs of any member of the Cali Group maintain at least the
"Minimum Percentage" (as defined below) of the Cali family's aggregate equity
position in the Units in the Operating Partnership (measured exactly as it
existed on June 27, 2000), the Company has agreed to nominate one designee of
the Cali family for election to the Board of Directors at each of the 2003 and
2006 annual meeting of stockholders, provided such person shall be subject to
the prior approval of the Board of Directors, which approval shall not be
unreasonably withheld. "Minimum Percentage" shall mean (i) 90% or (ii) 87.5%, if
the Cali family's aggregate equity position in the Units in the Operating
Partnership is reduced below 90% solely as a result of sales of Units by the
Operating Partnership to the Company.
For as long as (i) the Cali family is represented on the Board of Directors,
(ii) the Cali family (or entities wholly owned by the Cali family, Cali family
trusts, or the heirs of any member of the Cali Group) maintains at least the
Minimum Percentage of the Cali family's aggregate equity position in the Units
of the Operating Partnership (measured exactly as it existed on June 27, 2000)
and (iii) the Board of Directors determines in its reasonable discretion to
continue the Executive Committee of the Board of Directors, the Cali family
shall be entitled to designate John R. Cali or another Cali-designated board
member to serve as a member of the Executive Committee of the Board of
Directors, provided such person shall be subject to the prior approval of the
Board of Directors, which approval may not be unreasonably withheld.
Pursuant to the Cali Agreement, John J. Cali serves as a consultant to the
Company and is paid an annual salary of $150,000 until June 27, 2003.
MACK AGREEMENT. In connection with the Company's combination with the Mack
organization in December 1997, William L. Mack, Mitchell E. Hersh and Earle I.
Mack were appointed to the Company's Board of Directors. If any of Messrs. Mack
or Mr. Hersh shall withdraw from the Board of Directors for any reason during
their terms, the members of the Mack Group are entitled to designate their
successors. In addition, for as long as members of the Mack Group maintain at
least the "Mack Significant Interest" (as defined below), the Mack Group has the
right to re-nominate, and the Company will support, Messrs. Mack and Hersh (or
their successors) for re-election to the Board of Directors for successive
three-year terms upon the expiration of each three-year term. "Mack Significant
Interest" shall mean legal and beneficial ownership, in the aggregate, of not
less than 3,174,603 shares of Common Stock and/or Units (on a fully converted
basis) by Earle Mack, David Mack, Frederic Mack and William Mack, subject to
certain restrictions and to adjustment for stock splits and other customary and
similar stock dilutions.
ROBERT MARTIN AGREEMENT. In connection with the Company's acquisition of 65
Class A properties from Robert Martin in January 1997, as subsequently modified,
the Company granted Robert Martin the right to designate one RM Board Seat.
Robert Martin has designated Martin S. Berger and Robert
12
F. Weinberg to jointly share the RM Board Seat as follows: Mr. Weinberg served
as a member of the Board of Directors of the Company from January 1997 until
December 1, 1998, at which time Mr. Weinberg resigned and Mr. Berger was
appointed to serve in such capacity. Upon his resignation from the Board,
Mr. Weinberg became a member of the Advisory Board. Mr. Berger served as a
member of the Board of Directors of the Company from December 1, 1998 until
March 6, 2001, at which time Mr. Berger resigned and Mr. Weinberg was appointed
to serve in such capacity until the Company's 2003 annual meeting of
stockholders. Upon his resignation from the Board, Mr. Berger became a member of
the Advisory Board. If the Company elects to nominate for re-election to its
Board of Directors a designee of Robert Martin at the Company's 2003 annual
meeting of stockholders, then Mr. Berger and Mr. Weinberg have agreed that
Mr. Berger will be so nominated and the seat will be rotated among Mr. Berger
and Mr. Weinberg every 12 months commencing on the 12 month anniversary of the
2003 annual meeting of stockholders. Upon the death of Mr. Berger or
Mr. Weinberg, the surviving person shall solely fill the remainder of the term
of the RM Board Seat.
TAX PROTECTION AGREEMENTS. The Company may not dispose of or distribute
certain of its properties, currently comprising 141 properties with an aggregate
net book value of approximately $1.9 billion (as of December 31, 2001), which
were originally contributed by members of either the Mack Group (which includes
William L. Mack, director; Earle I. Mack, director; and Mitchell E. Hersh, chief
executive officer and director), the Robert Martin Group (which includes Robert
F. Weinberg, director; Martin W. Berger, a former director and a member of the
Company's Advisory Board; Timothy M. Jones, president; and Michael A. Grossman,
executive vice president) or the Cali Group (which includes John J. Cali,
director, and John R. Cali, director), without the express written consent of a
representative of the Mack Group, the Robert Martin Group or the Cali Group, as
applicable, except in a manner which does not result in recognition of any
built-in-gain (which may result in an income tax liability) or which reimburses
the appropriate Mack Group, Robert Martin Group or Cali Group members for the
tax consequences of the recognition of such built-in-gains (collectively, the
"Property Lock-Ups"). The aforementioned restrictions do not apply in the event
that the Company sells all of its properties or in connection with a sale
transaction which the Company's Board of Directors determines is reasonably
necessary to satisfy a material monetary default on any unsecured debt, judgment
or liability of the Company or to cure any material monetary default on any
mortgage secured by a property. The Property Lock-Ups expire periodically
through 2008. Upon the expiration of the Property Lock-Ups, the Company is
required to use commercially reasonable efforts to prevent any sale, transfer or
other disposition of the subject properties from resulting in the recognition of
built-in gain to the appropriate Mack Group, Robert Martin Group or Cali Group
members.
ACQUISITIONS AND OTHER TRANSACTIONS. Certain directors and executive
officers of the Company (or members of their immediate families or related
trusts) and persons who hold more than 5% of the outstanding shares of Common
Stock (or Units in the Operating Partnership) had direct or indirect interests
in certain transactions involving the Company, the Operating Partnership or
their affiliates in the last fiscal year as follows:
- William L. Mack, a director of the Company, is a principal in the Apollo
real estate funds, which owns approximately a 7.5% interest in
Insignia/ESG, Inc. ("Insignia"), a publicly-traded commercial leasing and
real estate services company. The Company has paid Insignia commissions in
the amount of approximately $2,758,000 for the year ended December 31,
2001 on numerous leasing transactions, as well as for the sale of one of
its properties. In addition, American Financial Exchange, an
unconsolidated joint venture in which the Company has a 50% interest, has
paid Insignia approximately $1,305,000 in commissions for the year ended
December 31, 2001. The Company currently has engaged Insignia as its
exclusive leasing agent at Harborside Financial Center, as well as the
Company's broker for the sales of certain of its properties. Additionally,
an affiliate of Insignia leases 40,404 square feet of office space at one
13
of the Company's properties, which is scheduled to expire in June 2003.
The Company recognized $836,000 in revenue under this lease for the year
ended December 31, 2001, and had no accounts receivable as of such date.
- William L. Mack, a director of the Company, and Earle I. Mack, a director
of the Company, are the executive officers, directors and stockholders of
a corporation that entered into a lease in 2000 at one of the Company's
office properties, for approximately 7,801 square feet, which is scheduled
to expire November 2005. The Company has recognized $217,000 in revenue
under this lease for the year ended December 31, 2001, and had no accounts
receivable as of such date.
- The Company is an investor in ARCap Investors, L.L.C., a joint venture
with several participants, which was formed to invest in sub-investment
grade tranches of commercial mortgage-backed securities. The Company has
invested $20,000,000 in the joint venture. William L. Mack, a director of
the Company, is a principal of an entity that owns approximately 28% of
the joint venture and has nominated a member of its board of directors. At
December 31, 2001, the joint venture held approximately $595,937,000 of
assets, comprised principally of subordinated commercial mortgage-backed
securities recorded at market value.
- The Company has engaged certain entities (the "RMC Entities"), whose
principals include Martin S. Berger, a former director of the Company and
a member of the Company's Advisory Board, Robert F. Weinberg, a director
of the Company, and Timothy M. Jones, President of the Company, to perform
management, leasing and construction-related services for certain of the
Company's properties. During 2001, the Company paid these RMC Entities
approximately $77,000 for such services.
- On August 3, 2001, the Company acquired from certain RMC Entities two
office/flex properties aggregating 168,177 square feet located in
Hawthorne, Westchester County, New York, for a total cost of approximately
$14,846,000.
- On September 13, 2001, the Company acquired from certain RMC Entities
approximately five acres of developable land located in Elmsford,
Westchester County, New York, for approximately $1,000,000. The Company
has commenced construction of a fully pre-leased 33,000 square foot
office/flex building on the acquired land.
- The Company has a loan payable of $500,000 to a RMC Entity in connection
with the Company's acquisition in May 1999 of 2.5 acres of land, which the
Company acquired for a total cost of approximately $2,200,000, of which
$1,500,000 was paid in cash. The loan requires quarterly payments of
interest only at an annual interest rate of 10.5%. Payment of the
principal is contingent upon the tenant's status in 2002. The Company
incurred $53,000 in interest expense for the year ended December 31, 2001
in connection with this loan.
- The Company provides management, leasing and related services to
properties in which RMC Entities have an ownership interest. The Company
recognized approximately $2,072,000 in revenues from these RMC Entities
for the year ended December 31, 2001, and had no accounts receivables as
of such date.
- A RMC Entity leases space at one of the Company's office properties for
approximately 3,330 square feet, which is scheduled to expire in
August 2002. The Company has recognized $89,000 in revenue under this
lease for the year ended December 31, 2001, and had no accounts receivable
due from the RMC Entity as of such date.
- Vincent Tese, a director of the Company, also is currently a member of the
board of directors of Cablevision, Inc., who, through its affiliates,
leases an aggregate of 58,885 square feet of office space, and has several
telecom licensing agreements, at the Company's properties. The Company
recognized approximately $1,101,000 in total revenue from affiliates of
Cablevision, Inc. for the year ended December 31, 2001, and had accounts
receivable of $7,000 as of such date.
14
- William L. Mack and Vincent Tese, both directors of the Company, also
currently are members of the board of directors of Bear, Stearns &
Co. Inc. Roy Zuckerberg, a director of the Company, also is currently a
member of the board of directors of Goldman Sachs & Co. Bear Stearns &
Co. Inc. and Goldman Sachs & Co. both have acted as underwriters on
several of the Operating Partnership's previously completed public debt
offerings.
- The son of Martin S. Berger, a former director of the Company, who also
was a former officer of the Company, served as an officer of and continues
to have a financial interest in, a company which provides cleaning and
other related services to certain of the Company's properties. The Company
has incurred costs from this company of approximately $4,674,000 for the
year ended December 31, 2001, and had accounts payable of approximately
$4,000 to this company as of such date.
