SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
CarrAmerica Realty Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[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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(4) Proposed maximum aggregate value of transaction:
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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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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
CarrAmerica Realty Corporation
1850 K Street, N.W.
Washington, D.C. 20006
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 3, 2001
To Our Stockholders:
You are cordially invited to attend the 2001 annual meeting of stockholders
of CarrAmerica Realty Corporation on Thursday, May 3, 2001, beginning at 9:30
a.m., Eastern Daylight Savings Time, at The Willard Inter-Continental Hotel,
1401 Pennsylvania Avenue, N.W., Washington, D.C. 20004. At the meeting,
stockholders will act on the following matters:
1. Election of three directors to serve terms expiring in 2004;
2. Consideration and action upon a stockholder proposal relating to the
instatement of the election of directors annually; and
3. Any other business that properly comes before the meeting or any
adjournments thereof.
Only stockholders of record at the close of business on March 8, 2001 will
be entitled to vote at the meeting or any adjournments thereof.
IF YOU PLAN TO ATTEND:
Please note that space limitations make it necessary to limit attendance to
stockholders only. Registration will begin at 8:30 a.m., and seating will be
available at approximately 9:00 a.m. Cameras and recording devices will not be
permitted at the meeting. "Street name" holders will need to bring a copy of a
brokerage statement reflecting stock ownership as of the record date.
WHETHER OR NOT YOU EXPECT TO ATTEND:
Whether or not you expect to attend the annual meeting, you are urged to
sign and date the enclosed proxy, which is being solicited on behalf of the
Board of Directors, and return it promptly in the enclosed envelope.
By Order of the Board of Directors,
/s/ Linda A. Madrid
Linda A. Madrid
Corporate Secretary
CarrAmerica Realty Corporation
1850 K Street, N.W.
Washington, D.C. 20006
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PROXY STATEMENT
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ABOUT THE MEETING
Why am I receiving this Proxy Statement?
This Proxy Statement contains information related to the solicitation of
proxies for use at our 2001 annual meeting of stockholders, to be held on
Thursday, May 3, 2001, at 9:30 a.m., Eastern Daylight Savings Time, for the
purposes set forth in the accompanying Notice of Annual Meeting of Stockholders.
This solicitation is made on behalf of our Board of Directors. "We," "our,"
"us" and "CarrAmerica" refer to CarrAmerica Realty Corporation and its
subsidiaries and affiliates. This Proxy Statement, the enclosed form of proxy
and the 2000 Annual Report to Stockholders are being mailed to stockholders
beginning on or about April 2, 2001.
Who is entitled to vote at the annual meeting?
Only holders of record of our common stock at the close of business on
March 8, 2001 are entitled to receive notice of the annual meeting and to vote
the shares of common stock held by them on that date at the meeting. Our common
stock constitutes the only class of securities entitled to vote at the meeting.
What are the voting rights of stockholders?
Each share of common stock entitles its holder to cast one vote on each
matter on which a vote may be taken.
What will constitute a quorum at the annual meeting?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of our common stock outstanding on March 8, 2001 will
constitute a quorum, permitting the stockholders to conduct business at the
meeting. We will include abstentions and broker non-votes (i.e., shares held by
a broker or nominee which are represented at the meeting, but with respect to
which the broker or nominee is not voting on a particular proposal) in the
calculation of the number of shares considered to be present at the meeting.
At the close of business on March 8, 2001, there were 65,294,227 shares of
our common stock outstanding.
How do I vote?
You may vote either by filling out and returning the accompanying proxy
card or by filling out a written ballot at the annual meeting.
How are proxy card votes counted?
If the accompanying proxy card is properly signed and returned to us (and
not revoked), it will be voted as directed by you. Unless contrary instructions
are given, the persons designated as proxy holders on the proxy card will vote
FOR the election of all nominees for our Board of Directors named herein,
AGAINST instatement of the election of directors annually and as recommended by
our Board of Directors with regard to any other matters, or, if no such
recommendation is given, in their own discretion.
May I change my vote after I return my proxy card?
Yes. You may revoke a previously granted proxy at any time before it is
exercised by filing with our Corporate Secretary a notice of revocation or a
duly executed proxy bearing a later date. Additionally, the powers of the proxy
holders will be suspended regarding any person who executed a proxy but then
attends the meeting in person and so requests. Attendance at the meeting will
not, in itself, constitute revocation of a previously granted proxy.
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ELECTION OF DIRECTORS
(Proposal 1)
Board of Directors
Our Board of Directors is divided into three classes, with one-third of the
directors scheduled to be elected by the stockholders annually. Thomas A. Carr,
Caroline S. McBride and Wesley S. Williams, Jr. have been nominated by our Board
of Directors for election as directors at the 2001 annual meeting of
stockholders to fill terms expiring at the 2004 annual meeting of stockholders.
If elected, the nominees will hold office until the expiration of their terms
and until their successors are elected and qualified.
Nominees for Election to Terms Expiring in 2004
Thomas A. Carr, 42, was named Chairman of the Board in May 2000 and has
been our President and a director since 1993. In May 1997, Mr. Carr was
appointed our Chief Executive Officer. At that time, he resigned as Chief
Operating Officer, a position he had held since April 1995. Mr. Carr was our
Chief Financial Officer from February 1993 to April 1995. Mr. Carr is a
director of The Oliver Carr Company and serves on the Boards of HQ Global
Holdings, Inc. and V Technologies International Corporation (d/b/a Agilquest).
Mr. Carr holds a Master of Business Administration degree from Harvard Business
School and a Bachelor of Arts degree from Brown University. Mr. Carr is a
member of the Board of Governors of the National Association of Real Estate
Investment Trusts, the Young Presidents Organization and the Federal City
Council. Mr. Carr is the son of Oliver T. Carr, Jr. and the brother of Robert
O. Carr. Mr. Carr is a member of the Investment Committee and the Executive
Committee of the Board of Directors. In addition, Mr. Carr is a member of
management's Operating Committee and Investment Committee.
Caroline S. McBride, 47, has been a director since July 1996. Ms. McBride
was nominated to the Board as a designee of Security Capital Group, Incorporated
("Security Capital"), one of our major stockholders. Since June 1996, Ms.
McBride has been a Managing Director of the Capital Division of Security
Capital. From June 1996 to July 1997, Ms. McBride was Managing Director of
Security Capital Global Management Group. From July 1978 to May 1996, she was
with IBM, where she was director of private market investments for the IBM
Retirement Fund from 1994 to 1996. From 1992 to 1994, she was director of real
estate investments for the IBM Retirement Fund. Ms. McBride is on the Board of
Directors of Storage USA, Inc., BelmontCorp., CWS Communities Trust and the Real
Estate Research Institute. Ms. McBride received her Masters in Business
Administration degree from New York University and a Bachelor of Arts degree
from Middlebury College. Ms. McBride is a member of the Investment Committee of
the Board of Directors.
Wesley S. Williams, Jr., 58, has been a director since February 1993. Mr.
Williams has been a partner of the law firm of Covington & Burling since 1975.
After serving as a junior member of the Faculty of Law of Columbia University,
Mr. Williams was an adjunct professor of real estate finance law at Georgetown
University Law Center from 1971 to 1973. In addition, he is an author or
contributing author of several texts on banking law and on real estate
investment and finance. Mr. Williams is on the Editorial Advisory Board of the
District of Columbia Real Estate Reporter. Mr. Williams serves as Deputy
Chairman of the Board of Directors of the Federal Reserve Bank of Richmond. Mr.
Williams is Co-Chairman of the Board of Directors and Co-CEO of Lockhart
Companies, Inc., and of its real estate, insurance, consumer finance, and
miscellaneous Internet and venture subsidiaries. Mr. Williams is a member of
the Executive Committee of the Board of Trustees of Penn Mutual Life Insurance
Company, of which he is the Senior Trustee. He is also a member of the
Executive Committee of the Board of Regents of the Smithsonian Institution. Mr.
Williams received B.A. and J.D. degrees from Harvard University, an M.A. degree
from the Fletcher School of Law and Diplomacy and an LL.M. from Columbia
University. Mr. Williams is a member of the Audit
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Committee, Executive Compensation Committee and Nominating Committee of the
Board of Directors.
