UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
/X/ Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
RECKSON ASSOCIATES REALTY CORP.
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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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PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED
IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
RECKSON ASSOCIATES REALTY CORP.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 2, 2004
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To our Stockholders:
The 2004 Annual Meeting of Stockholders (the "Annual Meeting") of Reckson
Associates Realty Corp., a Maryland corporation (the "Company"), will be held on
Wednesday, June 2, 2004 at 10:30 a.m., local time, at the MGM Theatre located at
1350 Avenue of the Americas, New York, New York, for the following purposes:
1. To approve a proposal to amend the Articles of Incorporation of the
Company to eliminate the classification of the Board of Directors so
that each director would stand for re-election on an annual basis
(each of our directors has agreed to stand for re-election at this
Annual Meeting if this proposal is approved, except for Messrs.
Klein and Stephenson who will not stand for re-election in
accordance with the Company's policy on the retirement of Board
members);
2. To approve a proposal to amend the Articles of Incorporation of the
Company to amend the provision regarding waivers of the Company's
common stock ownership limit to address the potential for its use
as an anti-takeover device by requiring that the Board waive the
ownership limit upon any request by a stockholder that is not an
individual, if evidence satisfactory to the Board and its tax
counsel is provided that as a result of the waiver no individual
through its ownership interest in the stockholder will own in
excess of the ownership limit;
3. If Proposal 1 is approved by stockholders, to elect nine directors
of the Company to serve until the 2005 Annual Meeting of
Stockholders, and until their respective successors are duly elected
and qualified, or, if Proposal 1 is not approved by stockholders, to
elect three Class III directors, one Class I director and one Class
II director of the Company;
4. To ratify the selection of Ernst & Young LLP as the independent
auditors of the Company for the fiscal year ending December 31,
2004; and
5. To consider and act upon any other matters that may properly be
brought before the Annual Meeting and at any adjournments or
postponements thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on March 22, 2004
as the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and at any adjournments or postponements thereof.
Only stockholders of record of the Company's common stock, par value $.01 per
share, at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting and at any adjournments or postponements thereof.
You are requested to fill in and sign the enclosed form of proxy, which is
being solicited by the Board of Directors, and to mail it promptly in the
enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may vote
in person, even if they have previously delivered a signed proxy.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Scott H. Rechler
Scott H. Rechler
Chief Executive Officer and President
Melville, New York
April 12, 2004
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
RECKSON ASSOCIATES REALTY CORP.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
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PROXY STATEMENT
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FOR 2004 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 2, 2004
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Reckson Associates Realty Corp., a Maryland
corporation (the "Company"), for use at the 2004 Annual Meeting of Stockholders
of the Company to be held on June 2, 2004, and at any adjournments or
postponements thereof (the "Annual Meeting"). At the Annual Meeting,
stockholders will be asked (1) to consider and vote on a proposal to amend the
Articles of Incorporation, as amended and supplemented (the "Articles of
Incorporation"), of the Company to eliminate the classification of the Board of
Directors so that each director would stand for re-election on an annual basis,
(2) to consider and vote on a proposal to amend the Articles of Incorporation of
the Company to amend the provision regarding waivers of the Company's common
stock ownership limit to address the potential for its use as an
anti-takeover device by requiring that the Board waive the ownership limit
upon any request by a stockholder that is not an individual, if evidence
satisfactory to the Board and its tax counsel is provided that as a result of
the waiver no individual through its ownership interest in the stockholder
will own in excess of the ownership limit, (3) if Proposal 1 is approved by
stockholders, to vote upon the election of nine directors of the Company to
serve until the 2005 Annual Meeting of Stockholders, and until their
respective successors are duly elected and qualified, or, if Proposal 1 is
not approved by stockholders, to vote upon the election of three Class III
directors, one Class I director and one Class II director of the Company, (4)
to ratify the selection of Ernst & Young LLP as the independent auditors of
the Company for the fiscal year ending December 31, 2004 and (5) to act upon
any other matters that may properly be brought before the Annual Meeting and
at any adjournments or postponements thereof.
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are first being sent to stockholders on or about April 12, 2004. The
Board of Directors has fixed the close of business on March 22, 2004 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting (the "Record Date"). Only stockholders of record of
the Company's common stock, par value $.01 per share (the "Common Stock"), at
the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. As of the Record Date, there were 66,388,203 shares
of Common Stock outstanding and entitled to vote at the Annual Meeting. Holders
of Common Stock outstanding as of the close of business on the Record Date will
be entitled to one vote for each share held by them on the Record Date.
The presence, in person or by proxy, of holders of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote at the
Annual Meeting is necessary to constitute a quorum for the transaction of
business at the Annual Meeting. The affirmative vote of the holders of a
plurality of the votes cast on the matter at the Annual Meeting (assuming a
quorum is present) is required for the election of directors. The affirmative
vote of the holders of two-thirds of the votes entitled to be cast on the matter
at the Annual Meeting (assuming a quorum is present) is required for the
approval of amendments to the Company's Articles of Incorporation. The
affirmative vote of the holders of a majority of votes cast on the matter is
required for the approval of the ratification of the Company's auditors.
1
A broker non-vote occurs when a broker does not vote on some matter on the
proxy card because the broker does not have discretionary voting power for that
particular item and has not received instructions from the beneficial owner.
Abstentions and broker non-votes are counted as present for determining a quorum
at the Annual Meeting. For Proposal 3, the election of directors, and Proposal
4, the ratification of the selection of independent auditors, abstentions will
not be counted as votes cast and will have no effect on the result of the vote.
Broker non-votes will not exist for Proposal 3 and Proposal 4 because brokers
have discretionary voting power. For Proposal 1 and Proposal 2, each a proposal
to amend the Company's Articles of Incorporation, abstentions and broker
non-votes will have the same effect as votes cast against each Proposal.
The cost of solicitation of proxies in the form enclosed herewith will be
paid by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.
Stockholders can vote in person or by proxy. Stockholders have the choice
of voting by proxy by either mail or over the Internet. To vote by mail,
stockholders are requested to complete, sign, date and promptly return the
accompanying Proxy Card in the enclosed postage-prepaid envelope. To vote over
the Internet, please log on to WWW.VOTEPROXY.COM and follow the on-screen
instructions. If you vote over the Internet, you DO NOT need to return your
Proxy Card.
SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY RECEIVED PRIOR TO THE VOTE
AT THE ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL MEETING AS
DIRECTED ON THE PROXY. IF A PROPERLY EXECUTED PROXY IS SUBMITTED AND NO
INSTRUCTIONS ARE GIVEN, THE PROXY WILL BE VOTED:
o FOR THE AMENDMENT TO THE ARTICLES OF INCORPORATION TO ELIMINATE THE
CLASSIFICATION OF THE BOARD OF DIRECTORS;
o FOR THE AMENDMENT TO THE ARTICLES OF INCORPORATION TO AMEND THE
PROVISION REGARDING WAIVERS OF THE COMMON STOCK OWNERSHIP LIMIT;
o FOR THE ELECTION OF NINE NOMINEES FOR DIRECTORS OF THE COMPANY,
PROVIDED, HOWEVER, THAT IF PROPOSAL 1 IS NOT APPROVED, THE PROXY
WILL BE VOTED FOR THE ELECTION OF THE THREE NOMINEES FOR CLASS III
DIRECTORS OF THE COMPANY, THE ONE NOMINEE FOR CLASS I DIRECTOR OF
THE COMPANY AND THE ONE NOMINEE FOR CLASS II DIRECTOR OF THE
COMPANY; AND
o FOR RATIFICATION OF THE BOARD OF DIRECTORS' SELECTION OF ERNST &
YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2004.
IT IS NOT ANTICIPATED THAT ANY MATTERS OTHER THAN THOSE SET FORTH IN THE
PROXY STATEMENT WILL BE PRESENTED AT THE ANNUAL MEETING. IF OTHER MATTERS ARE
PRESENTED, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE DISCRETION OF THE PROXY
HOLDERS.
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Secretary of the Company at
the address of the Company set forth above, by filing a duly executed proxy
bearing a later date, or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in person whether or not a proxy has been previously
given, but the presence (without further action) of a stockholder at the Annual
Meeting will not constitute revocation of a previously given proxy.
2
The Company's 2003 Annual Report, including financial statements for the
fiscal year ended December 31, 2003, accompanies the proxy solicitation
materials. The Annual Report, however, is not part of the proxy solicitation
material.
3
PROPOSAL 1: APPROVAL OF AMENDMENT TO THE ARTICLES OF INCORPORATION
TO ELIMINATE THE CLASSIFICATION OF THE BOARD OF DIRECTORS
Article V, Section 1 of the Company's Articles of Amendment and
Restatement (the "Articles of Incorporation") currently provides for the
classification of the Board of Directors into three classes, with each class
being elected every three years. The Board of Directors has determined that the
Articles of Incorporation should be amended to provide for the annual election
of all directors commencing with the 2004 Annual Meeting. In furtherance of this
purpose, the Board has unanimously adopted a resolution approving the amendment
and declaring its advisability and recommending such amendment to our
stockholders.
A classified board has the effect of making it more difficult for a
substantial stockholder to gain control of the board without the approval or
cooperation of incumbent directors and, therefore, may deter unfriendly and
unsolicited takeover proposals and contests. A classified board also makes it
more difficult for stockholders to change a majority of directors even where a
majority of stockholders are dissatisfied with the performance of incumbent
directors. Many institutional investors believe that the election of board
members is the primary means for stockholders to influence corporate governance
policies and to hold management accountable for implementing these policies.
However, if the proposal is approved, the entire Board could be removed in any
single year, which could make it more difficult to discourage persons from
engaging in proxy contests or otherwise seeking control of the Company on terms
that the current Board does not believe are in the best interests of
stockholders.