- In 2001, the director accounts of Nathan Gantcher, Martin D. Gruss,
William L. Mack, Alan G. Philibosian, Irvin D. Reid, Vincent Tese, and Roy
J. Zuckerberg were credited with a stock dividend in the amount of
126.623, 147.313, 147.313, 73.656, 147.313, 147.313 and 126.623,
respectively, pursuant to the Directors' Deferred Compensation Plan,
whereby each non-employee director is entitled to defer all or a specified
portion of the annual compensation to be paid to such director. See
"Directors' Deferred Compensation Plan" below.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers, directors and
persons who beneficially own more than 10% of the Company's Common Stock to file
initial reports of ownership and reports of changes of ownership (Forms 3, 4 and
5) of the Common Stock with the SEC and the NYSE. Executive officers, directors
and greater than 10% holders are required by SEC regulations to furnish the
Company with copies of such forms that they file.
To the Company's knowledge, based solely on the Company's review of the
copies of such reports received by the Company, the Company believes that for
the fiscal year 2001, all Section 16(a) filing requirements applicable to its
executive officers, directors and greater than 10% beneficial owners were
complied with.
MEETINGS OF COMMITTEES AND THE BOARD OF DIRECTORS
During 2001, the entire Board of Directors met ten times. With the exception
of John R. Cali, no director attended fewer than 75% of the aggregate of the
total number of meetings of the Board of Directors (held during the period for
which he has been a director) and the total number of meetings held by all
committees of the Board of Directors on which he served (during the periods that
he served).
The Board of Directors has four committees: the Executive Committee, the
Audit Committee, the Executive Compensation and Option Committee and the
Nominating Committee.
The Executive Committee consists of William L. Mack, chairman, John R. Cali,
Nathan Gantcher, Mitchell E. Hersh and Roy J. Zuckerberg. The Executive
Committee acts for the Board of Directors in between regularly scheduled
meetings of the Board of Directors within certain parameters prescribed by the
Board of Directors. The Executive Committee met four times during 2001.
The Audit Committee consists of Irvin D. Reid, chairman, Brendan T. Byrne,
Nathan Gantcher and Roy J. Zuckerberg, each of whom are independent directors of
the Company. The Audit Committee makes recommendations concerning the engagement
of independent accountants, reviews with the independent accountants the scope
and results of the audit engagement, approves professional services provided by
the independent accountants, reviews the independence of the independent
15
accountants, considers the range of audit and non-audit fees and reviews the
adequacy of the Company's internal accounting controls. The Audit Committee met
five times during 2001.
The Executive Compensation and Option Committee consists of Vincent Tese,
chairman, Martin D. Gruss and Alan G. Philibosian. The Executive Compensation
and Option Committee establishes remuneration levels for executive officers of
the Company and implements incentive programs, including the Company's employee
and director stock option plans. The Executive Compensation and Option Committee
met four times during 2001.
The Nominating Committee consists of Vincent Tese, chairman, Nathan Gantcher
and Alan G. Philibosian. The Nominating Committee makes recommendations for
nominees to the Board of Directors of the Company. Although there are no formal
procedures for stockholders to make recommendations for committee appointments
or recommendations for nominees to the Board of Directors, the Nominating
Committee will consider recommendations from stockholders, which should be
addressed to Roger W. Thomas, the Company's Secretary, at the Company's address
set forth on the first page of this Proxy Statement. The Nominating Committee
met once during 2001.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors of the Company, on behalf of
the Board of Directors of the Company, serves as an independent and objective
party to monitor and provide general oversight of the Company's financial
accounting and reporting process, system of internal control, audit process for
monitoring compliance with laws and regulations and the Company's standards of
business conduct. The Audit Committee performs these oversight responsibilities
in accordance with its Audit Committee Charter, which was approved and adopted
by the Board of Directors of the Company on June 8, 2000. The Company's
management has primary responsibility for preparing the Company's financial
statements and the Company's reporting process. The Company's independent
accountants and auditors, PricewaterhouseCoopers LLP, are responsible for
expressing an opinion on the conformity of the Company's audited financial
statements to accounting principles generally accepted in the United States of
America. The Audit Committee met five times during 2001.
The Audit Committee discussed with the Company's independent accountants and
auditors the overall scope and plans for their respective audits. The Audit
Committee met with the independent accountants and auditors, with and without
management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls, and the overall quality of the
Company's financial reporting.
In this context, the Audit Committee hereby reports as follows:
1. The Audit Committee has reviewed and discussed the audited financial
statements with the Company's management, including the quality, not just
the acceptability, of the Company's accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in
the financial statements;
2. The Audit Committee has discussed with the independent auditor their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
by SAS 61 (Codification of Statements on Auditing Standard, AU Section 380),
as may be modified or supplemented;
3. The Audit Committee has received the written disclosures and the
letter from the independent accountant required by Independence Standards
Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees), as may be modified or
supplemented, and has discussed with the independent accountant the
independent accountant's independence from management and the Company and
considered the compatibility of non-audit services with the auditor's
independence; and
16
4. Based on the review and discussions referred to in paragraphs
(1) through (3) above, the Audit Committee recommended to the Board of
Directors of the Company (and the Board of Directors has approved) that the
audited financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2001, for filing with the
Securities and Exchange Commission.
The foregoing Audit Committee Report does not constitute soliciting material
and shall not be deemed filed or incorporated by reference into any other
Company filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent the Company specifically
incorporates this Audit Committee Report by reference therein.
Each of the members of the Audit Committee is independent as defined under
the listing standards of the New York Stock Exchange and meets all other
requirements of such Exchange.
AUDIT COMMITTEE
IRVIN D. REID, CHAIRMAN
BRENDAN T. BYRNE
NATHAN GANTCHER
ROY J. ZUCKERBERG
COMPENSATION OF DIRECTORS
DIRECTORS' FEES. Each non-employee director was paid an annual fee of
$20,000, plus $1,000 per board meeting attended, $500 per committee meeting
attended and $250 per telephonic meeting participation. The Company does not pay
director fees to employee directors, who in fiscal 2001 consisted of Mitchell E.
Hersh. Each director also was reimbursed for expenses incurred in attending
director and committee meetings. For fiscal year 2001, the Company's
non-employee directors received directors' fees or fee equivalents (See
"Directors' Deferred Compensation Plan" below) in the amounts set forth in the
table below.
DIRECTORS' DEFERRED COMPENSATION PLAN. Pursuant to the Directors' Deferred
Compensation Plan, effective as of January 1, 1999, each non-employee director
is entitled to defer all or a specified portion of the annual compensation to be
paid to such director. The account of a director who elects to defer such
compensation under the Directors' Deferred Compensation Plan is credited with
the hypothetical number of stock units, calculated to the nearest thousandths of
a unit, determined by dividing the amount of compensation deferred on the
deferral date by the closing market price of the Company's Common Stock as
reported on the Consolidated Tape of NYSE listed shares on the deferral date.
Any stock dividend declared by the Company on its Common Stock results in a
proportionate increase in units in the director's account as if such director
held shares of Common Stock equal to the number of units in such director's
account. Payment of a director's account may only be made in a lump sum in
shares of Common Stock equal to the number of units in a director's account
after either the director's service on the Board of Directors has terminated or
there has been a change in control of the Company. In 2001, the director
accounts of Nathan Gantcher, Martin D. Gruss, William L. Mack, Alan G.
Philibosian, Irvin D. Reid, Vincent Tese, and Roy J. Zuckerberg were credited
with the stock units set forth in the table below.
17
2001 DIRECTORS' COMPENSATION
CASH VALUE OF
DIRECTOR CASH FEES DEFERRED STOCK UNITS DEFERRED STOCK UNITS
-------- --------- -------------------- --------------------
William L. Mack........................ $ 7,500 696.676 $ 20,000
John J. Cali........................... 25,250 0 0
Martin S. Berger (1)................... 9,361 0 0
Brendan T. Byrne....................... 27,250 0 0
John R. Cali........................... 25,500 0 0
Nathan Gantcher........................ 9,750 696.676 20,000
Martin D. Gruss........................ 6,750 696.676 20,000
Earle I. Mack.......................... 23,500 0 0
Alan G. Philibosian.................... 17,875 348.337 10,000
Irvin D. Reid.......................... 8,000 696.676 20,000
Vincent Tese........................... 7,000 696.676 20,000
Robert F. Weinberg (1)................. 14,694 0 0
Roy Zuckerberg......................... 7,250 696.676 20,000
-------- --------- --------
Total.................................. $189,680 4,528.393 $130,000
======== ========= ========
------------------------
(1) Mr. Berger resigned from the Board of Directors of the Company on March 6,
2001, at which time Mr. Weinberg was appointed to serve in such capacity.
See "Certain Relationships and Related Transactions--Robert Martin
Agreement."
DIRECTORS' STOCK OPTION PLANS. The Company has two director stock option
plans: the Director Stock Option Plan of Mack-Cali Realty Corporation (the
"Director Stock Option Plan") and the 2000 Director Stock Option Plan (the "2000
Director Stock Option Plan"). References to "Director Option Plans" herein refer
to the Director Stock Option Plan and the 2000 Director Stock Option Plan,
collectively. Pursuant to the Director Option Plans, each non-employee director
is automatically granted a non-statutory option to purchase 5,000 shares of
Common Stock in connection with the director's initial election or appointment
to the Board of Directors. These grants under the Director Option Plans are made
at an exercise price equal to the "fair market value" (as defined under the
Director Option Plans) at the time of the grant of the shares of Common Stock
subject to such option. The Executive Compensation and Option Committee may make
additional discretionary option grants to eligible directors, consistent with
the terms of the Director Option Plans. In 2001, each non-employee director was
granted 5,000 discretionary options. The Board of Directors may amend, suspend
or terminate the Director Option Plans at any time, except that any amendments
that would materially increase the cost of either of the Director Option Plans
to the Company must be approved by the holders of the majority of issued and
outstanding shares of Common Stock of the Company entitled to vote.
18
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation of the chief executive officer and the four most highly compensated
executive officers of the Company other than the chief executive officer
(collectively, the "Named Executive Officers") for each of the Company's last
three fiscal years:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
-------------------------------------
AWARDS
------------------------- PAYOUTS
SECURITIES --------
ANNUAL COMPENSATION(1) RESTRICTED UNDERLYING LTIP
NAME AND PRINCIPAL ------------------------------- OTHER ANNUAL STOCK OPTIONS/ PAYOUTS
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARD(S)($) WARRANTS(#) ($)(4)
---------------------------------- -------- --------- -------- --------------- ----------- ----------- --------
Mitchell E. Hersh ................ 2001 1,050,000 460,000 113,946(2) 0 0 264,990
Chief Executive Officer 2000 1,050,000 440,000 104,119(3) 0 200,000(5) 242,138
1999 1,050,000 440,000 0 0 0 0
Timothy M. Jones ................. 2001 515,000 395,000 68,367(2) 0 0 158,994
President 2000 515,000 380,000 62,472(3) 0 120,000(5) 145,283
1999 421,462 275,000 0 0 0 0
Barry Lefkowitz .................. 2001 385,000 275,000 47,572(2) 0 0 110,632
Executive Vice President 2000 385,000 250,000 43,469(3) 0 100,000(5) 101,091
and Chief Financial Officer 1999 360,385 225,000 0 0 0 0
Roger W. Thomas .................. 2001 325,000 195,000 40,170(2) 0 0 93,418
Executive Vice President, 2000 325,000 185,000 36,706(3) 0 100,000(5) 85,362
General Counsel and Secretary 1999 312,692 185,000 0 0 0 0
Michael A. Grossman .............. 2001 315,000 185,000 7,292(2) 0 0 16,959
Executive Vice President(8) 2000 250,000 160,000 6,664(3) 0 30,000(6) 15,497
1999 177,019 75,000 0 0 5,000(7) 0
NAME AND PRINCIPAL ALL OTHER
POSITION COMPENSATION
---------------------------------- ------------
Mitchell E. Hersh ................ 0
Chief Executive Officer 0
0
Timothy M. Jones ................. 0
President 0
0
Barry Lefkowitz ..................