Incumbent Directors--Terms Expiring in 2002
Andrew F. Brimmer, 74, has been a director since February 1993. He has
been President of Brimmer & Company, Inc., an economic and financial consulting
firm, since 1976. Dr. Brimmer is the Wilmer D. Barrett Professor of Economics
at the University of Massachusetts, Amherst. He also serves as a director of
BlackRock Investment Income Trust, Inc. (and other funds), and Borg-Warner
Automotive, Inc. From June 1995 through August 1998, Dr. Brimmer served as
chairman of the District of Columbia Financial Control Board. He was a member
of the Board of Governors of the Federal Reserve System from March 1966 through
August 1974. Dr. Brimmer received a B.A. degree and a masters degree in
economics from the University of Washington and a Ph.D. in economics from
Harvard University. Dr. Brimmer is a member of the Audit Committee of the Board
of Directors.
Oliver T. Carr, Jr., 75, was Chairman of our Board of Directors from
February 1993 until May 2000. He also served as our Chief Executive Officer
from 1993 to 1997. Mr. Carr founded The Oliver Carr Company in 1962, and since
that time he has been its Chairman of the Board and a director, as well as
President from 1962 until 2000. He also serves as Chairman Emeritus of the
Board of Trustees of The George Washington University. Mr. Carr is the father
of both our current Chairman, President & CEO, Thomas A. Carr, and Robert O.
Carr, President of CarrAmerica Urban Development, Inc. Mr. Carr is a member of
the Investment Committee and the Executive Committee of the Board of Directors.
William D. Sanders, 59, has been a director since May 1996. Mr. Sanders
was nominated to the Board as a designee of Security Capital, one of our major
stockholders. He is the founder and Chairman of Security Capital. Mr. Sanders
retired on December 31, 1989 as Chief Executive Officer of LaSalle Partners
Limited, a firm he founded in 1968. Mr. Sanders is on the Board of Directors of
Security Capital and Storage USA, Inc. Mr. Sanders is a former trustee and
member of the executive committee of the University of Chicago and a former
trustee fellow of Cornell University. Mr. Sanders received his Bachelor of
Science degree from Cornell University. Mr. Sanders is a member of the
Nominating Committee of the Board of Directors.
Incumbent Directors--Terms Expiring in 2003
C. Ronald Blankenship, 51, has been a director since August 1998. Mr.
Blankenship was nominated to the Board as a designee of Security Capital, one of
our major stockholders. Mr. Blankenship has been the Vice Chairman and Chief
Operating Officer of Security Capital since May 1998. Previously, Mr.
Blankenship was Managing Director of Security Capital from March 1991 to May
1998. Mr. Blankenship is a director of Security Capital. He also is a trustee
of ProLogis Trust and a director of Homestead Village Incorporated, BelmontCorp,
Macquarie Capital Partners, LLC, Regency Realty Corporation and Storage USA,
Inc, all of which are affiliates of Security Capital. He received a B.B.A. from
the University of Texas at Austin. Mr. Blankenship is a member of the Executive
Compensation Committee and the Executive Committee of the Board of Directors.
A. James Clark, 73, has been a director since February 1993. He is
Chairman of the Board and CEO of Clark Enterprises, Inc., a Bethesda, Maryland-
based construction company. Clark Enterprises, Inc. has been involved in real
estate and commercial and residential construction since 1972. Mr. Clark is on
the Board of Trustees of the University of Maryland College Park Foundation and
is a Trustee Emeritus of the Johns Hopkins University and the Johns Hopkins
Board of Medicine. He is also a member of the PGA Tour Golf Course Properties
Advisory Board. Mr. Clark
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is a graduate of the University of Maryland. He is a member of the Investment
Committee, the Executive Committee, the Executive Compensation Committee, and
the Nominating Committee of the Board of Directors.
Timothy Howard, 52, has been a director since August 1998. Mr. Howard has
been the Executive Vice President and Chief Financial Officer of Fannie Mae
since 1990 and a member of Fannie Mae's Office of the Chairman since November
2000. Mr. Howard has held positions of increasing responsibility with Fannie
Mae since beginning with the company in 1982. Mr. Howard received a masters
degree in economics and a bachelors degree in economics, magna cum laude, from
the University of California, Los Angeles. He is a member of the Audit
Committee and the Executive Compensation Committee of the Board of Directors.
Committees of the Board of Directors; Meetings
Among the committees of our Board of Directors are a standing Audit
Committee, Executive Compensation Committee, Nominating Committee, Executive
Committee and Investment Committee. Additionally, during 2000 our Ad Hoc
Compensation Committee, which previously had been established by our Board of
Directors, was reconvened. The functions performed by these committees are
described below.
Audit Committee. Our Board's Audit Committee makes recommendations
concerning the engagement of independent public accountants, reviews with the
independent public accountants the plans and results of the audit engagement,
approves professional services provided by the independent public accountants,
reviews the independence of the independent public accountants, considers the
range of audit and non-audit fees of the independent public accountants, and
reviews the adequacy of our internal accounting controls. The Audit Committee
met five times in 2000. All of the members of the Audit Committee are
independent of CarrAmerica (as defined in Sections 303.01(B)(2)(a) and (3) of
the New York Stock Exchange's listing standards). Our Board of Directors has
adopted a written charter for the Audit Committee, a copy of which is attached
hereto as Appendix A.
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Executive Compensation Committee and Ad Hoc Compensation Committee. Our
Board's Executive Compensation Committee is comprised entirely of non-employee
directors, and is responsible for implementing and/or recommending to the Board
of Directors compensation policies applicable to our executive officers and for
monitoring compliance with such policies. The Committee determines the Chief
Executive Officer's compensation and approves compensation recommendations for
our other executive officers upon the recommendation of the Chief Executive
Officer. It also administers our employee stock option plan. The Ad Hoc
Compensation Committee was a committee comprised solely of directors who
qualified as "outside directors" under Section 162(m) of the Internal Revenue
Code. We established the Ad Hoc Compensation Committee to consider and make
grants of options that otherwise would be subject to a limitation on
deductibility under the Internal Revenue Code. The Executive Compensation
Committee met three times in 2000. The Ad Hoc Compensation Committee met one
time in 2000.
Nominating Committee. Our Board's Nominating Committee was established to
consider and make recommendations to the Board of Directors regarding nominees
for election as members of the Board of Directors. In addition, the Nominating
Committee has the authority to review and approve compensation, benefits and
other forms of remuneration for non-employee directors. The Nominating
Committee is willing to consider nominees recommended by stockholders.
Stockholders who wish to suggest qualified candidates must comply with the
advance notice provisions and other requirements of Section 3.11 of our by-laws.
The Nominating Committee did not meet in 2000.
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Executive Committee. Our Board's Executive Committee may exercise the full
authority of our Board of Directors, except that the Executive Committee may not
amend our charter or by-laws, adopt a plan of merger or consolidation, recommend
to stockholders the sale or lease of all or substantially all of our assets,
elect any of our directors, elect or remove any of our officers or establish
compensation for any of our executive officers. The Executive Committee did not
meet in 2000.
Investment Committee. Our Board's Investment Committee has the authority
to approve and authorize expenditures, agreements and other actions relating to
the acquisition and/or disposition of assets by us, the incurrence of
indebtedness by us or other encumbrances on our assets or other matters treated
as capital items and involving less than $100 million for any single transaction
or series of related transactions, so long as such matters are consistent with
our annual budget (as to amount and type of transaction). The Investment
Committee met four times in 2000.
Our Board of Directors held seven meetings during 2000. None of our
directors attended fewer than 75% of the aggregate number of meetings of the
Board of Directors held during the period he or she served on our Board and the
number of meetings of committees of the Board of Directors on which he or she
served during the period of service in 2000.
Compensation of Directors
We pay an annual retainer of $20,000 to directors who are not our
employees. We also pay each such non-employee director a fee (plus out-of-
pocket expenses) for attendance (in person or by telephone) at each meeting of
our Board of Directors and for each committee meeting held on a non-Board
meeting day. Our Board of Directors meeting fee is $1,000 and the committee
meeting fee is $500. In addition, the chairman of each committee receives an
additional annual fee of $1,000.