The Board has examined the arguments for and against continuation of the
classified Board and has determined that the classified Board should be
eliminated.
If the proposed amendment is approved by our stockholders, the classified
Board will be eliminated. In addition, each of our directors has agreed to stand
for re-election at this Annual Meeting of Stockholders for a one-year term if
the proposed amendment is approved by our stockholders, except for Messrs. Klein
and Stephenson who will not stand for re-election in accordance with the
Company's policy on the retirement of Board members. Directors will thereafter
continue to be elected for one-year terms at each annual meeting of
stockholders. In addition, any directors chosen as a result of a newly-created
director position or to fill a vacancy on the Board will hold office until the
next annual meeting and until his or her successor is duly elected and
qualified.
The text of the proposed amendment to our Articles of Incorporation is
attached as Annex A to this Proxy Statement.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
TO THE COMPANY'S ARTICLES OF INCORPORATION TO ELIMINATE THE CLASSIFICATION OF
OUR BOARD.
4
PROPOSAL 2: APPROVAL OF AMENDMENT
TO THE ARTICLES OF INCORPORATION TO AMEND THE PROVISION REGARDING
WAIVERS OF THE COMPANY'S COMMON STOCK OWNERSHIP LIMIT
Due to the limitations on the concentration of ownership of shares of a
real estate investment trust ("REIT") in the hands of individuals imposed by the
Internal Revenue Code of 1986, as amended (the "Code"), the Company's Articles
of Incorporation generally prohibit any stockholder from actually or
constructively owning more than 9.0% of the lesser of the aggregate number or
value of our outstanding common stock. Pursuant to Article VII, Section 11 of
the Articles of Incorporation, the Board of Directors may, in its sole
discretion, waive the ownership limit with respect to any particular Person or
Persons (as such terms are defined in the Articles of Incorporation) if evidence
satisfactory to the Board and the Company's tax counsel is presented that the
changes in ownership pursuant to such a waiver will not cause the Company to
fail to qualify as a REIT and is not reasonably likely to cause the Company to
fail to qualify as a REIT and the Board otherwise determines that such a waiver
is in the best interests of the Company.
The REIT ownership limit may have the effect of making it more difficult
for a stockholder to accumulate substantial stock holdings in the Company,
and thereby may delay, defer or prevent a change- in-control of the Company
or other transaction by a third party without the consent of the Board even
if a change-in-control were in the best interests of our stockholders. As
part of our strategic plan to improve corporate governance, the Board has
determined that the Articles of Incorporation should be amended to address
the potential for its use as an anti-takeover device. Specifically, the Board
has determined that in the case of requests for waivers of the ownership
limit by Persons that are not individuals (or treated as individuals for
purposes of the relevant provisions of the Internal Revenue Code), the Board
will be required, rather than permitted, to waive the ownership limit if
evidence satisfactory to the Board and its tax counsel is provided that as a
result of the requested waiver, no individual through its ownership interest
in the Person will own in excess of the common stock ownership limit.
Under the proposed amendment, the common stock ownership limit will be
revised so that, provided a Person or Persons (other than a Person that is an
individual (or treated as an individual for purposes of the relevant provisions
of the Internal Revenue Code)) provides evidence satisfactory to the Board and
the Company's tax counsel that the changes in ownership pursuant to a waiver
will not cause any individual (or Person treated as an individual) to
Beneficially Own shares of Common Stock in excess of the common stock ownership
limit, the Board will waive the common stock ownership limit. In furtherance of
this purpose, the Board has unanimously adopted a resolution approving the
amendment and declaring its advisability and recommending such amendment to our
stockholders.
The text of the proposed amendment to our Articles of Incorporation is
attached as Annex B to this Proxy Statement.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
TO THE COMPANY'S ARTICLES OF INCORPORATION TO AMEND THE PROVISION REGARDING
WAIVERS OF THE COMPANY'S COMMON STOCK OWNERSHIP LIMIT.
5
PROPOSAL 3: ELECTION OF DIRECTORS
The Board of Directors of the Company consists of eleven members and is
currently divided into three classes, with the directors in each class serving
for a term of three years and until their respective successors are duly elected
and qualified. The term of one class expires at each Annual Meeting of
Stockholders.
If Proposal 1 to declassify the Board of Directors is approved, each
director has agreed to stand for re-election at this Annual Meeting, other than
Messrs. Klein and Stephenson, both of whom are the age of 72 or over and who
will not stand for re-election in accordance with the Company's policy for
retirement of Board members. Mr. Klein's term as a director will expire at the
Annual Meeting and Mr. Stephenson will resign from the Board immediately
following the Annual Meeting. If Proposal 1 is approved, each director elected
at this Annual Meeting will serve a term to expire at the 2005 Annual Meeting.
If Proposal 1 to declassify the Board of Directors is not approved,
Messrs. Quick, Steinberg and Ruffle will be nominated to stand for election as
members of Class III for a term expiring at the 2007 Annual Meeting of
Stockholders, Ms. McCaul will be nominated to stand for election as a member of
Class I for a term expiring at the 2005 Annual Meeting of Stockholders and Mr.
Crocker will be nominated to stand for election as a member of Class II for a
term expiring at the 2006 Annual Meeting of Stockholders. Messrs. Quick,
Steinberg and Ruffle are currently serving as Class III directors of the
Company, Ms. McCaul is currently serving as a Class I director and Mr. Crocker
is currently serving as a Class II director of the Company. Since Messrs.
Steinberg and Ruffle and Ms. McCaul were appointed by the Board of Directors in
2004 to fill vacant seats on the Board of Directors, in accordance with
applicable law, they will be nominated by the Board of Directors for election by
stockholders at this Annual Meeting if Proposal 1 is not approved. If Proposal 1
is not approved, Mr. Stephenson will continue to serve as a director for the
remainder of his term.
The Board of Directors anticipates that each of the nominees will serve,
if elected, as a director. However, if any person nominated by the Board of
Directors is unable to accept election, the proxies will be voted for the
election of such other person or persons as the Board of Directors may
recommend.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
INFORMATION REGARDING NOMINEES AND DIRECTORS
The following table and biographical descriptions set forth certain
information with respect to each of the directors of the Company and the
executive officers who are not directors, based upon information furnished to
the Company by each director and executive officer.
6
AMOUNT AND
NATURE OF
BENEFICIAL
OWNERSHIP OF PERCENT
DIRECTOR COMMON OF
NAME AGE SINCE STOCK (1) CLASS (2)
---- --- ----- --------- ---------
CLASS III NOMINEES FOR ELECTION AT 2004 ANNUAL MEETING
(TERM TO EXPIRE IN 2007*)
Peter Quick..................................................... 48 2002 12,949 (3) ***
John V. N. Klein**.............................................. 72 1995 41,266 (4) ***
Stanley Steinberg............................................... 71 2004 4,676 (5) ***
John F. Ruffle.................................................. 67 2004 -- ***
CLASS I CONTINUING DIRECTORS (TERM EXPIRES IN 2005*)
Lewis S. Ranieri................................................ 57 1997 42,466 (6) ***
Scott H. Rechler................................................ 36 1994 765,440 (7) 1.09%
Conrad D. Stephenson**.......................................... 76 1995 38,466 (8) ***
Elizabeth McCaul................................................ 42 2004 1,000 (9) ***
CLASS II CONTINUING DIRECTORS (TERM EXPIRES IN 2006*)
Douglas Crocker II.............................................. 62 2004 6,000 (10) ***
Ronald H. Menaker............................................... 59 2002 14,966 (11) ***
Donald J. Rechler............................................... 69 1994 995,208(12) 1.41%
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* Each of the current directors, other than Messrs. Klein and Stephenson,
has agreed to stand for re-election at the 2004 Annual Meeting if Proposal 1 is
approved by stockholders. If Proposal 1 is approved, each director elected at
the 2004 Annual Meeting will serve a term to expire at the 2005 Annual Meeting
of Stockholders.
** Messrs. Klein and Stephenson will not stand for re-election in accordance
with the Company's policy for retirement of Board members. Mr. Klein's term as a
director will expire at the Annual Meeting. If Proposal 1 is approved, Mr.
Stephenson will resign from the Board immediately following the Annual Meeting.
If Proposal 1 is not approved, Mr. Stephenson will continue to serve as a
director for the remainder of his term.
*** Less than one percent.
--------------------
(1) All information has been determined as of March 22, 2004. For purposes of
this table a person is deemed to have "beneficial ownership" of the number
of shares of common stock that a person has the right to acquire pursuant
to the exercise of stock options exercisable within sixty days, or the
redemption of units (the "Units") of limited partnership interest in
Reckson Operating Partnership, L.P., a Delaware limited partnership (the
"Operating Partnership") (assuming the Company elects to issue common
stock rather than pay cash upon such redemption). Pursuant to the terms of
the Amended and Restated Agreement of Limited Partnership of the Operating
Partnership, dated as of June 2, 1995, as amended, the Operating
Partnership is obligated to redeem Units for cash, or, at the option of
the Company, shares of common stock. See "Executive Compensation" for a
discussion of the vesting of stock options granted to directors and
officers.
(2) For purposes of computing the percentage of outstanding shares of common
stock held by each person, any shares of common stock that such person has
the right to acquire pursuant to the exercise of a stock option
exercisable within 60 days is deemed to be outstanding, but is not deemed
to be outstanding for the purpose of computing the percent ownership of
any other
7
person. In addition, for purposes of such calculation, Units held by each
person are treated as if such person had converted and held the related
equivalent number of shares of common stock.
(3) Represents (a) 5,449 shares of common stock and (b) options to purchase
7,500 shares of common stock.
(4) Represents (a) 3,766 shares of common stock and (b) options to purchase
37,500 shares of common stock.