Executive Vice President
and Chief Financial Officer
Roger W. Thomas .................. 0
Executive Vice President, 0
General Counsel and Secretary 0
Michael A. Grossman .............. 0
Executive Vice President(8) 0
0
--------------------------
(1) The annual compensation portion of this table includes the dollar value of
regular annual payments of base salary, bonus and any other annual
compensation earned by each Named Executive Officer during the stated fiscal
year. Certain base salaries appear slightly higher than the contractual
amounts due to when pay periods accrued during fiscal year 2001.
(2) Represents tax gross-up payments relating to restricted stock which vested
on January 1, 2001. See footnote 4 hereto.
(3) Represents tax gross-up payments relating to restricted stock which vested
on January 1, 2000. See footnote 4 hereto.
(4) In July 1999, the Company entered into amended and restated employment
agreements with each of Mitchell E. Hersh, Timothy M. Jones, Barry Lefkowitz
and Roger W. Thomas, pursuant to which Messrs. Hersh, Jones, Lefkowitz and
Thomas were issued 62,500, 37,500, 26,094 and 22,031 shares of restricted
stock, respectively, the vesting of which is contingent upon the
satisfaction of certain performance requirements. In March 2001, Mr. Thomas
was issued 1,000 shares of restricted stock, the vesting of which is
contingent upon the satisfaction of certain performance requirements. There
are certain tax gross-up payments that will be made upon such vesting. In
addition, in December 1999 and March 2001, pursuant to the Company's
Employee Stock Option Plan, Michael A. Grossman was issued 4,000 and 18,519
shares of restricted stock, respectively, the vesting of which is contingent
upon the satisfaction of certain performance requirements. There are certain
tax gross-up payments that will be made upon such vesting. See "Employment
Contracts; Termination of Employment." The shares of restricted stock vest
with respect to the recipient on either an annual basis over a five-year
vesting period or on a cumulative basis over a seven-year maximum vesting
period. The number of shares of restricted stock scheduled to be vested and
earned on each vesting date on an annual basis, provided
19
certain performance requirements set forth in the following sentence are
satisfied, generally is equal to 15% of the restricted stock on the vesting
date in year one, 15% of the restricted stock on the vesting date in year
two, 20% of the restricted stock on the vesting date in year three, 25% of
the restricted stock on the vesting date in year four and 25% of the
restricted stock on the vesting date in year five. Vesting of the restricted
stock on an annual basis commenced January 1, 2000, provided one of the
following financial tests is met for the measurement period ending on the
last day of the Company's fiscal year immediately preceding such vesting
date: (A) the Company achieves an eight percent (8%) increase in its funds
from operations per common share or (B) stockholders achieve a twelve and
three quarters percent (12.75%) total return (dividends, assuming
reinvestment upon applicable payment date, plus stock appreciation per share
of Common Stock). The Company met the first of such tests for the
measurement period ended December 31, 1999. On January 1, 2000, the
following shares of restricted stock vested: 9,375, 5,625, 3,914, 3,304 and
600 for Messrs. Hersh, Jones, Lefkowitz, Thomas and Grossman, respectively,
together with tax gross-up payments relating thereto. The value of the
vested restricted stock and the tax gross-up payments relating thereto are
based upon a $25.8281 stock price, which was the price of the Company's
Common Stock on the date of vesting. The Company met the first of such tests
for the measurement period ended December 31, 2000. On January 1, 2001, the
following shares of restricted stock vested: 9,375, 5,625, 3,914, 3,305 and
600 for Messrs. Hersh, Jones, Lefkowitz, Thomas and Grossman, respectively,
together with tax gross-up payments relating thereto. The value of the
vested restricted stock and the tax gross-up payments relating thereto are
based upon a $28.2656 stock price, which was the price of the Company's
Common Stock on the date of vesting. The Company also met the first of such
tests for the measurement period ended December 31, 2001. On January 1,
2002, the following shares of restricted stock vested: 12,500, 7,500, 5,218,
4,406 and 6,356 for Messrs. Hersh, Jones, Lefkowitz, Thomas and Grossman,
respectively, together with tax gross-up payments relating thereto. The
value of the vested restricted stock for the measurement period ended
December 31, 2001, and the tax gross-up payments relating thereto are based
upon a $30.5225 stock price, which was the price of the Company's Common
Stock on the date of vesting.
(5) Represents an option to purchase shares of Common Stock at an exercise price
of $26.8125 per share.
(6) Represents an option to purchase shares of Common Stock at an exercise price
of $26.75 per share.
(7) Represents an option to purchase shares of Common Stock at an exercise price
of $24.625 per share.
(8) Michael A. Grossman was appointed Executive Vice President in 2000.
20
AGGREGATED OPTION/WARRANT/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/WARRANTS/SARS AT OPTIONS/WARRANTS/SARS AT
ACQUIRED VALUE FISCAL YEAR-END(#) FISCAL YEAR-END ($)
ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
Mitchell E. Hersh................. 40,000 175,325.34 379,976 120,000 168,300.00 504,900.00
Timothy M. Jones.................. 24,000 99,663.97 311,295 75,000 100,980.00 315,562.50
Barry Lefkowitz................... 20,000 81,200.14 117,137 60,000 84,150.00 252,450.00
Roger W. Thomas................... 20,000 81,200.14 117,137 60,000 84,150.00 252,450.00
Michael A. Grossman............... 12,000 40,512.35 79,832 20,000 32,785.00 84,150.00
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF PERFORMANCE OR NON-STOCK PRICE-BASED PLANS
SHARES, UNITS OTHER PERIOD -------------------------------
OR OTHER UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#) OR PAYOUT (1) ($ OR #) ($ OR #) ($ OR #)
---- ------------- ---------------- --------- -------- --------
Mitchell E. Hersh...................... 0 -- -- -- --
Timothy M. Jones....................... 0 -- -- -- --
Barry Lefkowitz........................ 0 -- -- -- --
Roger W. Thomas........................ 1,000 January 1, 2006 -- -- --
Michael A. Grossman.................... 18,519 January 1, 2006 -- -- --
EMPLOYMENT CONTRACTS; TERMINATION OF EMPLOYMENT
MITCHELL E. HERSH EMPLOYMENT AGREEMENT. On July 1, 1999, following the
appointment of Mitchell E. Hersh as Chief Executive Officer of the Company on
April 18, 1999, the Company and Mr. Hersh amended and restated Mr. Hersh's
employment agreement with the Company (the "Amended and Restated Hersh
Agreement"), providing for a constant four year term. Mr. Hersh's current annual
base salary is $1,050,000, with annual increases within the discretion of the
Executive Compensation and Option Committee. Mr. Hersh also is eligible to
receive an annual bonus, restricted share awards and options within the
discretion of the Board of Directors or the Executive Compensation and Option
Committee, as the case may be. Pursuant to the Employee Stock Option Plan,
Mr. Hersh was awarded 62,500 shares of restricted stock as of July 1, 1999, and
with respect to each tax year in which such shares of restricted stock vest and
are distributed to him, Mr. Hersh is entitled to receive a tax gross-up payment
from the Company equal to forty-three percent (43%) of the fair market value of
such restricted shares at the time of vesting, exclusive of dividends (the "Tax
Gross-Up Payments"). Mr. Hersh is required to devote substantially all of his
business time to the affairs of the Company and, subject to certain excluded
activities, generally is restricted during the term of his employment and in the
event his employment is terminated by the Company for cause (as defined in the
Amended and Restated Hersh Agreement) or by him without good reason (as defined
in the Amended and Restated Hersh Agreement), for a period of one year
thereafter, from conducting any office-service, flex or office property
development, acquisition or management activities within the continental United
States. Mr. Hersh is entitled to (i) receive the aggregate of a cash payment of
$8,000,000 (the "Fixed Amount"), reimbursement of expenses incurred prior to the
date of termination, and the Tax-Gross-Up Payments applicable to any vested
shares of restricted stock, (ii) immediate vesting of all options and incentive
compensation payments or programs otherwise subject to a vesting schedule,
(iii) require the Company to repurchase his vested options and (iv) receive
continuation of health coverage through the end of his unexpired employment
period should his employment be terminated by the Company without cause, by him
for good reason or on account of his disability (as defined in the Amended and
21
Restated Hersh Agreement) or death. Should Mr. Hersh terminate his employment on
or within six months following a change in control (as defined in the Amended
and Restated Hersh Agreement), Mr. Hersh's termination shall be treated as a
termination for good reason. In addition, upon a change in control, and
irrespective of whether Mr. Hersh's employment is terminated, the vesting of all
options and other incentive compensation is accelerated and Mr. Hersh is
entitled to receive a tax gross-up payment to cover any excise taxes payable due
to the change in control.
TIMOTHY M. JONES EMPLOYMENT AGREEMENT. On July 1, 1999, following the
appointment of Timothy M. Jones as President of the Company on April 18, 1999,
the Company and Mr. Jones amended and restated Mr. Jones' employment agreement
with the Company (the "Amended and Restated Jones Agreement"). The terms and
conditions of the Amended and Restated Jones Agreement are generally similar to
those of the Amended and Restated Hersh Agreement, except that (i) Mr. Jones'
current annual base salary is $515,000, with annual increases within the sole
discretion of the Chief Executive Officer, (ii) Mr. Jones was awarded 37,500
shares of restricted stock and (iii) the Fixed Amount Mr. Jones will receive is
$2,700,000.
BARRY LEFKOWITZ EMPLOYMENT AGREEMENT. On July 1, 1999, the Company and
Barry Lefkowitz amended and restated Mr. Lefkowitz's employment agreement with
the Company (the "Amended and Restated Lefkowitz Agreement"). The terms and
conditions of the Amended and Restated Lefkowitz Agreement are generally similar
to those of the Amended and Restated Jones Agreement, except that
(i) Mr. Lefkowitz's current annual base salary is $395,000, (ii) Mr. Lefkowitz
was awarded 26,094 shares of restricted stock and (iii) the Fixed Amount
Mr. Lefkowitz will receive is $2,500,000.