We also compensate our directors through our 1997 Stock Option and
Incentive Plan (the "1997 Plan"). Each non-employee director receives options
to purchase 3,000 shares of our common stock upon such non-employee director's
initial election to our Board. In addition, each continuing non-employee
director receives a grant of options to purchase 7,500 shares of our common
stock immediately following the election of directors at each annual meeting of
our stockholders. Both employee directors and non-employee directors are
eligible to receive other grants under the 1997 Plan, which grants are provided
at the discretion of our Executive Compensation Committee.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our executive officers and directors, and persons who own more than ten percent
of a registered class of our equity securities, to file reports of ownership on
Forms 3, 4 and 5 with the Securities and Exchange Commission and the New York
Stock Exchange. Such executive officers, directors and greater than ten percent
stockholders are required by the SEC to furnish us with copies of all Forms 3, 4
and 5 they file.
Based on our review of the copies of such forms we have received and on
written representations from certain reporting persons that they were not
required to file a Form 5 for the fiscal year, we believe that our executive
officers, directors and greater than ten percent stockholders complied with the
Section 16(a) filing requirements applicable to them with respect to
transactions during 2000, with the exception that one late filing was made in
2000 by Mr. Oliver Carr regarding shares of our common stock purchased in
February 2000.
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Vote Required and Recommendation
When a quorum is present, the affirmative vote of a majority of the votes
present at the annual meeting will be required for the election of directors. A
properly executed proxy marked "Withhold Authority" with respect to the election
of one or more directors will not be voted with respect to the director or
directors indicated, although it will be counted for purposes of determining
whether there is a quorum. Accordingly, abstentions or broker non-votes as to
the election of directors will have the effect of a vote against the election of
the candidates.
Our Board of Directors recommends a vote FOR the candidates named in this
Proxy Statement as directors to hold office until the expiration of the terms
for which they have been nominated and until their successors are elected and
qualified. Should any one or more of these nominees become unable to serve for
any reason before the annual meeting, our Board of Directors may designate a
substitute nominee or nominees, in which event the persons designated as proxy
holders on the enclosed proxy will vote for the election of such substitute
nominee or nominees, or may reduce the number of members of our Board of
Directors.
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STOCKHOLDER PROPOSAL RELATING TO
INSTATEMENT OF THE ELECTION
OF DIRECTORS ANNUALLY
(Proposal 2)
Mrs. Evelyn Y. Davis, 2600 Virginia Ave., N.W., Suite 215, Washington, DC
20037, holding 200 shares of our common stock, has given notice of her intention
to propose the following resolution at the 2001 Annual Meeting of Stockholders:
"RESOLVED: "That the stockholders of CarrAmericaRealty [sic] recommend that the
Board of Directors take the necessary steps to instate the election of directors
ANNUALLY, instead of the stagger system which was recently adopted."
Mrs. Davis submitted to us the following statement in support of the
resolution:
"The great majority of New York Stock Exchange listed corporations elect
all their directors each year.
This insures that ALL directors will be more accountable to ALL
shareholders each year and to a certain extent prevents the self-perpetuation of
the Board.
Last year the owners of 15,292,274 shares, representing approximately 26.1%
of shares voting, voted FOR this proposal.
If you AGREE, please mark your proxy FOR this resolution."
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OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 2.
Our current system of electing directors to staggered three-year terms has
been in place since we completed the initial public offering of our common stock
in February 1993. Under this method, currently one-third of our directors are
elected annually by our stockholders, dividing our Board of Directors into three
equal classes.
Our Board of Directors believes that this board classification provides us
and our stockholders with significant continuity and stability, factors which
are of vital importance to our business. At all times, we benefit from having
at least two-thirds of our Board of Directors experienced with our long-term
business strategy and operations. This enables our Board of Directors to build
on past experience and plan for a reasonable time into the future. Board
classification provides an effective balance between the need for continuity and
experience on the Board and the need for revalidation of the stockholder mandate
through the election process.
Our Board believes that directors elected to a classified Board are no less
accountable to stockholders than they would be if elected annually. Our
directors are continually accountable to stockholders by virtue of state law
fiduciary duties and their ongoing legal obligations to serve the best interests
of all stockholders. Accountability is not affected by the length of a
director's term.
In addition, the classified Board is intended to encourage persons who may
seek to acquire control of us to initiate such action through negotiations with
our Board. At least two meetings of our stockholders would generally be
required to replace a majority of our Board. Board classification reduces the
risk to us and our stockholders of the uncertainty and instability resulting
from a
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precipitous change in the majority control of our Board. By reducing the threat
of an abrupt change in the composition of the entire Board, classification of
directors would give our Board sufficient time to review any takeover proposal,
study appropriate alternatives and achieve the best results for all of our
stockholders. Our Board believes that although a classified board enhances the
ability to negotiate favorable terms with a proponent of an unfriendly or
unsolicited proposal, it does not necessarily discourage takeover offers.
Adoption of this proposal would not in itself eliminate the classified
Board. The proposal simply recommends that our Board of Directors take steps to
instate the election of directors annually. Further action by our stockholders
would be necessary to amend our by-laws with a vote of a majority of the votes
cast at a meeting of our stockholders at which a quorum is present.
Finally, our Board notes that similar proposals regarding declassification
of our Board of Directors were not approved by our stockholders at our 1996 and
2000 annual meetings.
Our Board believes that a classified Board is in our best interests as well
as the best interests of our stockholders, and that you should oppose efforts to
eliminate it.
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OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 2.
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EXECUTIVE COMPENSATION
The following table provides information on the annual and long-term
compensation for our Chief Executive Officer and our four most highly
compensated other executive officers (our ``Named Executive Officers") for the
periods indicated:
Summary Compensation Table
Long-Term Compensation
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Annual Compensation Awards
-------------------------------------- -------------------------------
Other Restricted Securities
Annual Stock Unit Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Awards ($)(1) Options (#)(2) Compensation
--------------------------- ------ -------- --------- ------------ --------------- -------------- -------------
Thomas A. Carr........................ 2000 $ 456,122 $600,000 0 0 125,000 $102,570 (4)
President and Chief 1999 $ 450,000 $550,000 0 0 0 $ 47,746 (4)
Executive Officer; Chairman 1998 $332,500 (3) $350,000 0 $2,000,000 550,000 $ 9,080 (4)
of the Board of Directors
Philip L. Hawkins..................... 2000 $ 386,212 $458,000 0 0 100,000 $106,330 (6)
Chief Operating Officer 1999 $ 380,000 $400,000 0 0 0 $ 66,546 (6)
1998 $281,975 (5) $230,750 0 $1,500,000 400,000 $ 9,080 (6)
Richard F. Katchuk.................... 2000 $ 378,619 $398,000 0 0 100,000 $ 40,587 (8)
Chief Financial Officer 1999 $319,019 (7) $280,000 0 $1,000,000 85,000 $ 23,159 (8)
1998 N/A
Karen B. Dorigan...................... 2000 $227,373 (9) $220,000 0 $ 350,003 50,000 $40,534 (10)
Chief Investment Officer 1999 $ 196,562 $200,000 0 0 0 $15,281 (10)
1998 $ 160,162 $ 90,000 0 $ 388,531 75,000 $ 8,929 (10)
Kent C. Gregory....................... 2000 $ 219,817 $182,750 0 0 50,000 $57,584 (11)
Managing Director-- 1999 $ 205,000 $174,250 0 0 0 $39,391 (11)
National Accounts 1998 $ 205,000 $153,750 0 $1,000,000 150,000 $ 8,940 (11)
(1) Represents the value of grants of restricted stock units made under our
1997 Stock Option and Incentive Plan. The restricted stock units vest
ratably over a five-year period, assuming the grantee is still an employee
of CarrAmerica or otherwise eligible for vesting on the vesting date. On
each vesting date, the grantee will receive shares representing 20% of the
total number of restricted stock units granted plus an amount equal to the
dividends that would have been paid on such shares had the shares been
outstanding since the grant date, or the cash equivalent thereof, at our
option. The grants of restricted stock units do not entitle the grantees
to any current dividend or voting rights. As of December 29, 2000, the
total holdings of restricted stock units of the Named Executive Officers
(with one unit deemed equivalent to the value of one share) and the market
value of such holdings were as follows: Mr. Thomas A. Carr: 83,553 units
($2,616,253); Mr. Hawkins: 62,664 units ($1,962,166); Mr. Katchuk: 43,669
units ($1,367,386); Ms. Dorigan: 30,020 units ($940,001); and Mr. Gregory:
41,776 units ($1,308,111). The following table provides information on
grants of restricted stock units during 2000 scheduled to vest in under
three years from the date of grant:
No. of Units No. of Units No. of Shares No. of Shares
Vesting on Vesting on Vesting on Vesting on
Grantee 2/16/01 11/2/01 2/16/02 11/2/02
------- ---------- ------------ ------------- -------------
Karen B. Dorigan......... 966 1695 966 1695
(2) All option grants were made under our 1997 Stock Option and Incentive Plan.