(5) Represents 4,676 shares of common stock.
(6) Represents (a) 10,966 shares of common stock and (b) options to purchase
31,500 shares of common stock.
(7) Represents (a) 342,940 shares of common stock, including 339,357 shares of
common stock owned directly, 576 shares of common stock owned through the
Company's 401(k) plan and 3,007 shares of common stock held in trust for
the benefit of his children, and (b) 422,500 exercisable options.
(8) Represents (a) 966 shares of common stock and (b) options to purchase
37,500 shares of common stock.
(9) Represents 1,000 shares of common stock.
(10) Represents 6,000 shares of common stock.
(11) Represents (a) 7,466 shares of common stock and (b) options to purchase
7,500 shares of common stock.
(12) Represents (a) 497,708 shares of common stock, including 496,885 shares of
common stock owned directly, 823 shares of common stock owned through the
Company's 401(k) plan and (b) 497,500 exercisable options.
CLASS III NOMINEES FOR ELECTION AT 2004 ANNUAL MEETING -TERM TO EXPIRE IN 2007*
PETER QUICK has served as the Company's lead director since 2003 and as a
director of the Company since 2002. Mr. Quick has served as President of the
American Stock Exchange and on its Board of Governors since July 2000. From 1982
to 2000, Mr. Quick worked for Quick & Reilly, Inc., a leading national discount
brokerage firm, holding various positions, including President and Chief
Executive Officer thereof. Mr. Quick is a director of the Securities Industry
Automation Corporation. Mr. Quick serves as a director of St. Francis Hospital
and Good Shepard Hospice and Fund for the Poor, Inc. He is a member of the
National Selection Committee for the Jefferson Scholars Program of the
University of Virginia and a Trustee of the Securities Industry Institute at the
Wharton School of the University of Pennsylvania. Mr. Quick received a
bachelor's degree in engineering from the University of Virginia and attended
Stanford University's Graduate School of Petroleum Engineering. He was a
lieutenant in the United States Navy, and served four years on active duty.
Recognized for his personal and professional achievements, Mr. Quick received
the prestigious Ellis Island Medal of Honor award in May 2001.
STANLEY STEINBERG has been a director of the Company since 2004. Mr.
Steinberg currently serves as a Senior Advisor to the management consulting firm
of Casas, Benjamin & White, LLC. Mr. Steinberg formerly served as Chairman and
Chief Executive Officer of Sony Retail Entertainment where
8
he was responsible for the development and operation of major location based
retail entertainment centers, a major theater chain and Sony retail stores.
Prior to joining Sony, Mr. Steinberg served as Executive Vice President and
Chief Operating Officer of Walt Disney Imagineering, where he managed the
development of over $4.5 billion of theme parks. Prior to joining Disney, Mr.
Steinberg served as Executive Vice President of the Portman Companies where he
was responsible for the operations of the companies and was directly involved in
the design, development, financing and operation of numerous major hotels and
mixed-used projects around the world including: Peachtree Center in Atlanta;
Embarcadero Center in San Francisco; Marina Square in Singapore; and the New
York Marriott Marquis Hotel at Times Square. Mr. Steinberg currently serves as a
member of the Board of Directors of Electronics Boutique, a retailer of video
game related hardware and software products and AmericasMart, Inc., one of the
nations largest wholesale marketplaces. Mr. Steinberg earned both Bachelor of
Science and Bachelor of Architecture degrees from the Georgia Institute of
Technology and a Master of Architecture from the Massachusetts Institute of
Technology.
JOHN F. RUFFLE has served as a director of the Company since 2004. Mr.
Ruffle retired as Vice Chairman and a Director of J.P. Morgan & Co. Incorporated
on May 31, 1993, having served in this capacity since 1985, and as a member of
the Corporate Office, the firm's senior policy and planning group. Mr. Ruffle
served in a similar position in the firm's lead subsidiary, Morgan Guaranty
Trust Company of New York. Mr. Ruffle joined Morgan in 1970 as Controller. In
1980 Mr. Ruffle became Chief Financial Officer. Earlier in his career, Mr.
Ruffle had been with International Paper Company as Assistant Treasurer and
Director of Accounting, and with Price Waterhouse. Mr. Ruffle was a member of
the Board of Trustees of the Financial Accounting Foundation from 1985 to 1990
and Chairman during his last two years. This Board offers oversight over the
Financial Accounting Standards Board and Governmental Accounting Standards Board
processes as well as selection of members and compensation. Mr. Ruffle was also
a national past Chairman of the Board of the Financial Executives Institute and
awarded a lifetime membership in the organization. In 1991 Mr. Ruffle received
the Financial Executive's Institute's National Award for Distinguished Service
to his profession. Mr. Ruffle was named by "Accounting Today", a national
professional newspaper, as the Most Influential Accountant in America during the
year 1990. Mr. Ruffle is a Director of several mutual funds in the JP Morgan
Family of mutual funds as well as certain other investment funds managed by J.P.
Morgan Investment Management Inc. Mr. Ruffle is also a Director of American
Shared Hospital Services, Inc. and a member of the Board of Trustees of The John
Hopkins University since 1990. In prior years Mr. Ruffle has served as a member
of the Board of Directors of many companies, including, Bethlehem Steel
Corporation, Wackenhut Corporation, Wackenhut Corrections Corp., Trident Corp.,
and Sallie Mae. Mr. Ruffle also serves as an Elder in the Presbyterian Church.
Mr. Ruffle graduated from The John Hopkins University with a B.A. degree in 1958
and from Rutgers University with an M.B.A. in finance in 1963, the same year in
which he became a Certified Public Accountant.
INCUMBENT CLASS III DIRECTOR RETIRING AT END OF TERM
JOHN V. N. KLEIN has served as a director of the Company since 1995. Mr.
Klein was the Managing Attorney of the law firm of Meyer, Suozzi, English &
Klein, P.C. between 1984 and 1997 and currently serves as Chairman of the firm.
Mr. Klein served as a director of Fleet Bank from 1980 to 1994. Mr. Klein has
also been a member of the advisory board of St. Joseph's College, Patchogue, New
York since 1980. For more than seven years, Mr. Klein has served as director of
Pocono Hotels Corporation, a hotel owner and operator. Mr. Klein has served in
various government positions on Long Island, including County Executive of
Suffolk County, New York from 1972 to 1979. Mr. Klein holds a bachelor's degree
and a law degree from the University of Virginia.
9
CLASS I CONTINUING DIRECTORS-TERM EXPIRES IN 2005*
LEWIS S. RANIERI has served as a director of the Company since 1997. Mr.
Ranieri is the Chairman and Chief Executive Officer of Ranieri & Co., Inc.,
positions he has held since founding Ranieri & Co. in 1988. Mr. Ranieri is the
founder of Hyperion Partners L.P. and Hyperion Partners II L.P., private
investment limited partnerships ("Hyperion"). He is also Chairman of Hyperion
Capital Management, Inc., a registered investment adviser. He is the Chairman of
the following registered investment funds: Hyperion 2005 Investment Grade
Opportunity Trust, Inc.; The Hyperion Total Return Fund, Inc.; and The Strategic
Mortgage Income Fund, Inc. Mr. Ranieri also serves as a director and/or an
executive officer of various other indirect subsidiaries of Hyperion. Prior to
forming Hyperion, Mr. Ranieri had been Vice Chairman of Salomon Brothers Inc.
Mr. Ranieri helped develop the capital markets as a source of funds for housing
and commercial real estate, established Salomon's leadership position in the
mortgage-backed securities area, and also led the effort to obtain Federal
legislation to support and build the market. Mr. Ranieri has served on the
National Association of Home Builders Mortgage Roundtable continuously since
1986. He was inducted into the National Housing Hall of Fame in 1997. He is a
director and/or trustee of Delphi Financial Group, Inc., Computer Associates
International, Inc., Capital Lease Funding, Inc., where he is also chairman of
the board of directors, and American Financial Realty Trust, a REIT focused on
acquiring and operating properties leased to regulated financial institutions,
where he is also chairman of the board of trustees. Mr. Ranieri also acts as a
trustee or director of various environmental and religious institutions such as
Environmental Defense, The Metropolitan Opera Association and Shrine of
Elizabeth Ann Seton/Our Lady of the Rosary Church. Mr. Ranieri is also the
Chairman of the Board of the American Ballet Theatre.
SCOTT H. RECHLER has served as Chief Executive Officer and President since
December 2003, served as Co-Chief Executive Officer of the Company from May 1999
until December 2003, serves as the Chairman of the Executive Committee of the
Board and has served as a director of the Company since its formation. He served
as President of the Company from February 1997 to May 2001 and served as Chief
Operating Officer of the Company from its formation until May 1999. In addition,
from the Company's formation until February 1997, Mr. Rechler served as
Executive Vice President of the Company. Mr. Rechler has been employed at
Reckson since 1989. Mr. Rechler was the architect of Reckson's successful public
offering in June 1995 and has led the Company from a Long Island-based owner
and developer to one of the largest office REITs in the New York tri-state
area. Mr. Rechler has overseen in excess of $2.5 billion in acquisitions and
developments since joining the Company. Mr. Rechler is a member of the Board of
Directors of the Long Island Children's Museum and is a member of the board of
governors of NAREIT. Since 1997 Mr. Rechler has served as Chief Executive
Officer and Chairman of the Board of Directors of FrontLine Capital Group
("FrontLine"), and also served as the non-executive Chairman of the Board of
Directors and as former interim executive officer of HQ Global Holdings, Inc.
("HQ"), both companies that filed for protection from creditors under the
federal bankruptcy laws. Mr. Rechler is a graduate of Clark University and
received a Master's Degree in Finance with a specialization in real estate from
New York University.