ROGER W. THOMAS EMPLOYMENT AGREEMENT. On July 1, 1999, the Company and
Roger W. Thomas amended and restated Mr. Thomas' employment agreement with the
Company (the "Amended and Restated Thomas Agreement"). The terms and conditions
of the Amended and Restated Thomas Agreement are generally similar to those of
the Amended and Restated Jones Agreement, except that (i) Mr. Thomas' current
annual base salary is $335,000, (ii) Mr. Thomas was awarded 22,031 shares of
restricted stock and (iii) the Fixed Amount Mr. Thomas will receive is
$2,500,000. Mr. Thomas was awarded an additional 1,000 shares of restricted
stock in March of 2001.
MICHAEL A. GROSSMAN EMPLOYMENT AGREEMENT. On December 5, 2000, the Company
entered into an employment agreement with Michael A. Grossman (the "Grossman
Agreement"). The terms and conditions of the Grossman Agreement are generally
similar to those of the Amended and Restated Jones Agreement, except that
(i) the Grossman Agreement provides for an initial three year term, and a
constant one year term beginning in December 2002, (ii) Mr. Grossman's current
annual base salary is $330,000, (iii) in March 2001, Mr. Grossman was awarded
18,519 shares of restricted stock in addition to the 4,000 shares of restricted
stock previously granted to him in 1999, and with respect to each tax year in
which such restricted stock vests, Mr. Grossman is entitled to receive a Tax
Gross-Up Payment, (iv) the Fixed Amount Mr. Grossman will receive is $1,000,000
and (v) should Mr. Grossman terminate his employment following a change in
control, Mr. Grossman's termination will not be treated as a termination for
good reason.
EXECUTIVE COMPENSATION AND OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no interlocking relationships involving the Company's Board of
Directors, which require disclosure under the executive compensation rules of
the SEC.
REPORT OF THE EXECUTIVE COMPENSATION AND OPTION COMMITTEE OF THE BOARD OF
DIRECTORS ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings,
22
including this Proxy Statement, in whole or in part, the following report and
the Performance Graph which follows shall not be deemed to be incorporated by
reference into any such filings.
EXECUTIVE COMPENSATION PHILOSOPHY. The Executive Compensation and Option
Committee will annually consider the appropriate combination of cash and
stock-based compensation and weigh the competitiveness of the Company's overall
compensation arrangements in relation to comparable real estate investment
trusts. From time to time, the Executive Compensation and Option Committee may
retain compensation and other management consultants to assist with, among other
things, structuring the Company's various compensation programs and determining
appropriate levels of salary, bonus and other compensatory awards payable to the
Company's executive officers and key employees, as well as to guide the Company
in the development of near-term and long-term individual performance objectives
necessary to achieve long-term profitability.
The Executive Compensation and Option Committee believes that a fundamental
goal of the Company's executive compensation program should be to provide
incentives to create value for the Company's stockholders.
BASE SALARIES. The base compensation levels for the Company's executive
officers in 2001 were set to compensate the executive officers for the functions
they will perform as well as to be consideration for certain non-competition
provisions in the employment agreements, and were based on the employment
agreements entered into in December 1997, as amended and restated in July 1999
and December 2000. The Company believes that the base salaries generally are
appropriate as base compensation to compensate the Company's executive officers
for the functions they perform and other considerations. Base salaries will be
reviewed annually and may be increased by the Executive Compensation and Option
Committee or the Chief Executive Officer, as the case may be, in accordance with
certain criteria determined primarily on the basis of growth of revenues and
funds from operations per share of Common Stock and on the basis of certain
other factors, which include (i) individual performance, (ii) the functions
performed by the executive officer and (iii) changes in the compensation peer
group in which the Company competes for executive talent. The weight given such
factors by the Executive Compensation and Option Committee may vary from
individual to individual.
ANNUAL BONUS COMPENSATION. The Company's policy of awarding annual cash
bonuses is designed to specifically relate executive pay to Company and
individual performance. As a pay-for-performance program, cash bonuses provide
financial rewards for the achievement of substantive Company objectives. Actual
awards paid are based primarily on actual Company performance. During 2001,
discretionary incentive and merit cash bonuses in recognition of services
performed during fiscal 2001 were awarded as follows: $460,000 to Mitchell E.
Hersh, $395,000 to Timothy M. Jones, $275,000 to Barry Lefkowitz, $195,000 to
Roger W. Thomas and $185,000 to Michael A. Grossman.
EMPLOYEE STOCK OPTION PLAN. The Company has two employee stock option
plans: the Employee Stock Option Plan of Mack-Cali Realty Corporation (the
"Employee Stock Option Plan") and the 2000 Employee Stock Option Plan (the "2000
Employee Stock Option Plan"). References to "Employee Option Plans" herein refer
to the Employee Stock Option Plan and the 2000 Employee Stock Option Plan,
collectively. Awards are granted under the Employee Option Plans based on a
number of factors, including (i) the executive officer's or key employee's
position in the Company, (ii) his or her performance and responsibilities,
(iii) the extent to which he or she already holds an equity stake in the
Company, (iv) equity participation levels of comparable executives and key
employees at other companies in the compensation peer group and (v) individual
contribution to the success of the Company's financial performance. However, the
Employee Option Plans do not provide any formulated method for weighing these
factors, and a decision to grant an award is based primarily upon the Executive
Compensation and Option Committee's evaluation of the past as well as the future
anticipated performance and responsibilities of the individual in question.
During 2001, no options were granted to the Company's Named Executive Officers.
The Company's Employee Option Plans relate
23
closely to traditional forms of equity oriented compensation in the commercial
real estate industry. The purpose of the option and other stock based grants is
to aid the Company in attracting and retaining quality employees, all advancing
the interest of the Company's stockholders by offering employees an incentive to
maximize their efforts to promote the Company's economic performance. In
addition, to assist the Company in retaining employees and encouraging them to
seek long-term appreciation in the value of the Company's stock, awards
generally are not exercisable immediately upon grant, but instead vest over a
specified period. Accordingly, an employee must remain with the Company for a
specified period to enjoy the full economic benefit of an award.
401(K) SAVINGS PLAN. The Company also maintains a tax-qualified 401(k)
savings plan for its eligible employees known as the "Mack-Cali Realty
Corporation 401(k) Savings/Retirement Plan" ("401(k) Plan"). Employees who have
attained age 21 and completed one-half year of service with the Company are
eligible to participate and may elect to defer up to 15% of their base pay on a
pre-tax basis to the 401(k) Plan. The Company may make discretionary matching or
profit sharing contributions to the 401(k) Plan on behalf of eligible
participants in any plan year. In 2001, the Company made discretionary profit
sharing contributions of $3,359.70 to the 401(k) Plan for the plan year ended
December 31, 2000, on behalf of each of the Named Executive Officers.
Participants are always 100% vested in their pre-tax contributions and will
begin vesting in any matching or profit sharing contributions made on their
behalf after two years of service with the Company at a rate of 20% per year
becoming 100% vested after a total of six years of service with the Company. The
assets of the 401(k) Plan are held in trust and a separate account is
established for each participant. A participant may receive a distribution of
his vested account balance in the 401(k) Plan in a single sum or installment
payment or in the form of an annuity upon his termination of service with the
Company.
CHIEF EXECUTIVE OFFICER COMPENSATION. Mitchell E. Hersh, the Chief
Executive Officer of the Company, received a base salary during 2001 of
$1,050,000 pursuant to the employment agreement entered into in December 1997,
as amended and restated in July 1999. Mr. Hersh also was paid a cash bonus of
$460,000 in recognition of services performed during fiscal 2001. Mr. Hersh
received no fees for his service as a Director of the Company during fiscal
2001. The Executive Compensation and Option Committee recognizes Mr. Hersh's
contributions to the Company's operations and attempts to ensure that the Chief
Executive Officer's compensation is commensurate with the compensation of chief
executive officers of comparable corporations. The Board of Directors deemed
such bonus and Mr. Hersh's total compensation appropriate in light of
Mr. Hersh's substantial contribution to the Company's growth and success in
2001.
EXECUTIVE COMPENSATION AND OPTION
COMMITTEE OF THE BOARD OF DIRECTORS
VINCENT TESE, CHAIRMAN
MARTIN D. GRUSS
ALAN G. PHILIBOSIAN
24
PERFORMANCE GRAPH
The following graph compares total stockholder returns from December 31,
1996 through December 31, 2001 to the Standard & Poor's 500 Index ("S&P 500")
and to the National Association of Real Estate Investment Trusts, Inc.'s Equity
REIT Total Return Index ("NAREIT"). The graph assumes that the value of the
investment in the Company's Common Stock and in the S&P 500 and NAREIT indices
was $100 at December 31, 1996 and that all dividends were reinvested. The
Company's Common Stock's price on December 31, 1996 (on which the graph is
based) was $30.875. The stockholder return shown on the following graph is not
necessarily indicative of future performance.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG MACK-CALI REALTY
CORPORATION, THE S&P 500 INDEX AND THE NAREIT EQUITY REIT INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
Mack-Cali 100 140.29 112.05 102.17 122.31 144.69
S&P 500 100 133.36 171.48 207.56 188.66 166.24
NAREIT 100 120.26 99.21 94.63 119.58 136.24
25
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP served as the Company's independent accountants
for the fiscal year ended December 31, 2001, and has been appointed by the Audit
Committee and the Board of Directors to continue as the Company's independent
accountants for the fiscal year ending December 31, 2002. In the event that
ratification of this appointment of auditors is not approved by the affirmative
vote of a majority of votes cast on the matter, then the appointment of
independent accountants will be reconsidered by the Board of Directors. Unless
marked to the contrary, proxies received will be voted for ratification of the
appointment of PricewaterhouseCoopers LLP as the Company's independent
accountants for the fiscal year ending December 31, 2002.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the annual meeting. The representative will have an opportunity to make a
statement and will be able to respond to appropriate questions.
Your ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending December 31, 2002
does not preclude the Board of Directors of the Company from terminating its
engagement of PricewaterhouseCoopers and retaining a new independent accountant,
if it determines that such an action would be in the best interests of the
Company. If the Company elects to retain a new independent accountant, such
accountant will be another "Big 5" accounting firm.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Assuming a quorum is present, the affirmative vote of a majority of the
votes cast at the Annual Meeting, either in person or by proxy, is required for
approval of this proposal. Abstentions and broker non-votes will have no effect
on the outcome of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2002.
AUDIT FEES
The aggregate fees incurred by the Company for professional services
rendered by PricewaterhouseCoopers LLP in connection with the audit of the
Company's fiscal 2001 financial statements and the review of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2001, June 30, 2001 and September 30, 2001 were
$365,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No services were performed by, or fees billed for the professional services
rendered by, PricewaterhouseCoopers LLP in connection with financial information
systems design and implementation projects for the year ended December 31, 2001.
ALL OTHER FEES
All other fees incurred by the Company for services rendered by
PricewaterhouseCoopers LLP for the year ended December 31, 2001 aggregated
$176,378.
The Audit Committee considered whether the provision of services described
above under "All Other Fees" is compatible with maintaining
PricewaterhouseCoopers LLP's independence, and concluded that it was compatible.