(3) Mr. Carr's annual salary was $300,000 from January until October 1998, when
it was increased to $450,000.
(4) Includes employer contributions for 2000, 1999 and 1998 to the CarrAmerica
Realty Corporation Retirement Plan in the amounts of $8,500, $8,000 and
$8,000, respectively, and life, AD&D and long-term disability insurance
premiums in the amounts of $1,032, $1,104 and $1,080, respectively.
Includes dividend equivalent payments of $92,678 and $38,642 made in 2000
and 1999, respectively, based on ownership of vested restricted stock units.
(5) Mr. Hawkins' annual salary was $250,000 from January until October 1998,
when it was increased to $380,000.
(6) Includes $8,500, $8,000 and $8,000 contributions to the CarrAmerica Realty
Corporation Retirement Plan for 2000, 1999 and 1998, respectively, and
contributions for 2000, 1999 and 1998 for life, AD&D and long-term
disability insurance premiums in the amounts of $1,032, $1,104 and $1,080,
respectively. In addition, includes the cost to us of a split-dollar life
insurance policy, for which we paid a premium of $30,500 and $28,462 in 2000
and 1999, respectively. Includes
10
dividend equivalent payments of $66,028 and $28,980 made in 2000 and 1999,
respectively, based on ownership of vested restricted stock units.
(7) Mr. Katchuk began his employment with CarrAmerica in 1999. The amount set
forth as salary for Mr. Katchuk for 1999 represents actual salary paid to
him for work performed from his hire date to December 31, 1999. His
annualized salary for 1999 was $350,000.
(8) Includes an $8,500 contribution to the CarrAmerica Realty Corporation
Retirement Plan for 2000 and employer contributions of $1,032 and $948 for
2000 and 1999, respectively, for life, AD&D and long-term disability
insurance premiums. Includes the cost to us of a split-dollar life
insurance policy, for which we paid a premium of $24,500 and $22,211 in
2000 and 1999, respectively. Includes $6,141 in dividend equivalent
payments made in 2000 based on ownership of vested restricted stock units.
(9) Ms. Dorigan's annual salary was $210,000 from January until November 2000,
when it was increased to $300,000.
(10) Includes $8,500, $8,000 and $8,000 contributions to the CarrAmerica Realty
Corporation Retirement Plan for 2000, 1999 and 1998, respectively, and
contributions for 2000, 1999 and 1998 for life, AD&D and long-term
disability insurance of $1,032, $959 and $761, respectively. In addition,
includes the cost to us of a split-dollar life insurance policy, for which
we paid a premium of $12,000 and $4,617 in 2000 and 1999, respectively.
Includes dividend equivalent payments of $18,535 and $1,546 made in 2000
and 1999, respectively, based on ownership of vested restricted stock
units.
(11) Includes $8,500, $8,000 and $8,000 contributions to the CarrAmerica Realty
Corporation Retirement Plan for 2000, 1999 and 1998, respectively and
contributions for 2000, 1999 and 1998 for life, AD&D and long-term
disability insurance premiums in the amounts of $1,032, $992 and $940,
respectively. In addition, includes the cost to us of a split-dollar life
insurance policy, for which we paid a premium of $10,963 and $13,010 in
2000 and 1999, respectively. Includes dividend equivalent payments of
$36,675 and $17,389 made in 2000 and 1999, respectively, based on ownership
of vested restricted stock units.
The following table provides information on options granted to the Named
Executive Officers during our last fiscal year. All such options are
exercisable at the fair market value of a share of our common stock on the date
of grant. The options have no value unless our stock price appreciates and the
holder satisfies all applicable vesting requirements. All the options granted
to the Named Executive Officers and to our other executive officers during 2000
vest 25% per year over four years. Options we granted to other employees during
2000 also vest 25% per year over four years.
Option Grants in Last Fiscal Year
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Individual Grants Appreciation for Option Term
------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
Percent of
Number of Total Options
Securities Granted to
Underlying Employees Exercise Price Expiration
Name Options Granted in Fiscal Year ($ /Share) Date 5% ($) 10% ($)
---- ---------------- -------------- -------------- ----------- ---------- ----------
Thomas A. Carr.......... 125,000 4.76% 20.6875 02/16/10 $1,626,282 $4,121,318
Philip L. Hawkins....... 100,000 3.81% 20.6875 02/16/10 $1,301,026 $3,297,055
Richard F. Katchuk...... 100,000 3.81% 20.6875 02/16/10 $1,301,026 $3,297,055
Karen B. Dorigan........ 50,000 1.91% 20.6875 02/16/10 $ 650,513 $1,648,527
Kent C. Gregory......... 50,000 1.91% 20.6875 02/16/10 $ 650,513 $1,648,527
11
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
Number of Securities Values of Unexercised
Underlying Unexercised In-the-Money
Shares Options at FY End(1) Options at FY End(2)
Acquired Value -------------------------- --------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------- ------------- ----------- ----------- ------------- ----------- -------------
Thomas A. Carr....... 95,000 $687,569 191,088 585,726 $848,582 $4,025,098
Philip L. Hawkins.... 56,000 $324,250 77,433 448,956 $147,139 $3,142,678
Richard F. Katchuk... 21,250 $169,936 0 163,750 $ 0 $1,656,172
Karen B. Dorigan..... 0 $ 0 51,524 101,016 $253,392 $ 780,387
Kent C. Gregory...... 30,000 $168,000 55,433 156,956 $115,764 $ 976,553
-----------------------------
(1) Number of shares of our common stock underlying options granted under our
1997 Stock Option and Incentive Plan or shares of our common stock for which
Class A Units of Carr Realty, L.P. underlying options granted under the 1993
Carr Realty Option Plan would have been redeemable.
(2) Based on the last reported sale price of our common stock on the NYSE on
December 29, 2000 of $31.3125.
Employment Contracts
Change-in-Control Arrangements. We have entered into change-in-control
agreements with each of Thomas A. Carr, Philip L. Hawkins, Richard F. Katchuk
and Karen B. Dorigan. These agreements generally provide that if within three
years from the date of a "change in control" (as defined below), the employment
of the executive with CarrAmerica is terminated without cause, or in the event
that the executive terminates his or her employment with us based on a change in
or diminishment of his or her responsibilities or a reduction in salary, such
executive will be entitled to severance pay, including an amount equal to two
times the executive's base annual salary and bonus compensation with us.
Additionally, the executive will be eligible for certain continued benefits from
us during the ensuing two-year period. Each of the agreements with Messrs.
Carr, Hawkins and Katchuk initially is in effect until May 6, 2002, and
thereafter may be extended automatically for additional one-year periods. The
agreement with Ms. Dorigan initially is in effect until February 6, 2004, and
thereafter may be extended automatically for additional one-year periods.
For purposes of each of these agreements, a "change in control" generally
means any of the following events: (i) the consummation of a reorganization,
merger or consolidation involving CarrAmerica, unless all or substantially all
of the individuals or entities who were the beneficial owners of our voting
securities continue to own at least 60% of the outstanding voting securities of
the surviving entity in substantially the same proportions; (ii) individuals who
currently constitute our Board of Directors (including individuals who
subsequently become directors whose nomination or election was approved by at
least a majority of the directors constituting our Board of Directors as of the
respective dates of the agreements) cease for any reason to constitute a
majority of our Board of Directors; (iii) the approval by our stockholders of a
reorganization, merger or consolidation in which we are not the surviving
entity; or (iv) the approval by our stockholders of our complete liquidation or
dissolution or the sale or other disposition of more than 50% of our operating
assets.
12
Notwithstanding anything to the contrary set forth in any of our filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, that might incorporate SEC filings, in whole or in part, the
following Performance Graph, the Report of the Executive Compensation Committee
and Ad Hoc Compensation Committee and the Report of the Audit Committee shall
not be incorporated by reference into any such filings:
PERFORMANCE GRAPH APPEARS HERE
* Assumes $100 invested on December 31, 1995 in our common stock or in the
securities comprising the S&P 500 index or the NAREIT Equity index, assuming
reinvestment of dividends.