CONRAD D. STEPHENSON has served as a director of the Company since 1995.
Mr. Stephenson served as the Chief Executive Officer of Pan Am Equities Inc., a
property ownership and management company, from 1993 to 1997, and currently
serves as a consultant thereto. Mr. Stephenson was employed by The Comras
Company, a real estate company, from 1990 to 1993, and served as the Vice
President in the tri-state and northeast real estate lending division of the
First National Bank of Chicago from 1987 to 1990. Mr. Stephenson was the Vice
President in charge of all commercial real estate lending activities of The
Bowery Savings Bank from 1985 to 1987, and was a Vice President of The Chase
Manhattan Bank from 1975 to 1985. Mr. Stephenson has served as a governor, vice
president and a member of the executive committee of the Real Estate Board of
New York. Mr. Stephenson holds a bachelor's degree from Fordham University and a
Masters in Business Administration from New York University. Mr. Stephenson is a
retired colonel of the U.S. Army Reserves, with which he served for 35 years.
10
ELIZABETH MCCAUL has served as a director of the Company since 2004. Ms.
McCaul currently serves as a Partner and runs the New York office of Promontory
Financial Group, a regulatory and financial consulting firm that specializes in
risk management, crisis management, corporate governance and compliance, as well
as strategic planning and mergers and acquisitions. From 1997 and 2003, Ms.
McCaul served as the Superintendent of Banks of the State of New York where she
was responsible for the supervision of some of the world's largest financial
institutions with total assets of approximately $2 trillion. Prior to being
appointed as Superintendent, she served as First Deputy Superintendent and Chief
of Staff. From 1985 through 1995, Ms. McCaul was an investment banker at Goldman
Sachs & Co. Ms. McCaul has also served as Chairman of the Conference of State
Bank Supervisors and participated in the Joint Forum for Financial
Conglomerates. She has been an instructor on corporate governance at the
Financial Stability Institute at the Bank for International Settlements in
Basel, Switzerland and has assisted many financial institutions to meet their
obligations under the Sarbanes-Oxley Act and the USA Patriot Act. Ms. McCaul was
also a leader in fighting predatory lending, where she proposed and adopted the
first regulation addressing this issue, which became a national model for other
states and federal legislation. Ms. McCaul earned her Bachelor of Arts in
Economics from Boston University.
CLASS II CONTINUING DIRECTORS-TERM TO EXPIRE IN 2006*
DOUGLAS CROCKER II has served as a director of the Company since 2004. Mr.
Crocker was Chief Executive Officer, President and a Trustee of Equity
Residential, the nation's largest apartment REIT, from 1993 to 2002, and also
served as Vice Chairman of the Board. Mr. Crocker remains very active in the
multifamily housing industry, serving on boards or committees of various
multifamily housing associations. Mr. Crocker is a past Trustee of the
Multifamily Council of the Urban Land Institute and former member of the Board
of Governors of the National Association of Real Estate Investment Trusts
("NAREIT"). Mr. Crocker currently serves as a regent of the National Apartment
Association University and on the Advisory Board of the De Paul University Real
Estate School. Mr. Crocker also serves as a director of the following companies
in the real estate industry including: Wellsford Real Properties, Inc., a real
estate merchant banking firm; Ventas, Inc., a leading healthcare-related REIT;
Prime Group Realty Trust, an owner and operator of office and industrial
properties; and Acadia Realty Trust, a REIT which owns and operates shopping
centers.
RONALD H. MENAKER has served as a director of the Company since 2002. From
1966 to 1999, Mr. Menaker worked for J.P. Morgan & Co. Inc., holding various
positions, including President and a director of J.P. Morgan Services. At the
time of his retirement on January 1, 1999, Mr. Menaker was a managing director
and head of corporate services of J.P. Morgan & Co. Inc. of New York. In this
capacity, Mr. Menaker had management responsibility for a $500 million budget
and 1,700 employees, including a range of administrative, support and operations
functions for J.P. Morgan companies. These functions included facilities
management, real estate design and construction, corporate insurance and
contingency planning, security services and investigations, health services,
payroll and payment services, executive compensation, travel services,
management services and operations. Mr. Menaker serves as a director of Atalanta
Sosnoff Capital Corp. He serves as a director of NYU Medical Center and Vice
Chairman and director of NYU Downtown Hospital. He was formerly the Chairman of
NYU Downtown Hospital. Mr. Menaker also serves as the Chairman of the American
Kennel Club.
DONALD J. RECHLER has served as non-executive Chairman of the Board of
Directors since 2003 and served as Co-Chief Executive Officer of the Company
from May 1999 to December 2003. Mr. Rechler has served as Chairman of the Board
since its formation. In addition, from the Company's formation through May 1999,
Mr. Rechler served as Chief Executive Officer of the Company. Mr. Rechler also
served as President of the Company from its formation until February 1997. Prior
to the Company's initial public offering in June 1995 (the "IPO"), Mr. Rechler
was a co-founder and general partner of Reckson Associates. He is a founder and
former President and Chairman of the Association For
11
A Better Long Island, a founder of the Long Island Commercial & Industrial
Development Association, a member of the Board of Directors of the Development
Division of North Shore Hospital, a member of the Board of Directors of the Long
Island Philharmonic, a member of the Council of Overseers of Long Island
University, C.W. Post College and a member of the Board of Directors of the
Nassau County Museum of Art. Mr. Rechler is a graduate of the University of
Miami.
----------------
* Each of the current directors, other than Messrs. Klein and Stephenson, has
agreed to stand for re-election at the 2004 Annual Meeting if Proposal 1 is
approved by stockholders. Messrs. Klein and Stephenson will not stand for
re-election in accordance with the Company's policy for retirement of Board
members. Mr. Klein's term as a director will expire at the Annual Meeting. If
Proposal 1 is approved, Mr. Stephenson will resign from the Board immediately
following the Annual Meeting. If Proposal 1 is not approved, Mr. Stephenson will
continue to serve as a director for the remainder of his term. If Proposal 1 is
approved, each director elected at the 2004 Annual Meeting will serve a term to
expire at the 2005 Annual Meeting of Stockholders.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
MICHAEL MATURO has served as Executive Vice President, Chief Financial
Officer and Treasurer of the Company since 1995. Mr. Maturo oversees the
Company's financial accounting, treasury management and public reporting,
capital markets activities, investor relations and corporate forecasting. During
his tenure with the Company, Mr. Maturo has led the Company's efforts to obtain
its investment grade rating and thereafter issue $500 million of senior
unsecured notes. He also established a $500 million unsecured corporate line of
credit with a 14 member bank group. In addition, Mr. Maturo has led efforts to
raise over $1 billion of additional debt and equity capital during this time
period. Mr. Maturo is a member of NAREIT. Prior to joining the Company, Mr.
Maturo was a Senior Manager at E&Y Kenneth Leventhal Real Estate Group
(formerly Kenneth Leventhal & Company), a public accounting and consulting
firm. Mr. Maturo specialized in diverse phases of real estate finance,
including corporate and property debt financings and recapitalization
transactions. Mr. Maturo is a graduate of Seton Hall University with a degree
in accounting and finance and is a certified public accountant. From 1998 to
2001, Mr. Maturo served as an executive officer and director of FrontLine, a
company that filed for protection from creditors under the federal bankruptcy
laws in June 2002. Mr. Maturo is 42 years old.
JASON M. BARNETT has served as Executive Vice President of Company since
May 1999, General Counsel of the Company since May 1997 and Secretary of the
Company since 2003. Mr. Barnett joined the Company in 1996. Mr. Barnett is
responsible for the coordination of all legal and compliance matters for the
Company. Mr. Barnett has been involved in over $2 billion of real estate
transactions, including acquisitions, dispositions, joint ventures, and
financings. Mr. Barnett has also be involved in approximately $1 billion of
public securities offerings on behalf of the Company. Prior to joining the
Company, Mr. Barnett practiced as an associate in the corporate REIT practice
area of Sidley Austin Brown & Wood LLP. While at Sidley Austin Brown & Wood
LLP, Mr. Barnett participated in numerous corporate and real estate
transactions involving publicly-held REITs, including initial public
offerings, joint ventures and corporate and real estate acquisitions. Mr.
Barnett holds a Bachelor of Arts degree from Clark University and a JURIS
DOCTOR from Emory University School of Law. Mr. Barnett is a member of the
American Bar Association, a member of the Real Estate Board of New York, a
member of NAREIT, and is involved in various industry related groups Mr.
Barnett is also a member of the Association of Small Claims Arbitors for the
Civil Court of the City of New York. Mr. Barnett is admitted to the Bar of
the State of New York. From 1998 to 2000, Mr. Barnett served as an executive
officer of FrontLine, a company that filed for protection from creditors
under the federal bankruptcy laws in June 2002. Mr. Barnett is 35 years old.
12
SALVATORE CAMPOFRANCO has served as Executive Vice President and Chief
Operating Officer of the Company since 2003. Mr. Campofranco served as the
Senior Vice President and Managing Director of the Company's Westchester and
Connecticut divisions from 1996 to 2003 where he was responsible for the
leasing, construction and property management in the Company's Westchester
County and Southern Connecticut Portfolio of office and industrial properties
currently consisting of over five million square feet in 35 properties. Mr.
Campofranco has 15 years experience in real estate finance and operations.
Before joining Reckson in 1996, Mr. Campofranco was Senior Vice President in
charge of finance and operations for Towermarc Corporation. Prior to that, he
was a manager with E&Y Kenneth Leventhal Real Estate Group (formerly Kenneth
Leventhal & Company) in New York. He is a Certified Public Accountant in New
York State and a graduate of Saint John's University, New York, with a B.S. in
Accounting. He is also a member of the Executive Committee for the Board of
Trustees for the Westchester Arts Council, and The Westchester County
Association among other corporate and civic boards. Mr. Campofranco received the
Westchester County Business Leader of the Year award for 2000. Mr. Campofranco
is 46 years old.