26
PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO THE 2000 EMPLOYEE STOCK OPTION PLAN TO
INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER.
The Board of Directors and the stockholders of the Company approved the
adoption of the 2000 Employee Stock Option Plan on September 11, 2000. An
aggregate of 2,500,000 shares of the Company's Common Stock were originally
authorized for issuance in connection with grants under the 2000 Employee Stock
Option Plan. As of March 15, 2002, 840,616 of such shares remained available for
future grants, 1,366,453 of such shares are allocated to options previously
granted but unexercised and 205,405 of such shares have been issued in
connection with the exercise of options previously granted. In addition, to
date, 87,526 shares of restricted stock and no SARs have been awarded under the
2000 Employee Stock Option Plan. The Board has amended the 2000 Employee Stock
Option Plan, subject to stockholder approval, to increase the number of shares
of Common Stock of the Company authorized for issuance of grants under the 2000
Employee Stock Option Plan by 1,500,000, to a total of 4,000,000. The Company
intends to register the 1,500,000 share increase on Form S-8 under the
Securities Act of 1933, as amended, as soon as practicable after receiving
stockholder approval.
The Board of Directors believes that approval of this amendment to the 2000
Employee Stock Option Plan is in the best interests of the Company and its
stockholders because the availability of an adequate number of shares reserved
for issuance under the 2000 Employee Stock Option Plan and the ability to grant
stock options and make other stock-based awards thereunder is an important
factor in attracting, motivating and retaining qualified personnel essential to
the success of the Company.
SUMMARY OF THE PROVISIONS OF THE 2000 EMPLOYEE STOCK OPTION PLAN, AS AMENDED
The following summary of the 2000 Employee Stock Option Plan, as amended, is
qualified in its entirety by the specific language of the 2000 Employee Stock
Option Plan, a copy of which has been publicly filed with the Securities and
Exchange Commission and is available to any stockholder upon request.
GENERAL. The purposes of the 2000 Employee Stock Option Plan are to attract
and retain the best personnel for positions of responsibility and to provide
additional incentives to employees, consultants and advisors whose efforts are
deemed worthy of encouragement to promote the growth and success of the Company.
The 2000 Employee Stock Option Plan provides for the grant of incentive stock
options, within the meaning of Section 422 of the Code to employees of the
Company and for the grant of nonstatutory stock options, stock appreciation
rights ("SARs") and restricted stock to employees, consultants and advisors of
the Company. The Board of Directors has amended the 2000 Employee Stock Option
Plan, subject to stockholder approval, to increase the number of shares
authorized for issuance thereunder by 1,500,000, from 2,500,000 to 4,000,000. In
the event of any stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, exchange of shares, combination, or like change in the
capital structure of the Company, appropriate adjustments will be made to the
shares subject to the 2000 Employee Stock Option Plan and to any outstanding
awards. To the extent any outstanding option under the 2000 Employee Stock
Option Plan expires or terminates prior to its exercise in full, or if any
shares of restricted stock or SARs are forfeited, the shares of Common Stock
underlying such option, SARs or restricted stock will be returned to the 2000
Employee Stock Option Plan and made available for future grants.
The Company also utilizes its Employee Stock Option Plan adopted in 1994. An
aggregate of 4,980,188 shares of the Company's Common Stock are currently
authorized for issuance in connection with grants under the Employee Stock
Option Plan. As of March 15, 2002, 395,527 of such shares remained available for
future grants, 2,417,539 of such shares are allocated to options previously
granted but unexercised and 1,960,629 of such shares have been issued in
connection with the exercise
27
of options previously granted. In addition, to date, 206,493 shares of
restricted stock and no SARs have been awarded under the Employee Stock Option
Plan.
ADMINISTRATION. The 2000 Employee Stock Option Plan is administered by the
Executive Compensation and Option Committee of the Board of Directors of the
Company. With respect to the participation of individuals who are subject to
Section 16 of the Exchange Act, the 2000 Employee Stock Option Plan is
administered in compliance with the requirements of Rule 16b-3 under the
Exchange Act. Subject to the provisions of the 2000 Employee Stock Option Plan,
the Executive Compensation and Option Committee determines the persons to whom
grants of options, SARs, and shares of restricted stock are to be made, the
number of shares of Common Stock to be covered by each grant and all other terms
and conditions of the grant. If an option is granted, the Executive Compensation
and Option Committee determines whether the option is an incentive stock option
or a nonstatutory stock option, the option's vesting and exercisability, the
amount and type of consideration to be paid to the Company upon the option's
exercise and the other terms and conditions of the grant. The terms and
conditions of restricted stock and SAR awards are also determined by the
Executive Compensation and Option Committee. The Executive Compensation and
Option Committee has the responsibility to interpret the 2000 Employee Stock
Option Plan and to make determinations with respect to all awards granted under
the 2000 Employee Stock Option Plan. All determinations of the Executive
Compensation and Option Committee are final and binding on all persons having an
interest in the 2000 Employee Stock Option Plan or in any award made under the
2000 Employee Stock Option Plan. The costs and expenses of administering the
2000 Employee Stock Option Plan are borne by the Company.
ELIGIBILITY. All employees, consultants and advisors who in the judgment of
the Executive Compensation and Option Committee are considered important to the
future of the Company (including officers and directors of the Company who are
also employees) are eligible to participate in the 2000 Employee Stock Option
Plan. Non-employee directors of the Company may not participate.
TERMS AND CONDITIONS OF OPTION GRANTS. Each option granted under the 2000
Employee Stock Option Plan is evidenced by a written agreement between the
Company and the optionee specifying the number of shares of the Company's Common
Stock subject to the option and all of the other terms and conditions of the
option, consistent with the requirements of the 2000 Employee Stock Option Plan.
The per share exercise price of an incentive stock option may not be less than
100% of the fair market value of a share of Common Stock on the date of the
option's grant and the term of any such option shall expire on the tenth
anniversary of the date of the option's grant. In addition, the per share
exercise price of any incentive stock option granted to a person who at the time
of the grant owns stock possessing more than 10% of the total combined voting
power or value of all classes of stock of the Company must be at least 110% of
the fair market value of a share of the Company's Common Stock on the date of
grant and such option shall expire on the fifth anniversary of the date of the
option's grant. After the Company grants an option pursuant to the 2000 Employee
Stock Option Plan, such option may not be re-priced by the Company.
Generally, options may be exercised by the payment of the exercise price in
cash, certified check or wire transfer, or, subject to the approval of the
Executive Compensation and Option Committee, in cash equivalents, such as
through the tender of shares of the Company's Common Stock owned by the optionee
having a fair market value not less than the exercise price, by the assignment
of the proceeds of a sale of some or all of the shares of Common Stock being
acquired upon the exercise of the option, by way of a loan or in any combination
of these methods.
Options granted under the 2000 Employee Stock Option Plan will become
exercisable at such times as may be specified by the Executive Compensation and
Option Committee, and generally become exercisable in five equal annual
installments on December 31 subject to the optionee's continued employment or
service with the Company. The maximum term of options granted under the
28
2000 Employee Stock Option Plan is ten years. Options are generally
nontransferable by the optionee other than by will or by the laws of descent and
distribution and are exercisable during the optionee's lifetime only by the
optionee, or his guardian or legal representative, except that, subject to
certain restrictions, in respect of incentive options, an optionee may, if
permitted by the Executive Compensation and Option Committee in its discretion,
transfer an award or any portion thereof, to one or more members of the
optionee's immediate family.
TERMS AND CONDITIONS OF OTHER AWARDS. Each SAR or restricted stock award
made under the 2000 Employee Stock Option Plan is also evidenced by a written
agreement between the Company and the award holder specifying the number of
shares of Common Stock subject to the award and the other necessary terms and
conditions, consistent with the requirements of the 2000 Employee Stock Option
Plan. A SAR may be granted separately or in conjunction with the grant of an
option. The terms included in the written agreements evidencing these awards are
summarized below.
If a SAR is granted, the written agreement will specify if the SAR is being
granted separately or with respect to an outstanding option. In general, if a
SAR is granted with respect to an option, the exercise of the option will cancel
the SAR and the exercise of the SAR will cancel the option. An agreement
evidencing the SAR will also describe when the SAR will become vested and
exercisable, subject to the award holder's continued employment by the Company,
and the per share grant price. Upon settlement of the SAR award, occurring at
exercise, the award holder will receive a cash distribution of the difference
between the grant price of the Common Stock underlying the SAR and its fair
market value on the date of exercise.
If shares of restricted stock are awarded, the agreement will specify the
per share grant price of the Common Stock subject to the restrictions, if any,
the conditions that will result in the automatic and complete forfeiture of the
shares and the time and manner in which the restrictions will lapse, subject to
the award holder's continued employment by the Company. Upon settlement of the
restricted stock award, occurring upon the lapse of the restrictions, the shares
of Common Stock subject to the award will become immediately distributable to
the participant.
At the close of trading on April 1, 2002, the closing price of the Company's
Common Stock was $33.99.
CHANGE OF CONTROL PROVISIONS. In general, a "Change of Control" will be
deemed to occur upon any of the following events in which the stockholders of
the Company do not retain, directly or indirectly, at least thirty percent of
the voting power of the Company or its successor: (i) the direct or indirect
sale or exchange by the stockholders of the Company of all or substantially all
of the stock of the Company, (ii) a merger in which the Company is a party, or
(iii) the sale, exchange or transfer of all or substantially all of the assets
of the Company, or upon the purchase of any Common Stock pursuant to a tender or
exchange offer other than an offer by the Company, or upon the acquisition by a
person or group of persons of thirty percent or more of the Common Stock
outstanding immediately prior to such acquisition. If a participant terminates
employment within six months following a "Change of Control," all of the options
and SARs previously granted to him shall automatically become vested and
immediately exercisable. Upon a "Change of Control" the restrictions applicable
to the restricted stock will automatically lapse and the Common Stock subject to
the restricted stock award will become immediately distributable to the
participant.
TERMINATION OR AMENDMENT OF THE 2000 EMPLOYEE STOCK OPTION PLAN. Unless
sooner terminated, no awards may be granted under the 2000 Employee Stock Option
Plan after September 11, 2010. The Board of Directors may terminate or amend the
2000 Employee Stock Option Plan at any time, but the Board of Directors may not
amend the 2000 Employee Stock Option Plan to increase the total number of shares
of Common Stock reserved for issuance of awards or adopt any amendment that
would materially increase the cost of the 2000 Employee Stock Option Plan to the
Company without
29
stockholder approval. No amendment may be adopted that would adversely affect an
outstanding option or award without the participant's consent.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE 2000 EMPLOYEE STOCK OPTION
PLAN
The following summary is intended only as a general guide as to the federal
income tax consequences under current law with respect to participation in the
2000 Employee Stock Option Plan and does not attempt to describe all possible
federal or other tax consequences of such participation. Furthermore, the tax
consequences of awards made under the 2000 Employee Stock Option Plan are
complex and subject to change, and a taxpayer's particular situation may be such
that some variation of the described rules is applicable.