The points on the graph represent the following numbers:
Last Trading Day of CarrAmerica S&P 500 NAREIT Equity
--------------------- ----------- ------- -------------
2000................. $183 $232 $162
1999................. $116 $255 $128
1998................. $120 $211 $134
1997................. $148 $164 $163
1996................. $129 $123 $135
1995................. $100 $100 $100
13
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE AND
AD HOC COMPENSATION COMMITTEE
Our Board's Executive Compensation Committee and Ad Hoc Compensation
Committee present this report on our compensation policies as they affected the
compensation reported above for our executive officers for fiscal year 2000. In
performing their responsibilities, these committees had the benefit of reports
prepared by our outside compensation consultant. The outside consultant
provided information and advice on competitive compensation policies and
practices and on the reasonableness of the compensation paid to our executives.
Executive Compensation Philosophy
CarrAmerica's executive officer compensation policies incorporate a variety
of objectives. Executive officers are rewarded commensurate with CarrAmerica's
performance, providing competitive compensation opportunities that recognize
individual performance and responsibility that assists us in attracting and
retaining a highly motivated, performance-oriented executive management team.
We believe that the use of such objectives to determine compensation for our
executive officers serves as an important part of the foundation for enhancement
of our stockholders' value. We implemented our executive officer compensation
policies for 2000 with a compensation program based on the total direct
compensation package of each executive officer. We evaluated each officer's
package as a whole and in terms of two components: an annual component, which
includes base salary and a cash bonus opportunity; and a long-term incentive
component.
In assessing the competitiveness of CarrAmerica's executive officer
compensation, the Executive Compensation Committee periodically reviews
materials brought to its attention by our outside compensation consultant.
During a recent review, the consultant reported on the compensation practices of
20 comparable publicly-traded office REITs with median market capitalizations of
approximately $2.1 billion and of 30 other large publicly-traded non-REIT
organizations with median market capitalizations of approximately $1.5 billion.
Our current capitalization is approximately $2.0 billion. The REITs whose
compensation practices were reviewed constitute only a portion of the REITs
included in the NAREIT Equity Index, which is used in the Performance Graph
above to compare stockholder returns. The Executive Compensation Committee
believes that in competing for executive talent competitors are not necessarily
companies included in the NAREIT Equity Index, most of which have smaller
capitalizations than ours.
Annual Component
Base Salaries. We established base salary ranges for our executive
officers for fiscal year 2000 after a review of base salaries by the Executive
Compensation Committee, taking into consideration information previously
provided by our outside compensation consultant. The principal elements that
entered into our determination to set base salaries to the levels reported for
2000 were the competitiveness of our base salaries compared to those paid by
other large office REITs and other comparable for-profit corporations outside
the real estate area, the roles and responsibilities of the individual, the
contributions of the individual to our business, the requirements of the
individual's job and the individual's prior experience and accomplishments.
Cash Bonuses. We use annual cash bonuses as a primary method of rewarding
executive officers commensurate with the Company's performance and individual
performance. Early in fiscal year 2000, we established a target bonus amount
for each executive officer equal to a percentage of the executive officer's base
salary, after review of the proposed targets by the Executive Compensation
Committee. The target bonus amounts for the Named Executive Officers were equal
to 50% to 100% of their base salaries. Payment of the target bonus amounts was
to be based primarily on three factors, contingent upon the adequacy of our cash
and capital resources: (i) our attainment of a specific target in terms of funds
from
14
operations (FFO) per share; (ii) each officer's achievement of individualized
quantitative financial and operational goals related to the activities he or she
managed; and (iii) a qualitative component at our management's discretion. We
retain the discretion to increase or decrease annual bonuses in any given year
above or below target amounts to take into account extraordinary performance or
events.
Long-Term Incentive Component
We use two forms of long-term incentive compensation - stock options and
restricted stock units - as methods of aligning the financial interests of
executive officers more closely with those of CarrAmerica's stockholders. The
Executive Compensation Committee believes that recognizing executive officer
retention as an important component will maintain and improve our performance.
In particular, we increased long-term incentive compensation to make executive
compensation more competitive with levels at companies competing with us for
executive talent. In general, we attempted to set total direct compensation for
our executive officers competitive with those for executive officers of peer
group REITs and peer group public companies based on capitalization.
Upon the Executive Compensation Committee's recommendation, our Board of
Directors concluded that our long-term incentive opportunities for executive
officers should be assessed on an annual basis. A compensation mix weighted
more heavily towards long-term incentive compensation better aligns the
interests of our executive officers at levels with those of our stockholders,
because long-term incentive compensation is more closely linked to long-term
performance and stock price.
Stock Options. We include grants of stock options among the long-term
incentives afforded to our executive officers. We believe that the interests of
stockholders are best served by giving key employees the opportunity to
participate in the appreciation of our common stock. To encourage our employees
to seek long-term appreciation in the value of our common stock, stock options
vest over a specified period of time. Accordingly, an employee generally must
remain with CarrAmerica for a period of years to enjoy the full economic benefit
of a stock option.
Restricted Stock Units. Since 1998, we have made grants of restricted
stock units to our executive officers as another form of long-term incentive
compensation. Our outside consultant had reported that it had detected a trend
in our REIT peer group towards granting restricted stock or restricted stock
units. The Executive Compensation Committee believes that these restricted
stock unit grants bring our overall long-term incentive compensation payable to
our executive officers more in line with the compensation arrangements that have
been implemented by our competitors for executive talent.
Chief Executive Officer Compensation
The Executive Compensation Committee has determined that the compensation
reported for our Chief Executive Officer for 2000 was substantially in
conformity with the policies described above for all of our other executive
officers. The Committee, however, provided that a greater percentage of the
CEO's total compensation would be payable through annual bonus and other
incentive compensation, rather than through base salary. The Committee granted
the CEO a bonus equal to approximately 130% of his base salary after the end of
the year based on his exceptional performance, as demonstrated by us exceeding
our target FFO, the effective implementation of our strategic plan, the
continued development of our management team and the successful implementation
of our capital and business plans during 2000.
Deductibility of Executive Officer Compensation
Section 162(m) of the Internal Revenue Code denies a deduction for
compensation in excess of $1 million paid to certain executive officers, unless
certain performance, disclosure, and
15
stockholder approval requirements are met. Our stock option grants to our
executive officers in 2000 are intended to qualify as "performance-based"
compensation not subject to the Section 162(m) deduction limitation. Our
restricted stock unit grants in 2000 are subject to the $1 million deduction
limitation because they vest over time and are not considered "performance-
based" within the meaning of Section 162(m). The Executive Compensation
Committee believes that a substantial portion of the compensation awarded to our
executive officers as annual cash bonuses would be exempted from the $1 million
deduction limitation. The Committee's present intention is to qualify, to the
extent reasonable, a substantial portion of each executive officer's
compensation for deductibility under applicable tax laws.
Ad Hoc Compensation Committee Executive Compensation Committee
(as to information on option grants) (as to remainder of information)
Timothy Howard C. Ronald Blankenship
Wesley S. Williams, Jr. A. James Clark
Timothy Howard
Wesley S. Williams, Jr.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
C. Ronald Blankenship, A. James Clark, Timothy Howard and Wesley S.
Williams, Jr. served on the Executive Compensation Committee of our Board of
Directors during 2000. Timothy Howard and Wesley S. Williams, Jr. also served
on the Ad Hoc Compensation Committee during 2000. None of these individuals was
or ever has been an employee of CarrAmerica or any of our subsidiaries.
Mr. Clark owns interests in certain entities that were parties to certain
transactions involving us. A wholly owned subsidiary of Clark Enterprises,
Inc., an entity of which Mr. Clark is the majority stockholder and which is a
holder of Class A Units of Carr Realty, L.P., has provided construction
management services to one of our affiliates, CarrAmerica Development, Inc. In
connection with these services, the affiliate paid $1.7 million to Clark
Enterprises for 2000.