F. D. RICH III has served as Executive Vice President and Chief
Administrative Officer since 2003. Mr. Rich joined the Company in 1996 and
has held numerous positions, including Senior Vice President and head of the
Company's Southern Connecticut Division and Chief Information Officer. Mr.
Rich has extensive real estate development and management expertise in
office, housing and retail developments in various regions in the country and
in the Caribbean. Prior to joining the Company, Mr. Rich was a senior vice
president with the F. D. Rich Company (the "Rich Company") and responsible
for its operations. Mr. Rich has had extensive involvement with the City of
Stamford's urban renewal efforts and the development, construction and
operations of commercial office space in downtown Stamford. Mr. Rich is a
founding member of the Board of the Stamford Downtown Special Services
District and past Chairman. MR. Rich has also served on the boards of the
Stamford Partnership, Stamford Chamber of Commerce. Mr. Rich attended
Marquette University, Utica College of Syracuse University and Loyola
College, majoring in Business Administration. Mr. Rich is 48 years old.
PHILIP WATERMAN III has served as Executive Vice President, Chief
Development Officer and Managing Director of the Company's New York City
division since 2003. Mr. Waterman joined the Company in 1999 as Managing
Director of the Company's New York City division. Mr. Waterman is responsible
for the Company's business activities in New York City. Prior to joining the
Company, Mr. Waterman spent 12 years with Tishman Speyer Properties. He served
as a Managing Director of Tishman Speyer Properties and sat on that company's
Management Committee, which was responsible for investment and acquisition
decisions. He was responsible for the oversight of Tishman Speyer's domestic
leasing and marketing efforts for approximately 38 million square feet,
including Rockefeller Center and the Chrysler Building in New York. Past
responsibilities included oversight of Tishman Speyer's Los Angeles and San
Francisco offices. He also spent two years in Tishman Speyer's Chicago office.
Mr. Waterman received his B.A. from the University of Michigan. His professional
affiliations include The Real Estate Board of New York, where he serves as a
Governor; The Urban Land Institute, The Realty Foundation of New York where he
serves as a Board Member, and The Young Men's and Women's Real Estate
Association. His charitable affiliations include The Fresh Air Fund, where he
sits on the Board of Directors, The Jeffrey Modell Foundation, where he serves
as a Board Member, and The Downtown School, where he serves as a Board Member.
Mr. Waterman is 37 years old.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company is currently managed by a eleven member Board of Directors,
nine of whom are independent of the Company's management. Director independence
was determined in accordance with the applicable corporate governance listing
standards of the New York Stock Exchange. The Company has recently adopted a
policy whereby every three years at least one independent director of the
Company will have rotated off of the Board.
The Board of Directors held eleven meetings during fiscal year 2003. In
addition, the independent directors of the Company held eight executive sessions
during fiscal year 2003 in which management directors did not participate.
Each of the directors attended at least 75% of the total number of
meetings of the Board of Directors and of the committees of the Company of which
he was a member during 2003. It is the Board's policy that directors should
attend the annual meeting. All of the then-current members of the Board of
Directors were present at the 2003 Annual Meeting.
LEAD DIRECTOR. In May 2003, the Board created a new position of lead
director, whose primary responsibility is to preside over the executive sessions
of the board in which management directors and
13
other members of management do not participate. The lead director also advises
the chairman of the board and, as appropriate, committee chairs with respect to
agendas and information needs relating to board and committee meetings, and
performs other duties that the Board may from time to time delegate to assist
the board in the fulfillment of its responsibilities. Mr. Quick serves as the
lead director of the Board.
AUDIT COMMITTEE. The Company has a standing Audit Committee consisting of
John Ruffle, Elizabeth McCaul, Ronald H. Menaker and Peter Quick, each of whom
is "independent" as defined in the New York Stock Exchange's listing standards.
Information regarding the functions performed by the Audit Committee is set
forth in the "Audit Committee Report" included in this Proxy Statement. The
Audit Committee held five meetings during fiscal year 2003. Mr. Ruffle currently
serves as chairman of the Audit Committee. Mr. Stephenson served as chairman of
the Audit Committee until March 2004.
The Board has determined that all members of the Audit Committee qualify
as "audit committee financial experts" as defined in the rules of the Securities
and Exchange Commission ("SEC") and the New York Stock Exchange. There is a
brief listing of the qualifications of the Committee members in their respective
biographies found on pages 8 through 11 of this Proxy Statement. As noted above,
the Board has determined that all of the Audit Committee's "audit committee
financial experts" are independent of the Company and its management.
EXECUTIVE COMMITTEE. Subject to the supervision and oversight of the Board
of Directors, the Executive Committee, which consists of Scott H. Rechler,
Donald J. Rechler, Douglas Crocker II, Stanley Steinberg and Peter Quick has the
authority to approve acquisitions, financings and dispositions by the Company
and to authorize the execution of certain contracts and agreements, including
those relating to the borrowing of money by the Company and to exercise
generally all other powers of the Board of Directors, except for those which
require action by all directors or the non-employee directors (the "Independent
Directors") under the Articles of Incorporation or Bylaws of the Company or
under applicable law. The Executive Committee held eight meetings during fiscal
year 2003. Mr. Scott H. Rechler serves as chairman of the Executive Committee.
COMPENSATION COMMITTEE. The Company's Compensation Committee, which
consists of Lewis S. Ranieri, Douglas Crocker II, Ronald Menaker and Stanley
Steinberg, makes recommendations and exercises all powers of the Board of
Directors in connection with compensation matters, including incentive
compensation and benefit plans. The Compensation Committee also has authority to
grant awards under the Company's stock option plans. The Compensation Committee
held two meetings during fiscal year 2003. Mr. Ranieri serves as chairman of the
Compensation Committee. All current members of the Compensation Committee are
independent as defined in the rules of the New York Stock Exchange.
DISCLOSURE COMMITTEE. The Company's Disclosure Committee, which consists
of all of the Company's executive officers as well as certain other officers of
the Company, has responsibility for the development and assessment of the
financial and non-financial information to be included in the reports filed by
the Company with the SEC and assists the Company's Chief Executive Officer and
Chief Financial Officer in connection with their certifications contained in the
Company's periodic reports. The Disclosure Committee reports to the Audit
Committee on a quarterly or more frequent basis. The Disclosure Committee held
six meetings during fiscal year 2003.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. The functions of the
Nominating and Corporate Governance Committee is to assist the Board in
promoting the best interests of the Company and its stockholders through the
implementation of sound corporate governance principals and practices. The
Nominating and Corporate Governance Committee is also responsible for (i)
identifying individuals
14
qualified to become Board members, consistent with criteria approved by the
Board, and recommending to the Board the director nominees for the next annual
meeting of stockholders, (ii) developing and recommending to the Board a set of
corporate governance principles applicable to the Company, and (iii) overseeing
the evaluation of the Board and the Company's management.
Each of Douglas Crocker II, Elizabeth McCaul, Ronald H. Menaker, Lewis S.
Ranieri, Stanley Steinberg, Peter Quick and John Ruffle currently serves as a
member of the Nominating and Corporate Governance Committee. Mr. Menaker serves
as chairman of the Nominating and Corporate Governance Committee. All current
members of the Nominating and Corporate Governance Committee are independent as
defined in the rules of the New York Stock Exchange. Mr. Quick served as
chairman of the Nominating and Corporate Governance Committee until March 2004.
The Nominating and Corporate Governance Committee has a charter which is
available and can be viewed and downloaded from the Company's website at
www.reckson.com. A copy of the charter is available to stockholders free of
charge on request to the Company's Secretary, Reckson Associates Realty Corp.,
225 Broadhollow Road, Melville, New York 11747.
The Nominating and Corporate Governance Committee will consider
appropriate nominees for director whose names are submitted in writing by a
stockholder of the Company. Nominations must be addressed to Reckson Associates
Realty Corp., 225 Broadhollow Road, Melville, New York 11747, Attn: Jason M.
Barnett, Secretary, indicating the nominee's qualification and other relevant
biographical information and providing confirmation of the nominee's consent to
serve as director. In order to be considered for the next annual election of
directors, any such written request must comply with the requirements set forth
in the Bylaws of the Company and below under "Stockholder Proposals for 2005
Annual Meeting." The Nominating and Corporate Governance Committee held ____
meetings during the fiscal year 2003.
The Nominating and Corporate Governance Committee reviews with the Board
on an annual basis the appropriate skills and characteristics required of Board
members in the context of the then-current composition of the Board. This
assessment includes, in addition to qualities of intellect, integrity and
judgment, business experience and knowledge, reputation and character, issues of
diversity, relevant industry and trade association knowledge and participation,
accounting and financial expertise, public company experience, willingness and
ability to devote the time and effort required to effectively serve on the Board
and relevant legal and regulatory qualifications. The committee makes this
determination in the context of an assessment of the perceived needs of the
Board at that point in time. The committee evaluates all nominees for director
based on these criteria, including nominees recommended by stockholders.
All nominees for director at the 2004 Annual Meeting currently serve as
directors of the Company. The recently appointed Independent Directors were
identified after the Nominating and Corporate Governance Committee had
determined the desired experience and other qualifications for additional
directors. With respect to Messrs. Crocker, Ruffle and Steinberg and Ms.
McCaul, each of whom was appointed by the Board in 2004, Mr. Steinberg and
Ms. McCaul were recommended as nominees to the Board by the Chief Executive
Officer, Mr. Ruffle was recommended as a nominee by an Independent Director,
and Mr. Crocker was recommended by an Independent Director based upon a
recommendation from a stockholder.