INCENTIVE STOCK OPTIONS. Options designated as incentive stock options are
intended to fall within the provisions of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). An optionee recognizes no taxable income
for regular income tax purposes as the result of the grant or exercise of such
an option. If an optionee does not dispose of his shares for two years following
the date the option was granted or within one year following the transfer of the
shares upon exercise of the option, the gain on the sale of the shares (which is
the difference between the sale price and the purchase price of the shares) will
be taxed as long-term capital gain. If an optionee satisfies such holding
periods, upon a sale of the shares, the Company will not be entitled to any
deduction for federal income tax purposes. If an optionee disposes of the shares
within two years after the date of grant or within one year from the date of
exercise (a "disqualifying disposition"), the difference between the fair market
value of the shares on the date of exercise and the option exercise price (not
to exceed the gain realized on the sale if the disposition is a transaction with
respect to which a loss, if sustained, would be recognized) will be taxed as
ordinary income at the time of the disqualifying disposition. Any gain in excess
of that amount will be a capital gain. If a loss is recognized, there will be no
ordinary income, and such loss will be a capital loss. A capital gain or loss
will be long-term if the optionee's holding period is more than 12 months. Any
ordinary income recognized by the optionee upon the disqualifying disposition of
the shares should be deductible by the Company for federal income tax purposes,
except to the extent such deduction is limited by Section 162(m) of the Code.
Section 162(m) of the Code disallows a public company's deductions for certain
employee remuneration exceeding $1,000,000 per year.
NONSTATUTORY STOCK OPTIONS. Options that do not qualify as incentive stock
options are nonstatutory stock options and have no special tax status. An
optionee generally recognizes no taxable income as the result of the grant of
such an option.
Upon the exercise of a nonstatutory stock option, the optionee normally
recognizes ordinary income in the amount of the difference between the option
exercise price and the fair market value of the shares on the determination date
(which is generally the date of exercise). If the optionee is an employee, such
ordinary income generally is subject to withholding of income and employment
taxes. The "determination date" is the date on which the option is exercised
unless the sale of the shares at a profit would subject the optionee to suit
under Section 16(b) of the Exchange Act, in which case the determination date is
the date the sale of the shares at a profit would no longer subject the optionee
to suit under Section 16(b) of the Exchange Act. (Section 16(b) of the Exchange
Act generally is applicable only to officers, directors and beneficial owners of
more than 10% of the Common Stock of the Company.) Upon the sale of stock
acquired by the exercise of a nonstatutory stock option, any gain or loss, based
on the difference between the sale price and the fair market value on the date
of recognition of income, will be taxed as capital gain or loss. A capital gain
or loss will be long-term if the optionee's holding period is more than
12 months. No tax deduction is available to the Company with respect to the
grant of a nonstatutory option or the sale of the stock acquired pursuant to
such grant. The Company should be entitled to a deduction equal to the amount of
ordinary income
30
recognized by the optionee as a result of the exercise of a nonstatutory option,
except to the extent such deduction is limited by Section 162(m) of the Code.
SARS AND RESTRICTED STOCK AWARDS. A participant will not be required to
recognize any income for federal income tax purposes upon the grant of a SAR or
shares of restricted stock. However, upon settlement of the SAR award (the date
of its exercise), the participant will be required to recognize as ordinary
income the difference between the strike price and the fair market value on the
date of its exercise of the shares of Common Stock on which the SAR award is
based. This amount will be taxed at ordinary federal income tax rates. Upon
settlement of the restricted stock award (the date the shares become
distributable), the participant will be required to recognize as ordinary income
the fair market value of the shares of Common Stock on such date. The Company
should be entitled to a deduction equal to the amount of the ordinary income
recognized by the participant upon the settlement of the SAR or restricted stock
award to the extent permitted by Section 162(m) of the Code.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Assuming a quorum is present, the affirmative vote of a majority of the
votes cast on this proposal at the Annual Meeting is required for approval of
this Proposal No. 3, provided that the total votes cast on this proposal
represent 50% in interest of all securities entitled to vote on this proposal.
For purposes of the vote on this Proposal No. 3, an abstention or a broker
non-vote will have the effect of a vote against this proposal unless the total
votes cast on this proposal represent more than 50% in interest of all
securities entitled to vote on this proposal, in which event neither an
abstention nor a broker non-vote will have any effect on the result of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE INCREASE IN THE
SHARE RESERVE OF THE 2000 EMPLOYEE STOCK OPTION PLAN BY 1,500,000 SHARES.
31
PROPOSAL NO. 4
APPROVAL OF AN AMENDMENT TO THE 2000 DIRECTOR STOCK OPTION PLAN TO
INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER.
The Board of Directors and the stockholders of the Company approved the
adoption of the 2000 Director Stock Option Plan on September 11, 2000. An
aggregate of 200,000 shares of the Company's Common Stock are currently
authorized for issuance in connection with grants under the 2000 Director Stock
Option Plan. As of March 15, 2002, 200,000 of such shares remained available for
future grants. The Board has amended the 2000 Director Stock Option Plan,
subject to stockholder approval, to increase the number of shares of Common
Stock of the Company authorized for issuance of grants under the 2000 Director
Stock Option Plan by 150,000, to a total of 350,000. The Company intends to
register the 150,000 share increase on Form S-8 under the Securities Act of
1933, as amended, as soon as practicable after receiving stockholder approval.
The Board of Directors believes that approval of this amendment to the 2000
Director Stock Option Plan is in the best interests of the Company and its
stockholders because the availability of an adequate number of shares reserved
for issuance under the 2000 Director Stock Option Plan and the ability to grant
stock options and make other stock-based awards thereunder is an important
factor in attracting, motivating and retaining qualified personnel essential to
the success of the Company.
SUMMARY OF THE PROVISIONS OF THE 2000 DIRECTOR STOCK OPTION PLAN, AS AMENDED
The following summary of the 2000 Director Stock Option Plan, as amended, is
qualified in its entirety by the specific language of the 2000 Director Stock
Option Plan, a copy of which has been publicly filed with the Securities and
Exchange Commission and is available to any stockholder upon request.
GENERAL. The 2000 Director Stock Option Plan is designed to enable the
Company to attract and retain persons of outstanding competence to serve as
members of the Board of Directors and the Advisory Board of the Company and to
provide a direct link between directors' or Advisory Board members' compensation
and stockholder value. Participation in the 2000 Director Stock Option Plan is
restricted to non-employee directors and Advisory Board members and only
nonstatutory options to purchase shares of Common Stock will be granted. The
Board of Directors has amended the 2000 Director Stock Option Plan, subject to
stockholder approval, to increase the number of shares authorized for issuance
thereunder by 150,000, from 200,000 to 350,000. The 2000 Director Stock Option
Plan also provides that in the event of any stock dividend, recapitalization,
reorganization, merger, consolidation, split-up, exchange of shares,
combination, or like change in the capital structure of the Company, appropriate
adjustments will be made to the shares of Common Stock subject to the 2000
Director Stock Option Plan and to any outstanding awards. To the extent any
outstanding option expires or terminates prior to its exercise in full, the
shares of Common Stock underlying such option will be returned to the 2000
Director Stock Option Plan and made available for future grants.
The Company also utilizes its Director Stock Option Plan adopted in 1994. An
aggregate of 400,000 shares of the Company's Common Stock are currently
authorized for issuance in connection with grants under the Director Stock
Option Plan. As of March 15, 2002, 61,000 of such shares remained available for
future grants, 320,000 of such shares are allocated to options previously
granted but unexercised and 19,000 of such shares have been issued in connection
with the exercise of options previously granted.
ADMINISTRATION. The 2000 Director Stock Option Plan is administered by the
Executive Compensation and Option Committee of the Board of Directors of the
Company in compliance with the requirements of Rule 16b-3 of the Exchange Act.
Initial stock option grants, including all conditions of such grants, that are
made to eligible non-employee directors under the 2000 Director Stock Option
32
Plan are non-discretionary and are dictated by the written terms of the 2000
Director Stock Option Plan. Under the 2000 Director Stock Option Plan, upon an
eligible director's initial election or appointment to the Board of Directors of
the Company, the director is automatically granted a non-statutory stock option
to purchase 5,000 shares of Common Stock at its fair market value on the date of
grant. The Executive Compensation and Option Committee may make additional
discretionary options grants to eligible directors and Advisory Board members,
consistent with the terms of the 2000 Director Stock Option Plan. All options
granted under the 2000 Director Stock Option Plan are non-statutory stock
options. Subject to certain specific limitations and restrictions set forth in
the 2000 Director Stock Option Plan, the Executive Compensation and Option
Committee has the authority to interpret the 2000 Director Stock Option Plan, to
prescribe, amend and rescind rules and regulations, if any, relating to the 2000
Director Stock Option Plan and to make all determinations necessary or advisable
for the administration of the 2000 Director Stock Option Plan. The costs and
expenses of administering the 2000 Director Stock Option Plan are borne by the
Company.
ELIGIBILITY. Participation in the 2000 Director Stock Option Plan is
limited to persons who serve as members of the Board of Directors and the
Advisory Board of the Company and who, at the time of the option grant, are not
employees of the Company. For purposes of determining the exercise period of
grants under the 2000 Director Stock Option Plan, any member of the Board of
Directors who resigns as a director in order to become a member of the Advisory
Board shall be deemed during his period of service as a member of the Advisory
Board to be a continuing member of the Board of Directors and any member of the
Advisory Board who resigns as a member of the Advisory Board to become a member
of the Board of Directors shall be deemed during his period of service as a
member of the Board of Directors to be a continuing member of the Advisory
Board.
TERMS AND CONDITIONS OF OPTION GRANTS. The 2000 Director Stock Option Plan
provides for each non-employee director automatically to receive, upon his or
her initial election to office or appointment to the Board of Directors, an
option to acquire 5,000 shares of Common Stock at a price equal to the fair
market value at the date of the grant of the shares of Common Stock subject to
such option. At the close of trading on April 1, 2002, the closing price of the
Company's Common Stock was $33.99. Pursuant to the terms of the 2000 Director
Stock Option Plan, each automatic option shall become vested and exercisable on
the earlier of (i) the first anniversary of the grant date, provided the
director remains in the continuous service of the Board of Directors, during
such period or (ii) upon the director's termination of the director's service
due to retirement, death or disability. If a director's service is terminated
for "cause" all awards granted to the director under the 2000 Director Stock
Option Plan will automatically be forfeited. In the event a director's service
on the Board of Directors terminates, other than due to retirement, death or
disability or termination for "cause", before the options have vested, any
unvested option shall be canceled and the director shall have no further right
or interest in the forfeited option. The 2000 Director Stock Option Plan does
not provide for the vesting of outstanding options to be accelerated upon a
"Change of Control" of the Company. Unless terminated earlier each option shall
remain outstanding until the tenth anniversary of the grant date.