16
Report of the Audit Committee
The Audit Committee has reviewed and discussed the audited consolidated
financial statements of CarrAmerica for fiscal year 2000 with CarrAmerica's
management, and also has discussed with KPMG LLP, CarrAmerica's independent
auditors, the matters required to be discussed by Statement on Auditing
Standards No. 61. The Audit Committee has received both the written disclosures
and the letter from KPMG LLP required by Independence Standards Board Standard
No. 1, and has discussed with KPMG LLP the independence of KPMG LLP from
CarrAmerica. In addition, the Audit Committee has considered whether the
provision of services by KPMG LLP falling under the heading "All Other Fees"
(see "Independent Auditors" below) is compatible with maintaining the
independence of KPMG LLP from CarrAmerica (services falling under the heading
"Financial Systems Design and Implementation Fees" being inapplicable, as there
were no such services provided by KPMG LLP for the last fiscal year).
Based on the foregoing, the Audit Committee recommended to CarrAmerica's
Board of Directors that CarrAmerica's audited consolidated financial statements
for fiscal year 2000 be included in CarrAmerica's Annual Report on Form 10-K for
the year ended December 31, 2000.
Audit Committee
Andrew F. Brimmer
Timothy Howard
Wesley S. Williams, Jr.
17
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information regarding the beneficial
ownership of shares of our common stock as of March 8, 2001 for (1) each person
known by us to be the beneficial owner of more than 5% of the outstanding common
stock, (2) each of our directors and each Named Executive Officer, and (3) all
of our directors and executive officers as a group. Unless otherwise indicated
in the footnotes, all such interests are owned directly, and the person or
entity identified as the beneficial owner has sole voting and investment power.
The number of shares reported as beneficially owned by a person represents the
number of shares of common stock the person holds (including shares of common
stock that may be issued upon exercise of options that are exercisable within 60
days of March 8, 2001) plus the number of shares into which Class A Units of
Carr Realty, L.P. (including Class A Units of Carr Realty, L.P. that may be
issued upon the exercise of options that are exercisable within 60 days of March
8, 2001) and Units of CarrAmerica Realty, L.P. held by the person are redeemable
(if we elect to issue shares rather than pay cash upon such redemption). For
purposes of the following table, the number of shares of our common stock, Class
A Units of Carr Realty, L.P. and Units of CarrAmerica Realty, L.P. deemed
outstanding includes 65,294,227 shares of our common stock, 4,680,511 Class A
Units of Carr Realty, L.P. and 1,118,625 Units of CarrAmerica Realty, L.P., as
well as 131,433 Class A Units of Carr Realty, L.P. and 731,202 shares of our
common stock issuable upon exercise of options exercisable within 60 days of
March 8, 2001. The extent to which a person holds Class A Units of Carr Realty,
L.P. or Units of CarrAmerica Realty, L.P. or options to purchase common stock or
Class A Units of Carr Realty, L.P. which are exercisable within 60 days of March
8, 2001, rather than common stock, is set forth in the footnotes.
18
Percent Percent of
Name and Address Number of Shares/Units of All All Shares &
of Beneficial Owner Beneficially Owned Shares(1) Units(2)
------------------- ---------------------- ---------- ---------------
More Than 5% Beneficial Owner
Security Capital Group, Incorporated
SC Realty Incorporated................ 28,603,417 42.4% 39.8%
3753 Howard Hughes Pkwy., Suite 200
Las Vegas, NV 89109
Morgan Stanley Dean Witter & Co.(3)... 4,100,078 6.1% 5.7%
1585 Broadway
New York, NY 10036
Morgan Stanley Dean Witter Investment
Management Inc.(4)................... 3,616,550 5.4% 5.0%
1221 Avenue of the Americas
New York, NY 10020
Directors
C. Ronald Blankenship (5)............. 9,500 * *
Security Capital Group, Incorporated
125 Lincoln Avenue
Santa Fe, NM 87501
Andrew F. Brimmer (6)................. 15,100 * *
Brimmer & Company
4400 MacArthur Boulevard, NW
Washington, DC 20007
Oliver T. Carr, Jr. (7)............... 1,664,537 2.5% 2.3%
CarrAmerica Realty Corporation
655 15th Street, NW
Washington, DC 20005
Thomas A. Carr (8).................... 279,602 * *
CarrAmerica Realty Corporation
1850 K Street, NW
Washington, DC 20006
A. James Clark (9).................... 970,440 1.4% 1.3%
Clark Enterprises, Inc.
7500 Old Georgetown Road
Bethesda, MD 20814
Timothy Howard (10)................... 25,866 * *
Fannie Mae
3900 Wisconsin Ave, N.W.
Washington, DC 20016
Caroline S. McBride (11).............. 41,426 * *
Security Capital Group, Incorporated
399 Park Avenue, 23rd Floor
New York, NY 10022
William D. Sanders (12)............... 41,866 * *
Security Capital Group, Incorporated
125 Lincoln Avenue
Santa Fe, NM 87501
Wesley S. Williams, Jr. (13).......... 25,700 * *
Covington & Burling
1201 Pennsylvania Avenue, NW
Washington, DC 20044
Named Executive Officers
Karen B. Dorigan (14)................. 74,226 * *
CarrAmerica Realty Corporation
1850 K Street, NW
Washington, DC 20006
19
Percent Percent of
Name and Address Number of Shares/Units of All All Shares &
of Beneficial Owner Beneficially Owned Shares(1) Units(2)
------------------- ---------------------- ---------- ---------------
Kent C. Gregory (15).................. 87,100 * *
CarrAmerica Realty Corporation
1600 Parkwood Circle, Ste. 150
Atlanta, GA 30339
Philip L. Hawkins (16)................ 148,350 * *
CarrAmerica Realty Corporation
1850 K Street, NW
Washington, DC 20006
Richard F. Katchuk (17)............... 11,465 * *
CarrAmerica Realty Corporation
1850 K Street, NW
Washington, DC 20006
All directors and executive officers
as a group (14 persons)............. 3,410,178 5.1% 4.7%
---------------------------
* Less than 1%.
(1) Assumes that all options to acquire shares of our common stock held by the
person that are shown, if any, are exercised, that all Class A Units of
Carr Realty, L.P. and Units of CarrAmerica Realty, L.P. held by the person,
if any, are redeemed for shares of our common stock, and that all options
to acquire Class A Units of Carr Realty, L.P. held by the person that are
shown, if any, are exercised and that the underlying Units are redeemed for
shares of our common stock. The total number of shares outstanding used in
calculating this percentage includes all currently issued and outstanding
shares of our common stock plus shares of our common stock issuable upon
redemption of all Class A Units and Units of CarrAmerica Realty, L.P.
beneficially owned by the person (including Class A Units issuable to such
person upon exercise of options that are shown), but assumes that none of
the Class A Units and Units of CarrAmerica Realty, L.P. held by other
persons are redeemed for shares of our common stock.
(2) Intended to show fully diluted beneficial ownership. Assumes that all
options to acquire shares of our common stock and options to acquire Class
A Units of Carr Realty, L.P. held by the person that are shown, if any, are
exercised. The total number of shares outstanding used in calculating this
percentage includes all currently issued and outstanding shares of our
common stock and assumes that all of the Class A Units and Units of
CarrAmerica Realty, L.P. held by other persons (including Class A Units
issuable to such person upon exercise of options that are shown) are
redeemed for shares of our common stock.
(3) Based on a filing made pursuant to Section 13(g) by Morgan Stanley Dean
Witter & Co. Represents 4,100,078 shares of our common stock over which
Morgan Stanley Dean Witter & Co. had shared dispositive power, 3,495,928 of
such shares with respect to which Morgan Stanley Dean Witter & Co. also had
shared voting power. According to the filing, represents shares owned by
others, the accounts of which are managed by Morgan Stanley Dean Witter
Investment Management Inc.
(4) Based on a filing made pursuant to Section 13(g) by Morgan Stanley Dean
Witter Investment Management Inc., a wholly owned subsidiary of Morgan
Stanley Dean Witter & Co. Represents 3,616,550 shares of our common stock
over which Morgan Stanley Dean Witter Investment Management Inc. had shared
dispositive power, 3,024,400 of such shares with respect to which Morgan
Stanley Dean Witter Investment Management Inc. also had shared voting
power. According to the filing, represents shares owned by others, the
accounts of which are managed by Morgan Stanley Dean Witter Investment
Management Inc.
(5) Mr. Blankenship is a director of Security Capital, but disclaims beneficial
ownership of the shares held by Security Capital. Mr. Blankenship owns no
shares of our common stock, but has options to purchase 9,500 shares of our
common stock which are exercisable within 60 days of March 8, 2001.