The committee considers nominees for the Board from any reasonable source,
including current Board members, stockholders or other persons. While the
Nominating and Corporate Governance Committee has the ability to retain a third
party to assist in the nomination process, the Company has not paid a fee to any
third party to identify or assist in identifying or evaluating potential
nominees.
15
PRICING COMMITTEE. The Company's Pricing Committee consists of Peter
Quick, Douglas Crocker II, Lewis S. Ranieri and Scott H. Rechler. The Pricing
Committee is designated from time to time and as needed to consider the price at
which securities of the Company may be offered. The Pricing Committee held _____
meetings during the fiscal year 2003. Mr. Crocker serves as chairman of the
Pricing Committee.
DIRECTOR INDEPENDENCE
The Board has determined that all of the Company's directors, with the
exception of Messrs. Scott H. Rechler (the Company's President and Chief
Executive Officer) and Donald J. Rechler (the Company's Chairman of the Board
and uncle of Scott H. Rechler), have met the independence requirements of the
New York Stock Exchange, based upon the application of objective categorical
standards adopted by the Board. In making a determination regarding a director's
independence, the Board considers all relevant facts and circumstances,
including the director's commercial, banking, consulting, legal, accounting,
charitable and familial relationships, and such other criteria as the Board may
determine from time to time. In accordance with the Company's corporate
governance guidelines, a director who satisfies all of the following criteria
will be determined to be an Independent Director of the Company:
(i) The director is not a current employee of the Company and has not
been an employee of the Company within the preceding three years
(other than in the capacity as a former interim Chairman or CEO);
(ii) No immediate family member is currently an executive officer of the
Company, and has not been such within the preceding three years;
(iii) The director (other than in the capacity of a former interim
Chairman or CEO), and any immediate family member of the director
acting in the capacity of an executive employee, did not receive
more than $100,000 in a twelve-month period in direct compensation
from the Company, other than director and committee fees and pension
or other forms of deferred compensation for prior service (provided
such compensation is not contingent in any way on continued
service), within the preceding three years;
(iv) The director was not affiliated with or employed by a present or
former (internal or external) auditor of the Company and no
immediate family member of the director was affiliated with or
employed in a professional capacity by a present or former (internal
or external) auditor of the Company, within the preceding three
years;
(v) Neither the director nor an immediate family member of the director
was employed as an executive officer of another company where any of
the Company's present executives served on that company's
compensation committee within the preceding three years;
(vi) The director is not a current executive officer or employee and no
immediate family member of the director is a current executive
officer, of another company that made payments to or received
payments from the Company for property or services in an amount
which, in any of the preceding three fiscal years, exceeded the
greater of $1 million or two percent (2%) of such other company's
consolidated gross revenues (based on those revenues reported in the
applicable fiscal year).
16
Direct or indirect ownership of even a significant amount of Company
stock, by a director who may otherwise be determined to be independent as a
result of the application of the foregoing standards, may not bar an
independence finding as to such director.
For purposes of the foregoing, an "immediate family member" is defined as
a person's spouse, parents, children, siblings, mothers and fathers-in-law, sons
and daughters-in- law, brothers and sisters-in-law and anyone (other than an
employee) who shares such person's home. Individuals who are no longer immediate
family members as a result of legal separation or divorce, or those who have
died or become incapacitated are not taken into consideration with respect to
the determination of a director's independence.
DIRECTOR COMPENSATION
Each Independent Director of the Company receives an annual director's fee
of $25,000 ($37,500 in the case of the lead director). Each Independent Director
also receives $1,000 for each quarterly and special meeting of the Board of
Directors attended in person, including committee meetings ($1,500 in the case
of the lead director), except that members of the Audit Committee receive $2,000
for each audit committee meeting attended in person; and $500 for each quarterly
and special meeting of the Board of Directors in which the director participates
by teleconference, including committee meetings ($750 in the case of the lead
director), except that members of the Audit Committee receive $750 for each
Audit Committee meeting in which they participate by teleconference. Each
Independent Director appointed or elected for the first time receives 1,000
shares of restricted common stock on his or her date of appointment or election.
In addition, following each annual meeting of stockholders, each of the
Company's Independent Directors receives a number of shares of restricted common
stock having a fair market value of $20,000 on the date of grant ($30,000 in the
case of the lead director). All shares of restricted common stock granted to the
Independent Directors vest immediately. However, no shares of restricted common
stock granted to an Independent Director is transferable by an Independent
Director while such Independent Director remains a director of the Company.
On June 5, 2003, each of the then-serving Independent Directors was
granted 966 shares of common stock, except for Peter Quick who as lead director
received 1,449 shares of common stock. The closing price on the New York Stock
Exchange on June 5, 2003 of the Company's common stock was $20.70 per share.
COMMUNICATION WITH THE BOARD OF DIRECTORS
The Company has a process for handling letters received by the Company and
addressed to the Board of Directors or members of the Board. Through this
process, any person, including our stockholders, may communicate directly with
the chairman of the board, the lead director or with any individual Board
member, or the entire Board a Committee of the Board or the Independent
Directors as a group, at any time. A description of how persons can communicate
with our Board of Directors or members of the Board is available on the
Company's website at www.reckson.com or to request a copy via U.S. mail write to
Jason M. Barnett, Corporate Secretary, Reckson Associates Realty Corp., 225
Broadhollow Road, Melville, NY 11747.
CODE OF BUSINESS CONDUCT AND ETHICS
The Company has a code of business conduct and ethics, which is designed
to promote honest and ethical conduct and deter wrongdoing at all levels of the
Company's organization. All employees, officers and directors of the Company are
bound by the code of business conduct and ethics. In addition to the code of
business conduct and ethics, the chief financial officer, chief accounting
officer and other
17
senior financial officers that hold significant positions of leadership and
trust at the Company must set an exemplary standard of conduct for the Company
as described in the CFO and senior financial officers code of conduct. A copy of
each code is available on the Company's website at www.reckson.com or to request
a copy via U.S. mail write to from Jason M. Barnett, Corporate Secretary,
Reckson Associates Realty Corp., 225 Broadhollow Road, Melville, NY 11747.
18
PROPOSAL 4: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee has selected the accounting firm of Ernst & Young LLP
to serve as independent auditors of the Company for the fiscal year ending
December 31, 2004, subject to ratification of this appointment by the
stockholders of the Company. Ernst & Young LLP has served as the Company's
independent auditors since the Company's formation in September 1994 and is
considered by management of the Company to be well qualified. The Company has
been advised by that firm that neither it nor any member thereof has any
financial interest, direct or indirect, in the Company or any of its
subsidiaries in any capacity. A representative of Ernst & Young LLP will be
present at the Annual Meeting, will be given the opportunity to make a statement
if he or she so desires and will be available to respond to appropriate
questions.
Ernst & Young LLP's fees for providing services to the Company in 2003 and
2002 were as follows:
AUDIT FEES. The aggregate fees billed by Ernst & Young LLP for
professional services rendered for the audit of the Company's annual financial
statements for the fiscal years ended December 31, 2003 and 2002 and for the
reviews of the financial statements included in the Company's Quarterly Reports
on Form 10-Q for the fiscal years ended December 31, 2003 and 2002 were
approximately $476,000 and $375,000, respectively.
AUDIT-RELATED FEES. The aggregate fees billed by Ernst & Young LLP for
professional services rendered for assurance and related services that are
reasonably related to the performance of the audit or review of the Company's
financial statements, other than the services described under "Audit Fees,"
including employee benefit plan audits and accounting assistance, for the fiscal
years ended December 31, 2003 and 2002 were approximately $478,000 and $222,500,
respectively.
TAX FEES. The aggregate fees billed by Ernst & Young LLP for professional
services rendered for tax compliance (including REIT tax compliance), tax
advice, and tax planning for the fiscal years ended December 31, 2003 and 2002
were approximately $113,000 and $83,000, respectively.
ALL OTHER FEES. There were no other fees billed by Ernst & Young LLP for
the fiscal years ended December 31, 2003 and 2002.
All of the services described under "Audit Fees," "Audit-Related Fees" and
"Tax Fees" were approved by the Audit Committee.
Under the Audit Committee's pre-approval policies and procedures, each
member of the Audit Committee has the authority to approve all permissible
non-audit services to be performed by Ernst & Young LLP, provided that each
decision relating to the approval of permissible non-audit services is presented
to the Audit Committee at its next scheduled meeting. All such approvals are
also reported to the full Board at the next scheduled Board meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF THE INDEPENDENT AUDITORS.
19
REPORT OF THE AUDIT COMMITTEE
THE FOLLOWING IS A REPORT BY THE COMPANY'S AUDIT COMMITTEE REGARDING THE
RESPONSIBILITIES AND FUNCTIONS OF THE AUDIT COMMITTEE.
The Audit Committee, on behalf of the Board of Directors of the Company,
serves as an independent and objective party to monitor the Company's financial
reporting process and internal control system, and to review and appraise the
audit efforts of the Company's independent auditors. The Audit Committee
performs these oversight responsibilities in accordance with its Audit Committee
Charter, which the Board of Directors revised in 2002. A copy of the revised
charter was included in the Company's proxy statement for the 2003 Annual
Meeting of Stockholders and can be viewed and downloaded from the Company's
website at www.reckson.com. A copy of the charter is also available to
stockholders free of charge on request to the Company's Secretary, Reckson
Associates Realty Corp., 225 Broadhollow Road, Melville, New York 11747.
Management has the primary responsibility for the financial statements and
the reporting process, including the systems of internal controls. In fulfilling
its oversight responsibilities, the Audit Committee reviewed with management the
audited financial statements in the Company's Annual Report, and discussed with
management the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments and the clarity of
disclosures in the financial statements. The Audit Committee also reviewed and
discussed the Company's earnings releases with management.