All of the terms and conditions of option grants are specified in a written
agreement between the Company and the optionee. In addition, the Executive
Compensation and Option Committee may make additional discretionary option
grants to eligible directors and members of the Advisory Board the terms of
which shall be determined by the Executive Compensation and Option Committee,
consistent with the provisions of the 2000 Director Stock Option Plan and
specified in a written agreement. Neither the existence of the 2000 Director
Stock Option Plan, nor the granting of an option thereunder, will be construed
to limit, in any way, the right of the Company or its stockholders to elect a
person to serve as a director or the right of the Board of Directors to appoint
a person to serve as a member of the Advisory Board. In addition, nothing in the
2000 Director Stock Option Plan shall be construed to give any director or
Advisory Board member the right to a grant of an option under the
33
2000 Director Stock Option Plan unless the express terms and conditions of the
2000 Director Stock Option Plan are satisfied.
Options may be exercised by the payment of the exercise price in cash,
certified check or wire transfer or, subject to the approval of the Executive
Compensation and Option Committee, in cash equivalents, such as through the
tender of shares of the Company's Common Stock owned by the optionee having a
fair market value not less than the exercise price, by the assignment of the
proceeds of a sale of some or all of the shares of Common Stock being acquired
upon the exercise of the option, by way of a loan or in any combination of these
methods. Options are generally nontransferable by the optionee other than by
will or by the laws of descent and distribution and are exercisable during the
optionee's lifetime only by the optionee.
TERMINATION OR AMENDMENT OF THE 2000 DIRECTOR STOCK OPTION PLAN. Unless
sooner terminated, no awards may be granted under the 2000 Director Stock Option
Plan after September 11, 2010. The Board of Directors may terminate or amend the
2000 Director Stock Option Plan at any time, but the Board of Directors may not
amend the 2000 Director Stock Option Plan to increase the total number of shares
of Common Stock reserved for issuance of awards or adopt any amendment that
would materially increase the cost of the 2000 Director Stock Option Plan to the
Company without stockholder approval. No amendment may be adopted that would
adversely affect an outstanding option or award without the participant's
consent.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE 2000 DIRECTOR STOCK OPTION
PLAN.
In general, no gain or loss is recognized by the option holder at the time
an option is granted under the 2000 Director Stock Option Plan. Upon the
exercise of an option, the difference between the fair market value of the
Common Stock on the date of exercise and the option price will be taxable as
compensation income to the option holder and the Company would be entitled to a
deduction for federal income tax purposes for the same amount. Upon a subsequent
sale or exchange of stock acquired pursuant to the exercise of an option, the
option holder would have taxable gain or loss, measured by the difference
between the amount realized on the disposition and the tax basis of such shares.
The foregoing statements are intended to summarize the general principles of
current federal income tax law applicable to options that may be granted under
the 2000 Director Stock Option Plan. The tax consequences of awards made under
the 2000 Director Stock Option Plan are complex, subject to change and may vary
depending on the taxpayer's particular circumstances.
VOTE REQUIRED AND BOARD OF DIRECTORS RECOMMENDATION
Assuming a quorum is present, the affirmative vote of a majority of the
votes cast on this proposal at the Annual Meeting is required for approval of
this Proposal No. 4, provided that the total votes cast on this proposal
represent 50% in interest of all securities entitled to vote on this proposal.
For purposes of the vote on this Proposal No. 4, an abstention or a broker
non-vote will have the effect of a vote against this proposal unless the total
votes cast on this proposal represent more than 50% in interest of all
securities entitled to vote on this proposal, in which event neither an
abstention nor a broker non-vote will have any effect on the result of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE INCREASE IN THE
SHARE RESERVE OF THE 2000 DIRECTOR STOCK OPTION PLAN BY 150,000 SHARES.
34
PROPOSAL NO. 5
STOCKHOLDER PROPOSAL
Thomas J. Harrington, on behalf of the Massachusetts State Carpenters
Pension Fund, 350 Fordham Road, Wilmington, MA 01887, the owner of 760 shares of
the Company's common stock, has notified the Company of his intention to
introduce the following proposal at the Annual Meeting. The proposal and the
proponent's supporting statement, for which the Board of Directors and the
Company accept no responsibility, appear below in italics.
THE BOARD OF DIRECTORS OF THE COMPANY STRONGLY OPPOSES ADOPTION OF THE
PROPOSAL AND ASKS STOCKHOLDERS TO REVIEW THE BOARD'S RESPONSE, WHICH FOLLOWS THE
PROPOSAL AND THE PROPONENT'S SUPPORTING STATEMENT.
"RESOLVED, THAT THE SHAREHOLDERS OF MACK-CALI REALTY CORPORATION ("COMPANY")
REQUEST BUT NOT REQUIRE THAT THE BOARD OF DIRECTORS SEEK SHAREHOLDER APPROVAL
FOR FUTURE EXECUTIVE OFFICER SEVERANCE PAY AGREEMENTS, COMMONLY REFERRED TO AS
"GOLDEN PARACHUTES."
SUPPORTING STATEMENT
SENIOR EXECUTIVE SEVERANCE OR TERMINATION PAY AGREEMENTS, COMMONLY REFERRED
TO AS "GOLDEN PARACHUTES," HAVE CONTRIBUTED TO THE PUBLIC AND SHAREHOLDER
PERCEPTION THAT MANY SENIOR EXECUTIVE OFFICERS OF MAJOR COMPANIES ARE MORE
CONCERNED WITH THEIR OWN PERSONAL INTEREST THAN THEIR BOARD RESPONSIBILITIES TO
THE COMPANY THEY ARE EMPOWERED TO LEAD.
OUR COMPANY CURRENTLY HAS VERY GENEROUS SEVERANCE AND CHANGE-IN-CONTROL
AGREEMENTS WITH KEY EXECUTIVES THAT PROVIDE FOR PAYMENTS AND OTHER BENEFITS IF
THE EXECUTIVE IS TERMINATED WITHOUT "CAUSE" OR IF A CHANGE IN CONTROL OCCURS.
FOR EXAMPLE, THE COMPANY'S MOST RECENT PROXY STATEMENT DESCRIBES THE PAYMENTS TO
BE MADE TO CHIEF EXECUTIVE OFFICER MITCHELL HERSH:
MR. HERSH IS ENTITLED TO (I) RECEIVE THE AGGREGATE OF A CASH PAYMENT OF
$8,000,000 (THE "FIXED AMOUNT"), REIMBURSEMENT OF EXPENSES INCURRED PRIOR
TO THE DATE OF TERMINATION, AND THE TAX-GROSS-UP PAYMENTS APPLICABLE TO
ANY VESTED SHARES OF RESTRICTED STOCK, (II) IMMEDIATE VESTING OF ALL
OPTIONS AND INCENTIVE COMPENSATION PAYMENTS OR PROGRAMS OTHERWISE SUBJECT
TO A VESTING SCHEDULE, (III) REQUIRE THE COMPANY TO REPURCHASE HIS VESTED
OPTIONS AND (IV) RECEIVE CONTINUATION OF HEALTH COVERAGE THROUGH THE END
OF HIS UNEXPIRED EMPLOYMENT PERIOD SHOULD HIS EMPLOYMENT BE TERMINATED BY
THE COMPANY WITHOUT CAUSE, BY HIM FOR GOOD REASON OR ON ACCOUNT OF HIS
DISABILITY (AS DEFINED IN THE AMENDED AND RESTATED HERSH AGREEMENT) OR
DEATH. SHOULD MR. HERSH TERMINATE HIS EMPLOYMENT ON OR WITHIN SIX MONTHS
FOLLOWING A CHANGE IN CONTROL (AS DEFINED IN THE AMENDED AND RESTATED
HERSH AGREEMENT), MR. HERSH'S TERMINATION SHALL BE TREATED AS A
TERMINATION FOR GOOD REASON. IN ADDITION, UPON A CHANGE IN CONTROL, AND
IRRESPECTIVE OF WHETHER MR. HERSH'S EMPLOYMENT IS TERMINATED, THE VESTING
OF ALL OPTIONS AND OTHER INCENTIVE COMPENSATION SHALL BE ACCELERATED AND
MR. HERSH WOULD BE ENTITLED TO RECEIVE A TAX GROSS-UP PAYMENT TO COVER
ANY EXCISE TAXES PAYABLE DUE TO THE CHANGE IN CONTROL.
GOLDEN PARACHUTE ARRANGEMENTS ARE ALSO OFFERED TO PRESIDENT TIMOTHY JONES,
WITH A "FIXED AMOUNT" OF $2,700,000; EXECUTIVE VICE PRESIDENT BARRY LEFKOWITZ
("FIXED AMOUNT" OF $2,500,000); AND EXECUTIVE VICE PRESIDENT ROGER THOMAS
("FIXED AMOUNT" OF $2,500,000).
THE JUSTIFICATION OFFERED FOR THE GRANTING OF THESE GENEROUS BENEFITS IS
THAT THEY ARE NECESSARY TO ATTRACT AND RETAIN TALENTED EXECUTIVES AND KEEP THEM
MOTIVATED TO ACHIEVE STRONG PERFORMANCE. WE BELIEVE THAT THE VERY GENEROUS
COMPENSATION THESE INDIVIDUALS RECEIVE AS WELL AS THEIR FIDUCIARY DUTIES TO
SHAREHOLDERS SHOULD PROVIDE SUFFICIENT MOTIVATION FOR THESE EXECUTIVES TO
PERFORM THEIR DUTIES. AS REGARDS ANY FUTURE EXECUTIVE SEVERANCE AGREEMENTS, WE
ALSO BELIEVE THAT SHAREHOLDERS SHOULD BE GIVEN THE RIGHT TO APPROVE OR
DISAPPROVE THEM.
35
WE URGE ALL SHAREHOLDERS TO VOTE "FOR" THIS PROPOSAL URGING THE BOARD TO
ALLOW SHAREHOLDERS AN OPPORTUNITY TO EVALUATE THE MERITS OF FUTURE EXECUTIVE
OFFICER SEVERANCE AGREEMENTS BEFORE SUCH GENEROUS BENEFITS ARE GRANTED.
WE URGE YOU TO VOTE FOR THIS PROPOSAL"
THE BOARD OF DIRECTORS' STATEMENT AGAINST STOCKHOLDER PROPOSAL
The Board of Directors believes that the proposal submitted by the proponent
is not in your best interests as a stockholder of the Company for the reasons
set forth below. We recommend that you vote AGAINST the proposal.
The Company's Executive Compensation and Option Committee (the "Committee"),
an independent Board committee of non-employee directors, oversees executive
compensation. The Company's executive compensation packages are designed to
attract and retain highly qualified executives and to motivate them to maximize
stockholder returns. The Committee recognizes its responsibility to make
executive compensation decisions in a manner it believes to be in the best
interest of the Company and its stockholders. The Committee, on an ongoing
basis, devotes considerable time and effort to compensation issues, including
the balance to be struck among the various objectives of that program. The Board
of Directors believes that it is ultimately in the stockholders' best interest
that the responsibility for this ongoing process continue to be vested in the
Committee, subject to the ultimate authority of the Board of Directors.