(6) Dr. Brimmer owns 100 shares of our common stock and options to purchase
15,000 shares of our common stock which are exercisable within 60 days of
March 8, 2001.
(7) The aggregate amount of shares of our common stock beneficially owned by
Mr. Oliver T. Carr, Jr. consists of 103,820 shares of our common stock and
284,672 Class A Units owned directly by him, 150,000 Class A Units held in
an irrevocable trust for the benefit of his spouse, 338,083 shares of our
common stock and 650,462 Class A Units owned by The Oliver Carr Company, of
which Mr. Carr is a director, chairman of the board and trustee of the
majority stockholder, and Mr. Carr's options to purchase 90,000 Class A
Units and options to purchase 42,500 shares of our common stock which are
exercisable within 60 days of March 8, 2001. Mr. Carr disclaims beneficial
ownership of 5,160 shares of our common stock held in an irrevocable trust
for the benefit of his minor children, 44,585 shares of our common stock
owned by his spouse and 16,473 shares of our common stock owned by his
children.
(8) Mr. Thomas Carr is a director of The Oliver Carr Company. Mr. Carr
disclaims beneficial ownership of the shares of our common stock and Class
A Units held by The Oliver Carr Company. Mr. Carr holds 18,993 shares of
our common stock, 24,614 Class A Units directly and 2,907 Class A Units are
held by his children. Mr. Carr has options to purchase 25,000 Class A Units
and 208,088 shares of our common stock which are exercisable within 60 days
of March 8, 2001.
(9) The aggregate number of shares of common stock beneficially owned by Mr.
Clark consists of 4,666 shares of our common stock and 358,596 Class A
Units owned directly by him and 569,979 Class A Units owned by Clark
Enterprises, Inc., of which Mr. Clark is chairman, president, a director
and the majority stockholder. Mr. Clark owns options to purchase 37,199
shares of our common stock which are exercisable within 60 days of March 8,
2001.
(10) Mr. Howard has options to purchase 25,866 shares of our common stock which
are exercisable within 60 days of March 8, 2001.
(11) Ms. McBride is an officer of Security Capital, but disclaims beneficial
ownership of the shares held by Security Capital. Ms. McBride owns options
to purchase 41,426 shares of our common stock which are exercisable within
60 days of March 8, 2001.
20
(12) Mr. Sanders is a director of Security Capital, but disclaims beneficial
ownership of the shares held by Security Capital. Mr. Sanders has options
to purchase 41,866 shares of our common stock which are exercisable within
60 days of March 8, 2001.
(13) Mr. Williams owns 200 shares of our common stock and options to purchase
25,500 shares of our common stock which are exercisable within 60 days of
March 8, 2001.
(14) Ms. Dorigan owns 402 shares of our common stock and options to purchase
73,824 shares of our common stock which are exercisable within 60 days of
March 8, 2001.
(15) Mr. Gregory owns 16,667 shares of our common stock and options to purchase
70,433 shares of our common stock which are exercisable within 60 days of
March 8, 2001.
(16) Mr. Hawkins owns 11,917 shares of our common stock and options to purchase
125,000 shares of our common stock and 11,433 Class A Units which are
exercisable within 60 days of March 8, 2001.
(17) Mr. Katchuk owns 11,465 shares of our common stock.
Under the terms of a Stockholders Agreement between us and Security
Capital, Security Capital generally is required to vote its shares of our common
stock either in accordance with the recommendation of our Board of Directors or
proportionally in accordance with the votes of the other holders of our common
stock on matters submitted to the stockholders for a vote. Security Capital is
permitted to vote its shares in its sole discretion under certain circumstances,
including with respect to the election of its nominees as our directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Carr Real Estate Services, Inc., one of our affiliates in which The Oliver
Carr Company owns voting stock, provides management and leasing services for
certain properties in which we own a controlling interest. Fees paid to Carr
Real Estate Services, Inc. for these services with respect to these properties
totaled $6.6 million for 2000. Carr Real Estate Services, Inc. also provides
management and leasing services for partnerships in which Oliver T. Carr, Jr.
and/or A. James Clark, two of our directors, have interests. Fees paid to Carr
Real Estate Services, Inc. for these services by these partnerships totaled $2.3
million for 2000.
CarrAmerica Development, Inc., another of our affiliates in which The
Oliver Carr Company owns voting stock, provides development and architectural
services to many of our properties. Fees paid to CarrAmerica Development, Inc.
for these services with respect to these properties totaled $1.6 million for
2000. CarrAmerica Development, Inc. also provides development and architectural
services for partnerships in which Oliver T. Carr, Jr. and/or A. James Clark,
two of our directors, have interests. Fees paid to CarrAmerica Development for
these services by these partnerships totaled $0.2 million for 2000.
We have entered into consulting agreements with each of Carr Real Estate
Services, Inc. and CarrAmerica Development, Inc. pursuant to which we have
provided certain consulting services. Fees paid to us for these services by
Carr Real Estate Services, Inc. and CarrAmerica Development, Inc. totaled $1.8
million and $1.2 million, respectively, for 2000.
CarrAmerica Development, Inc. borrows money from us periodically to finance
its development business. As of December 31, 2000, we had loaned CarrAmerica
Development, Inc. an aggregate of $140.7 million, $72.1 million of which was
secured by real estate and $68.6 million of which was loaned on an unsecured
basis. These loans bear interest at the rate of 9% per annum. The unsecured
loan is payable upon demand and the secured loan matures on March 31, 2030.
In April 2000, CarrAmerica Development, Inc. effected a recapitalization of
its debt and equity interests. In connection with that transaction, The Oliver
Carr Company executed a promissory note payable to CarrAmerica Development, Inc.
in the amount of $688,950 in respect of certain equity contributions made by The
Oliver Carr Company. Since April 2000, CarrAmerica
21
Development, Inc. has loaned an additional $880,324 to The Oliver Carr Company
in respect of certain additional equity contributions made by The Oliver Carr
Company. These loans bear interest at the rate of 9.25% per annum and mature on
March 31, 2005.
A wholly owned subsidiary of Clark Enterprises, Inc., an entity of which
Mr. Clark is the majority stockholder and which is a holder of Class A Units of
Carr Realty, L.P., has provided construction management services to CarrAmerica
Development, Inc.. In connection with these services, CarrAmerica Development,
Inc. paid $1.7 million to Clark Enterprises for 2000.
Messrs. Thomas Carr, Hawkins, Katchuk and Gregory and Ms. Linda Madrid, an
executive officer of CarrAmerica, were members of Strategic Omni Investors LLC,
an entity which held voting common stock of HQ Global. In June 2000, in
connection with the merger transaction involving HQ Global and VANTAS
Incorporated, Strategic Omni Investors LLC sold the voting common stock of HQ
Global held by it to FrontLine Capital Group, and distributed the proceeds of
such sale (except for certain proceeds held back to secure indemnification
obligations) out to its members, including the individuals listed above. In
connection with such transaction, the gross amounts received by such individuals
were as follows: Mr. Thomas Carr ($1,385,627); Mr. Hawkins ($1,128,482); Mr.
Katchuk ($141,621); Mr. Gregory ($680,084); and Ms. Madrid ($141,621).
We previously made loans to Messrs. Thomas Carr, Hawkins and Gregory and
Ms. Dorigan, each of whom is an executive officer of CarrAmerica, as part of an
incentive plan to encourage purchases of our stock. These loans bore interest
at 6.73% per annum and were scheduled to mature in August 2007, or earlier under
certain circumstances. Mr. Carr's loan was for a total principal amount of
$474,996, of which he repaid $424,996 in March 2001 and of which the remaining
$50,000 was forgiven by us as part of Mr. Carr's bonus for 2000. Mr. Hawkins'
loan was for a total principal amount of $149,989 and he repaid it in July 2000.
Ms. Dorigan's loan was for a total principal amount of $99,972 and she repaid it
in July 2000. Mr. Gregory's loan was for a total principal amount of $332,489
and he repaid it in July 2000.