Ernst & Young LLP, the Company's independent auditors, are responsible for
auditing the Company's financial statements and for expressing an opinion on the
conformity of those audited financial statements with generally accepted
accounting principles. The Audit Committee reviewed and discussed with the
independent auditors 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 with the Audit Committee under Statement on
Auditing Standards No. 61, as currently in effect. The Audit Committee also
received the written disclosures and the letter from the independent auditors
required by the Independence Standards Board Standard No. 1, as currently in
effect, discussed with the independent auditors the auditors' independence from
management and the Company and considered the compatibility of non-audit
services with the auditors' independence.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for their audit. The Audit Committee meets at least
quarterly with the independent 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.
The Audit Committee also meets with management prior to the filing of the
Company's quarterly reports on Form 10-Q with the SEC and release to the public
of its quarterly and year-end financial results.
In reliance on the reviews and discussions referred to above, and subject
to the limitations on the role and responsibilities of the Audit Committee
referred to below, the Audit Committee recommended to the Board of Directors
(and the Board has approved) that the audited financial statements be included
in the Company's Annual Report on Form 10-K for the year ended December 31, 2003
for filing with the SEC.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting. Members of the Audit Committee rely, without
independent verification, on the information provided to them and on the
representations made by management and the independent auditors. Accordingly,
the Audit Committee's oversight does not provide an independent basis to
20
determine that management has maintained appropriate accounting and financial
reporting principles or appropriate internal controls and procedures designed to
assure compliance with accounting standards and applicable laws and regulations.
Furthermore, the Audit Committee's considerations and discussions referred to
above do not assure that the audit of the Company's financial statements has
been carried out in accordance with generally accepted auditing standards, that
the financial statements are presented in accordance with generally accepted
accounting principles or that Ernst & Young LLP is in fact "independent."
Submitted by the Audit Committee
of the Board of Directors of the Company*
Conrad D. Stephenson (Chairman)
Ronald H. Menaker
Peter Quick
* During the year ended December 31, 2003, the Audit Committee was comprised of
Messrs. Stephenson, Menaker and Quick. At a Board of Directors meeting held in
March 2004, the Audit Committee was reconstituted. The current members of the
Audit Committee are Messrs. Ruffle (Chairman), Menaker and Quick and Ms. McCaul.
21
EXECUTIVE COMPENSATION
REPORT ON EXECUTIVE COMPENSATION
THE ROLE OF THE COMMITTEE. Generally, the Compensation Committee of the
Board of Directors (the "Compensation Committee") establishes, oversees and
directs the Company's executive compensation policies and programs, administers
the Company's stock option plans and seeks to ensure that the Company's
executive compensation philosophy is consistent with the Company's best
interests.
The Compensation Committee has a charter which is available and can be
viewed and downloaded from the Company's web site at www.reckson.com. A copy of
the charter is available to stockholders free of charge on request to the
Company's Secretary, Reckson Associates Realty Corp., 225 Broadhollow Road,
Melville, New York 11747. The Compensation Committee charter provides that the
responsibilities of the Compensation Committee include (i) reviewing and
approving corporate goals and objectives relevant to the chief executive
officer's compensation, evaluating the chief executive officer's performance in
light of those goals and objectives, and, determining and approving the chief
executive officer's compensation level based on this evaluation, (ii) making
recommendations to the Board with respect to non-chief executive officer
compensation, incentive-compensation plans and equity-based plans, and (iii)
producing this annual compensation committee report on executive compensation as
required by the SEC.
COMPENSATION PHILOSOPHY AND REVIEW. The Compensation Committee seeks to
align executive compensation with the Company's business objectives and
strategies, management programs and financial performance. The Company's
compensation philosophy for executive officers serves three principal purposes:
(i) to provide a total compensation package for executive officers that is
competitive with the total compensation paid by REITs similar to the Company,
other public and private real estate companies and with the current market for
executive talent, (ii) to attract, retain and motivate talented executives who
will maximize stockholder value and (iii) to encourage senior management's
long-term equity ownership in the Company by linking a portion of executive
compensation directly to increases in stockholder value.
The Compensation Committee has overall responsibility for evaluating and
approving the executive officer benefit, bonus, incentive compensation,
severance, equity-based or other compensation plans, policies and programs of
the Company. The Compensation Committee exercises independent discretion in
respect of executive compensation matters. With respect to the compensation of
the Named Executive Officers (as defined herein) other than Scott H. Rechler,
the Compensation Committee reviews the recommendations of Scott H. Rechler.
EXECUTIVE COMPENSATION. The Company's executive compensation program
consists primarily of an annual salary, cash bonuses linked to the performance
of executives and the Company and long-term equity-based compensation.
Final compensation determinations for each fiscal year are generally made
after the end of the fiscal year. At that time, base salaries for the following
fiscal year are set, cash bonuses, if any, are determined for the past year's
performance, and option grants or other long-term compensation awards, if any,
are generally made. For fiscal 2003, the Compensation Committee reviewed the
annual salaries of the Company's executive officers. At a meeting held in
February 2004, the Compensation Committee set the base salaries for the Named
Executive Officers for the fiscal year ending December 31, 2004 and approved
cash bonuses for such officers in respect of the fiscal year ended December 31,
2003.
22
The Compensation Committee was advised by an independent compensation
consultant regarding executive officer compensation matters, including annual
base salary, annual incentives and long-term incentives. The independent
compensation consultant is a consultant specializing in compensation matters in
the real estate industry and is not affiliated with the Company. The
Compensation Committee considered the independent compensation consultant's
advice in determining base salaries for 2004 and annual bonuses and long-term
incentives for fiscal 2003. In addition, the independent compensation consultant
advised the Compensation Committee on the appropriate long-term incentive
arrangements in order to meet the Company's objectives.
In determining executive compensation, the Compensation Committee noted
several factors, including the Company's restructuring, the Company's
disposition of the Long Island industrial portfolio, the Company's operating
performance in a challenging economic environment and the improvement to the
Company's balance sheet as a result of the Company's capital markets
activities.
The following is a discussion of each element of the Company's executive
compensation:
ANNUAL BASE SALARY. Base salaries for the current Named Executive Officers
are the subject of employment and noncompetition agreements between the Company
and each such executive as discussed below. Each such agreement provides that
the base salary provided for under the respective agreement will be reviewed no
less frequently than annually. For 2003, the Compensation Committee determined
base salaries for the Named Executive Officers based upon comparable industry
salaries, the current economic environment and the advice provided by the
independent compensation consultant for the fiscal year ended December 31, 2003.
The current Named Executive Officers' 2004 base salaries increased between 0 -
10% from their 2003 base salaries.
ANNUAL INCENTIVES. Annual incentives are provided in the form of cash
bonuses and were determined at the discretion of the Compensation Committee
based upon the overall performance of the Company, the personal performance of
each executive and the advice provided by the independent compensation
consultant. For fiscal 2003, each of the current Named Executive Officers
received a cash bonus equal to 100% of their 2003 base salary.
LONG-TERM INCENTIVES. Long-term incentives have historically been provided
by the Company through a variety of means, including the grant of stock options,
restricted stock awards, rights and, in prior years, stock loans to purchase the
Company's common stock. These awards are intended to align the executive's
long-term objectives with those of the Company's stockholders. The grant of
stock options, restricted stock awards, rights and stock loans are made under
the Company's stock option plans which are administered by the Compensation
Committee. The Compensation Committee has the discretion to determine those
individuals to whom awards are made and the terms and conditions of the awards.
CHIEF EXECUTIVE OFFICER. The Compensation Committee determined the 2003
compensation of the Chief Executive Officer in accordance with the above
discussion.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), limits the deductibility
on the Company's tax return of compensation over $1 million to the Chief
Executive Officer and the next four highest compensated officers of the Company
(the "Covered Employees") unless, in general, the compensation is paid pursuant
to a plan which is performance-related, non-discretionary and has been approved
by the Company's stockholders. The Company paid aggregate compensation of
approximately $7.9 million to its Covered Employees during 2003 which would be
non-deductible under the limitations set forth in section 162(m).
23
Submitted by the Compensation Committee
of the Board of Directors of the Company*
Lewis S. Ranieri (Chairman)
Peter Quick
* During the year ended December 31, 2003, the Compensation Committee was
comprised of Messrs. Quick and Ranieri. At a Board of Directors meeting held in
March 2004, the Compensation Committee was reconstituted. The current members of
the Compensation Committee are Messrs. Crocker, Menaker, Ranieri and Steinberg.
24
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding the compensation
awarded for the past three fiscal years to Scott H. Rechler, Chief Executive
Officer of the Company, the other four most highly compensated executive
officers of the Company (the "Current Named Executive Officers") and the former
Co-Chief Executive Officer and two former executive officers, each of whom was
no longer serving as an officer of the Company at the end of the most recent
fiscal year (the "Former Named Executive Officers" and together with the Current
Named Executive Officers, the "Named Executive Officers").