In addition, it would be detrimental to the Company's interests to require
that, whenever a severance arrangement with a current or prospective executive
officer is proposed, the Company must first convene a stockholders meeting to
seek approval of the severance arrangement prior to finalizing a key term of the
executive's employment. In such a circumstance, we would have to wait until the
next scheduled annual meeting or call a special meeting of stockholders for this
purpose--a process that customarily takes many months and is an expensive
process for the Company. This delay and the uncertainty as to whether the
severance arrangement would ultimately be approved by stockholders could impair
the Company's ability to attract or retain talented executives to manage its
business. In addition, such delay and uncertainty would make it difficult for
the Company to compete with other similarly situated companies in recruiting
executives because executive candidates may not want to engage in this timely
and burdensome process. It is for these reasons that public companies do not
typically operate in this manner. We believe that it is better if the Company's
Board and its committees have the flexibility and authority to determine the
terms and levels of severance benefits when they decide to hire or retain any of
the Company's executive officers.
Many other public companies in the United States have severance and other
arrangements for their officers and employees that provide for payments and
other benefits upon termination, including terminations that follow a change in
control. Executive Compensation Advisory Services reported in 1999 that
approximately 84% of Fortune 1000 companies had provisions for severance
payments, accelerated vesting of options, or both, following a change in
control. When used judiciously, as in the case of the Company, we believe that
these arrangements protect stockholder interests by helping stabilize management
during the periods of uncertainty that accompany changes of control.
In order to retain and attract top quality management, the Board of
Directors needs to be able to enter into severance arrangements with such
personnel promptly, without the attendant delay of calling a special
stockholders meeting.
Pursuant to Maryland law, companies are managed by their boards of directors
and not by their stockholders. Thus, even if Proposal No. 5 is adopted, it will
have no binding legal effect, and the Board of Directors of the Company may
choose not to abide by it.
36
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Assuming a quorum is present, the affirmative vote of a majority of the
votes cast at the Annual Meeting, either in person or by proxy, is required for
approval of this proposal. Abstentions and broker non-votes will have no effect
on the outcome of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
SUBMISSION OF STOCKHOLDER PROPOSALS
The Company intends to hold its 2003 annual meeting of stockholders in
May 2003. To be considered for inclusion in the Company's notice of meeting and
proxy statement for, and for presentation at, the annual meeting of the
Company's stockholders to be held in 2003, a stockholder proposal must be
received by Roger W. Thomas, Secretary, Mack-Cali Realty Corporation, 11
Commerce Drive, Cranford, New Jersey 07016, no later than December 6, 2002, and
must otherwise comply with applicable rules and regulations of the SEC,
including Rule 14a-8 of the Exchange Act.
The Company's by-laws require advance notice of any proposal by a
stockholder intended to be presented at an annual meeting that is not included
in the Company's notice of meeting and proxy statement because it was not timely
submitted under the preceding paragraph, or made by or at the direction of any
member of the Board of Directors, including any proposal for the nomination for
election as a director. To be considered for such presentation at the annual
meeting of the Company's stockholders to be held in 2003, any such stockholder
proposal must be received by Roger W. Thomas, Secretary, Mack-Cali Realty
Corporation, no earlier than January 14, 2003 and no later than February 13,
2003, and discretionary authority may be used if untimely submitted.
The Company will furnish without charge to each person whose proxy is being
solicited, upon the written request of any such person, a copy of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as filed
with the SEC, including the financial statements and schedules thereto. Requests
for copies of such Annual Report on Form 10-K should be directed to Roger W.
Thomas, Secretary, Mack-Cali Realty Corporation, 11 Commerce Drive, Cranford,
New Jersey 07016.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented at
the Annual Meeting. If any other business is properly brought before the Annual
Meeting, it is intended that proxies authorized pursuant to this Proxy Statement
will be voted in respect thereof and in accordance with the judgments of the
persons voting the proxies.
It is important that the proxies be returned promptly and that your shares
be represented. Stockholders are urged to mark, date, execute and promptly
return the accompanying proxy card in the enclosed envelope or to promptly
authorize a proxy to vote your shares by Internet or telephone in accordance
with the instructions on the accompanying proxy card.
By Order of the Board of Directors,
/s/ ROGER W. THOMAS
-----------------------------------------
Roger W. Thomas
Secretary
Date: April 5, 2002
Cranford, New Jersey
37
[LOGO]
IMPORTANT NOTICE REGARDING DELIVERY OF SECURITY HOLDER DOCUMENTS
April 5, 2002
Dear Stockholder:
The Securities and Exchange Commission recently approved a new rule that
allows us to send a single copy of our annual reports, proxy statements,
prospectuses and certain other disclosure documents to any household at which
two or more of our stockholders reside, if we believe the stockholders are
members of the same family. We will, however, continue to mail one proxy card
for each registered stockholder. This program is referred to as "householding."
You do not need to do anything in order to participate in our householding
program. If we do not hear from you on or before June 4, 2002 (the date our
householding program will become effective), you will be deemed to have
consented to the receipt of only one set of our stockholder mailings by your
household. Your consent will be perpetual unless you initially object or revoke
it according to the following instructions:
- If you initially choose not to participate in our householding program,
you may "opt-out" by marking the designated box on the enclosed proxy
card.
- If your Mack-Cali Realty Corporation shares are registered in your own
name, please write to our Investor Relations Department c/o Mack-Cali
Realty Corporation, 11 Commerce Drive, Cranford, New Jersey 07016, or call
our Investor Relations Department at (908) 272-8000, with your revocation
request.
- If a broker or other nominee holds your Mack-Cali Realty Corporation
shares, please write to our Investor Relations Department c/o Mack-Cali
Realty Corporation, 11 Commerce Drive, Cranford, New Jersey 07016, or call
our Investor Relations Department at (908) 272-8000, with your revocation
request. Be sure to include your name, the name of your brokerage firm and
your account number.
We will begin sending you a separate copy of our shareholder mailings within
30 days after receipt of your revocation notice.
Our new householding program benefits both you and us. It not only reduces
the volume of duplicate information received at your household, but also helps
reduce our expenses. We encourage you to participate in this program.
Thank you very much.
MACK-CALI REALTY CORPORATION
MACK-CALI REALTY CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Mitchell E. Hersh, Timothy M. Jones, Roger W.
Thomas, Barry Lefkowitz and Michael A. Grossman, or any of them, lawful
attorneys and proxies of the undersigned, with full power of substitution, for
and in the name, place and stead of the undersigned to attend the Annual Meeting
of Stockholders of Mack-Cali Realty Corporation to be held at the Marriott at
Glenpointe, 100 Frank W. Burr Boulevard, Teaneck, New Jersey 07666, on Tuesday,
May 14, 2002, at 2:00 p.m., local time, and any adjournment(s) or
postponement(s) thereof, with all powers the undersigned would possess if
personally present, and to vote the number of shares the undersigned would be
entitled to vote if personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2, 3 AND 4, AND AGAINST PROPOSAL 5. IF ANY OTHER MATTERS SHOULD
PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT
THEREOF, THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE PROXY HOLDERS. ANY
PRIOR PROXY IS HEREBY REVOKED.
(change of address/comments)
-----------------------------
-----------------------------
----------------------------- (to be signed on the other side)
SEE REVERSE SIDE
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
MACK-CALI REALTY CORPORATION
2002 ANNUAL MEETING OF STOCKHOLDERS
DATE: MAY 14, 2002
TIME: 2:00 P.M.
PLACE: MARRIOTT AT GLENPOINTE
100 FRANK W. BURR BOULEVARD
TEANECK, NEW JERSEY 07666
/X/ PLEASE MARK YOUR VOTES AS
INDICATED IN THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS NUMBER 1, 2, 3 AND 4
AND "AGAINST" PROPOSAL NUMBER 5.
1. The Election of Directors: FOR WITHHELD
For, except vote withheld from the following / / / /
nominee(s):
------------------------------------------------
NOMINEES FOR DIRECTOR:
01. Nathan Gantcher
02. Earle I. Mack
03. William L. Mack
04. Alan G. Philibosian
2. Ratification of the appointment of FOR AGAINST ABSTAIN
PricewaterhouseCoopers LLP as the independent / / / / / /
accountants of Mack-Cali Realty Corporation
3. Approval and adoption of an amendment to the FOR AGAINST ABSTAIN
2000 Employee Stock Option Plan to increase / / / / / /
the number of shares authorized thereunder by
1,500,000 from 2,500,000 to 4,000,000.
4. Approval and adoption of an amendment to the FOR AGAINST ABSTAIN
2000 Director Stock Option Plan to increase / / / / / /
the number of shares authorized thereunder by
150,000 from 200,000 to 350,000.
5. Approval and adoption of a stockholder FOR AGAINST ABSTAIN
proposal, if presented to the Annual Meeting, / / / / / /
requesting that Mack-Cali Realty Corporation
seek advance stockholder approval for future
executive officer severance arrangements.
I do not consent to have Mack-Cali Realty / /
Corporation household future annual reports,
proxy statements, prospectuses and certain
other disclosure documents as set forth in the
Important Notice Regarding Delivery of
Security Holder Documents included with the
Notice of Annual Meeting and the related Proxy
Statement dated April 5, 2002.
In accordance with their discretion, said Attorneys and Proxies are
authorized to vote upon such other matters or proposals not known at the time of
solicitation of this proxy which may properly come before the meeting. Any prior
proxy authorized by the undersigned is hereby revoked. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting and the related Proxy
Statement dated April 5, 2002.
SIGNATURE(S) DATE
------------------------------------------------------------ ----------
NOTE: Please sign exactly as your name or names appear hereon. Joint owners
should each sign. When signing as attorney, executor, administrator, trustee,
guardian or corporate officer, give full title.
--------------------------------------------------------------------------------
FOLD AND DETACH PROXY CARD HERE AND RETURN IN ENCLOSED ENVELOPE
[GRAPHIC APPEARS HERE]
MACK-CALI REALTY CORPORATION
PROXY VOTING INSTRUCTIONS
YOUR VOTE IS IMPORTANT. CASTING YOUR VOTE IN ONE OF THE THREE WAYS DESCRIBED ON
THIS INSTRUCTION CARD, EACH OF WHICH IS PERMITTED BY THE MARYLAND GENERAL
CORPORATION LAW, VOTES ALL COMMON SHARES OF MACK-CALI REALTY CORPORATION THAT
YOU ARE ENTITLED TO VOTE. WE URGE YOU TO PROMPTLY CAST YOUR VOTE BY:
[GRAPHIC OMITTED] - Accessing the World Wide Web site http:
//www.eproxyvote.com/cli to vote via the Internet.
[GRAPHIC OMITTED] - Using a touch-tone telephone to vote by phone toll free from
the U.S. or Canada. Simply dial 1-877-779-8683 and follow
the instructions. When you are finished voting, your vote
will be confirmed and the call will end.
[GRAPHIC OMITTED] - Completing, dating, signing and mailing the proxy card in
the postage-paid envelope included with the proxy statement
or sending it to Mack-Cali Realty Corporation, c/o First
Chicago Trust Company of New York, P.O. Box 8595, Edison,
New Jersey 08818-9460.