22
INDEPENDENT AUDITORS
KPMG LLP, which served as our independent auditors for the last fiscal year
and has been selected to serve as our independent auditors for the current
fiscal year, will have representatives present at the annual meeting, will have
the opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
For services rendered during or in connection with our fiscal year 2000, as
applicable, KPMG LLP billed the following fees:
Audit Fees.................................... $375,500
Financial Information Systems Design
and Implementation Fees..................... $0
All Other Fees................................ $1,977,443
OTHER MATTERS
Our management knows of no other matters which may be presented for
consideration at the annual meeting. If any other matters properly come before
the meeting, however, the holders of proxies solicited by this Proxy Statement
intend to vote such proxies as recommended by our Board of Directors or, if no
such recommendation is given, in accordance with their judgment on such matters.
If a stockholder proposal that was excluded from this Proxy Statement in
accordance with Rule 14a-8 of the Securities Exchange Act of 1934, as amended,
is properly brought before the meeting, it is intended that the proxy holders
will use their discretionary authority to vote the proxies against such
proposal.
STOCKHOLDER PROPOSALS
Proposals of stockholders pursuant to Rule 14a-8 of the Securities Exchange
Act of 1934, as amended, to be presented at the 2002 annual meeting must be
received by our Corporate Secretary before December 3, 2001 to be considered
for inclusion in our proxy material.
In addition, any stockholder who wishes to propose a nominee to our Board
of Directors or submit any other matter to a vote at a meeting of our
stockholders (other than a stockholder proposal included in our proxy materials
pursuant to Rule 14a-8 of the rules promulgated under the Securities Exchange
Act of 1934, as amended) must comply with the advance notice provisions and
other requirements of Section 3.11 of our by-laws, which are on file with the
Securities and Exchange Commission and may be obtained from our Corporate
Secretary upon request. If a stockholder nomination or proposal is received
after the date specified in the advance notice provisions, our proxy for next
year's annual meeting may confer discretionary authority to vote on such matter
without any discussion of the matter in the Proxy Statement.
23
VOTING PROCEDURES AND COSTS OF PROXY SOLICITATION
A properly executed proxy marked "Abstain" with respect to any such matter
to be voted upon will not be voted, although we will count it for purposes of
determining the presence of a quorum.
We pay for preparing, assembling, and mailing this Proxy Statement and any
other proxy materials transmitted on behalf of our Board of Directors. We will,
upon request, reimburse brokerage firms and others for their reasonable expenses
in forwarding proxy materials to the beneficial owners of our common stock.
* * * *
Your vote is important. Please complete the enclosed proxy card and mail
it in the enclosed postage-paid envelope as soon as possible.
24
APPENDIX A
----------
CarrAmerica Realty Corporation
Audit Committee of the Board of Director's Charter
--------------------------------------------------
I. Purpose
The primary function of the Audit Committee ("the Committee") is to assist the
Board of Directors in fulfilling its oversight responsibilities by reviewing (a)
the financial reports and other financial information provided by CarrAmerica
Realty Corporation and its subsidiaries (collectively referred to as "the
Company") to any governmental body or to the public; (b) the Company's systems
of internal controls regarding finance, accounting, legal compliance and the
ethics standards that management and the Board have established; and (c) the
Company's auditing, accounting standards and financial reporting processes
generally. Consistent with this function, the Audit Committee shall encourage
continuous improvement of, and shall foster adherence to, the Company's policies
and practices at all levels.
The Company's independent auditors are ultimately accountable to the Committee
and the Board of Directors.
II. Composition
The Audit Committee shall be comprised of three or more independent directors.
All members of the Committee shall have a working familiarity with basic finance
and accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise.
Committee members are appointed for one-year terms and may be re-appointed for
additional one-year terms at the discretion of the Board. The Board appoints a
Chairperson of the Committee. The Chairperson will preside at Committee
meetings and report on behalf of the Committee to the Board.
III. Meetings
The Committee should meet at least four times annually, or more frequently as
circumstances dictate. The Chairperson of the Committee should decide the
meeting agenda.
To provide access to the Committee, the Committee shall request, as deemed
appropriate, attendance at its regular meeting or otherwise of the Chief
Financial Officer, Controller, head of Internal Audit and such other members of
the Company's management as circumstances require.
Minutes of each meeting will be circulated for approval at the next meeting.
Approved minutes should then be submitted to the Board of Directors at the
Board's next meeting for ratification of any action reported as taken by the
Committee.
The Committee should meet at least annually with management, independent
accountants, and the director of internal audit in separate executive sessions
to discuss any matters that the Committee, the Chair of the Committee or each of
these groups believe should be discussed privately.
IV. Goals
Management has primary responsibility for the integrity and objectivity of the
Company's financial reporting, subject to oversight by the Board of Directors.
The Committee shall, on behalf of the Board of Directors, take reasonable steps
to review management's actions to determine that:
. a fair presentation of published financial information is made in accordance
with generally accepted accounting principles and in compliance with all
applicable professional and regulatory requirements;
. an appropriate system of internal controls, policies and procedures is
maintained; and
. the quality of internal and external audit efforts is adequate and the
Company's public accountants are independent.
V. Responsibilities and Duties
To fulfill its responsibility and duties the Audit Committee shall review and
may take recommendations to the Board concerning:
. annual audit plans of the Company's internal and independent auditors;
. the results of the internal and independent auditor's activities, including
their major conclusions, findings and recommendations and related management
responses;
. the Company's accounting and financial reporting practices, its annual and
quarterly financial report to shareholders, and financial information
submitted publicly;
. accounting, legal, tax and other developments of major significance to the
Company;
. adequacy and effectiveness of internal controls;
. the evaluation and selection of the independent auditors subsequent to a
recommendation to the Committee by management; and
. such other matters, as the Board or the Audit Committee considers
appropriate.
In its efforts to fulfill its responsibilities and duties, the Committee shall
receive periodic written and verbal reports from management, internal audit, and
the Company's independent auditors. The Committee shall receive these reports
pursuant to a schedule that the Chairperson develops in consultation with
management.
2
VI. Administration
The Audit Committee shall have prompt and unrestricted access to all financial
and operating information relevant to the Company's business. The Committee
shall have ready access to the Company's legal counsel and to the independent
auditors, and shall be provided from time to time with staff assistance from
within the Company as requested.
The Committee may cause an investigation to be made into any matter within the
scope of its responsibility that is brought to its attention. The Committee may
engage such independent resources to assist in its investigations, as it deems
necessary.
The Committee shall make regular reports to the Board on Committee activities.
The reports will generally occur after each Committee meeting or at such other
times, as the Committee deems appropriate.
As part of an on-going self-assessing process, the Committee will review and
update this Charter periodically, as conditions dictate. The Board shall
approve this Charter and any modifications to it, in order for the Charter to
become effective.
3
THIS PROXY IS SOLICITED BY AND ON BEHALF OF
THE BOARD OF DIRECTORS OF
P
CARRAMERICA REALTY CORPORATION
R REVOCABLE PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 3, 2001
O The undersigned hereby appoints Linda A. Madrid and Ann Marie Pulsch, or
any of them, Proxies, with full power of substitution, to act for and to vote
the shares of the Common Stock of CARRAMERICA REALTY CORPORATION which the
X undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of said Company to be held on May 3, 2001, and at any
and all adjournments thereof.
Y Receipt of the Company's Notice of Annual Meeting of Stockholders and
Proxy Statement is acknowledged.
IMPORTANT-THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
--------------- CONTINUED AND TO BE SIGNED ON REVERSE SIDE ----------------
SEE REVERSE SEE REVERSE
SIDE SIDE
--------------- ----------------
Please mark
[X] votes as in
this example.
The Proxy when properly executed will be voted as directed hereon, or if no
direction is indicated, will be voted FOR the election of the Board of
Directors' nominees for director, and AGAINST Proposal 2
1. To elect Directors.
Nominees for terms 2. To instate the election FOR AGAINST ABSTAIN
expiring 2004: of directors annually. [ ] [ ] [ ]
(01) Thomas A. Carr,
(02) Caroline S. McBride and
(03) Wesley S. Williams, Jr.
FOR WITHHOLD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
In their discretion, the Proxies are authorized
to vote upon such other business as may properly
come before the meeting.
[ ] --------------------------------------
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
(Please date and sign exactly as name appears on
this Proxy Card. Joint owners should each sign.
When signing as attorney, executor, administrator,
trustee, guardian, etc. give full title as well.)
Signature:_________________ Date:__________ Signature:____________________ Date:____________