CURRENT NAMED EXECUTIVE OFFICERS
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION RESTRICTED
----------------------- STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) AWARDS($)(2) OTHER($)(5)
--------------------------- ---- ------------ -------- ------------- -----------
Scott H. Rechler............................ 2003 486,875 486,875 -- 43,969(6)
Chief Executive Officer and 2002 486,875 486,875 885,148(3) 35,754(7)
President 2001 475,000 0 - -
Michael Maturo.............................. 2003 435,625 435,625 -- 7,596
Executive Vice President, 2002 435,625 435,625 726,760(3) 35,576(7)
Chief Financial Officer and Treasurer 2001 425,000 350,000 - -
Jason M. Barnett............................ 2003 435,625 435,625 -- 6,173
Executive Vice President, Secretary 2002 435,625 435,625 156,240(3) --
and General Counsel 2001 425,000 350,000 -- --
Salvatore Campofranco....................... 2003 300,000 300,000 -- 45,576(8)
Executive Vice President and Chief 2002 270,375 275,000 449,157(4) 576
Operating Officer 2001 262,500 212,500 496,151(4) 576
Philip Waterman III......................... 2003 400,000 400,000 70,464(8)
Executive Vice President, Chief 2002 343,917 350,000 576
Development Officer and Managing 2001 333,900 270,300 576
Director New York City Division
25
FORMER NAMED EXECUTIVE OFFICERS(9)(10)
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION RESTRICTED
----------------------- STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) AWARDS($)(2) OTHER($)(5)
--------------------------- ---- ------------ -------- ------------- -----------
Donald J. Rechler........................... 2003 496,534 563,750 - 4,370(6)
Chairman of the Board 2002 563,750 563,750 1,127,848(3) 35,690(7)
and Former Co-Chief Executive 2001 550,000 525,000 - -
Officer
Mitchell D. Rechler......................... 2003 385,685 435,625 - 52,475(6)
Former Co-President, Chief 2002 435,625 435,625 726,760(3) 38,738(7)
Administrative Officer and President 2001 425,000 400,000 - -
of Reckson Management Group, Inc.
Gregg M. Rechler............................ 2003 383,685 435,625 - 41,837(6)
Former Co-President, Chief 2002 435,625 435,625 726,760(3) 576(7)
Operating Officer and President of 2001 425,000 400,000 - -
Reckson Construction Group, Inc.
----------------
(1) The base salaries of Donald J. Rechler, Scott H. Rechler, Michael Maturo,
Jason M. Barnett, Salvatore Campofranco and Mitchell D. Rechler were paid
by the Management Company. The base salaries of Gregg M. Rechler and Roger
M. Rechler were paid by RCG and the base salary of Philip M. Waterman III
was paid by RANY Management Group, Inc. The Company and the Operating
Partnership reimburse the appropriate subsidiary corporation for time
spent by the Named Executive Officer on the business of the Company or the
Operating Partnership, respectively.
(2) As of December 31, 2003, the Named Executive Officers held 353,017 shares
of restricted stock, aggregating $8.6 million (based on the closing price
on the New York Stock Exchange of the Company's common stock on December
31, 2003), including the 2002 and 2003 Rights referred to in footnote 6
below.
(3) Represents the value, as of the date of grant, of (i) an award of Rights,
which was granted to certain of the Named Executive Officers in November
2002 (the "2002 Rights") and (ii) an award of Rights, which was granted to
certain of the Named Executive Officers in March 2003 (the "2003 Rights").
The Rights were granted pursuant to agreements with the respective Named
Executive Officer. Each Right represents the right to receive, upon
vesting, one share of common stock, if shares are then available for grant
under one of the Company's stock option plans or, if shares are not so
available, an amount of cash equivalent to the value of such stock on the
vesting date. The 2002 Rights will vest in four equal annual installments
beginning on November 14, 2003 (and shall be fully vested on November 14,
2006). The 2003 Rights will be earned as of March 13, 2005 and will vest
in three equal annual installments beginning on March 13, 2005 (and shall
be fully vested on March 13, 2007). Dividends on the shares will be held
by the Company until such shares become vested, and will be distributed
thereafter to the applicable officer. The 2002 Rights also entitled the
holder thereof to cash payments in respect of taxes payable by the holder
resulting from the Rights. The 2002 Rights were granted as follows:
26
Donald J. Rechler received 46,983 Rights; Scott H. Rechler received 35,247
Rights; each of Mitchell D. Rechler, Gregg M. Rechler and Michael Maturo
received 27,588 Rights; and Roger M. Rechler received 25,530 Rights. With
respect to the 2003 Rights, each of the foregoing Named Executive Officers
each received 8,680 Rights. In connection with the Company's disposition
of the Long Island Industrial portfolio, Donald Rechler, Mitchell Rechler,
Gregg Rechler and Roger Rechler forfeited their 2003 Rights and exchanged
their 2002 Rights for cash payments of $1,080,609, $634,524, $634,524 and
$587,190, respectively. See "Certain Relationships and Related
Transactions--Property Transactions."
(4) In 1999, Mr. Campofranco was awarded a stock grant of 65,000 shares of
common stock. The award vested in three equal annual installments
beginning in 2000.
(5) Excludes loan forgiveness and related tax payments in 2003, 2002 and 2001,
respectively, pursuant to the terms of previously awarded stock loans in
the following amounts: Donald J. Rechler--$530,500, $1,064,500 and
$680,400; Scott H. Rechler--$530,500, $985,400 and $599,600; Mitchell D.
Rechler--$440,700, $807,500 and $428,000; Gregg M. Rechler--$466,500,
$848,800 and $450,000; Michael Maturo--$440,700, $807,500 and $428,000;
Roger M. Rechler--$440,700, $792,156 and $413,900, Jason M.
Barnett--$383,200, $534,700 and $119,000; Salvatore Campofranco--$312,143,
$272, 156 and $407,031 and Philip Waterman III--$2,258,655, $762,278 and
$823,698. See "Certain Relationships and Related Transactions." In
addition, with respect to Michael Maturo, excludes loan forgiveness and a
related tax payment in 2003, 2002 and 2001 of $106,211, $79,832 and
$175,632, respectively, pursuant to the terms of Mr. Maturo's 1995
employment and noncompetition agreement with the Company. See "Employment
and Noncompetition Agreements."
(6) Includes the following premiums paid during 2003 for life insurance
policies under which the Named Executive Officers have the right to
receive the cash surrender value of the policies: Donald J. Rechler--$0;
Scott H. Rechler--$35,178; Mitchell D. Rechler--$38,162; Gregg M.
Rechler--$35,028; Michael Maturo--$0; and Roger M. Rechler--$45,429. Prior
to the enactment of the Sarbanes-Oxley Act of 2002, the Company had
loaned, on behalf of executive officers, the payment of the premiums on
such life insurance policies, subject to the refund of premiums to the
Company upon the termination of such policies.
(7) Includes the following premiums paid during 2002 for life insurance
policies under which the Named Executive Officers have the right to
receive the cash surrender value of the policies: Donald J.
Rechler--$35,114; Scott H. Rechler--$35,178; Mitchell D. Rechler--$38,162;
Gregg M. Rechler--$0; Michael Maturo--$35,000; and Roger M.
Rechler--$37,448. Prior to the enactment of the Sarbanes-Oxley Act of
2002, the Company had loaned, on behalf of executive officers, the payment
of the premiums on such life insurance policies, subject to the refund of
premiums to the Company upon the termination of such policies.
(8) Each of Messrs. Campofranco and Waterman were granted a special cash award
of $45,000 and $60,000, respectively, in connection with their promotion
to executive positions in December 2003.
27
(9) In connection with the Company's disposition of the Long Island Industrial
portfolio, Donald J. Rechler resigned as Co-Chief Executive Officer of the
Company effective November 10, 2003, but he remains the chairman of the
Board of Directors of the Company. See "Certain Relationships and Related
Transactions--Property Transactions."
(10) In connection with the Company's disposition of the Long Island Industrial
portfolio, Mitchell D. Rechler resigned as Co-President, Chief
Administrative Officer and President of Reckson Management Group, Inc. and
Gregg M. Rechler resigned as Co-President, Chief Operating Officer and
President of Reckson Construction Group, Inc. ("RCG") effective November
10, 2003. See "Certain Relationships and Related Transactions--Property
Transactions."
AGGREGATED FISCAL YEAR-END 2003 OPTION VALUES
The following table sets forth the value of options at the end of 2003 by
the Company's Named Executive Officers.
CURRENT NAMED EXECUTIVE OFFICERS
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED OPTIONS AT FISCAL OPTIONS AT FISCAL
ON VALUE YEAR-END(#) YEAR-END($)(1)
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Scott H. Rechler............. 0 0 422,500 0 297,063 0
Michael Maturo............... 0 0 477,500 0 1,277,783 0
Jason M. Barnett............. 0 0 130,000 0 216,840 0
Salvatore Campofranco........ 0 0 70,000 0 52,000 0
Philip Waterman III.......... 0 0 190,000 0 509,500 0
FORMER NAMED EXECUTIVE OFFICERS
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED OPTIONS AT FISCAL OPTIONS AT FISCAL
ON VALUE YEAR-END(#) YEAR-END($)(1)
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Donald J. Rechler............ 0 0 497,500 0 297,063 0
Mitchell D. Rechler.......... 0 0 397,500 0 297,063 0
Gregg M. Rechler............. 0 0 397,500 0 297,063 0
---------------
(1) The value of unexercised in-the-money options at fiscal year-end based on
the fair market value of the common stock of $24.30 per share as of
December 31, 2003.
LONG-TERM INCENTIVE PLAN(1) -- AWARDS IN LAST FISCAL YEAR
28
CURRENT NAMED EXECUTIVE OFFICERS
ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK
PRICE-BASED PLANS
PERFORMANCE OR OTHER ---------------------------------------------------
PERIOD UNTIL THRESHOLD TARGET MAXIMUM
NAME NUMBER OF SHARES MATURATION OF PAYOUT (# OF SHARES)(5) (# OF SHARES) (# OF SHARES)
---- ---------------- -------------------- ---------------- ------------- -------------
Scott H. Rechler
Core Award........................ 138,889(2) 3/13/03 - 3/13/07 8,681 138,889 138,889
Special Award.................... (3) 3/13/07 N/A N/A N/A
Michael Maturo
Core Award....................... 138,889(2) 3/13/03 - 3/13/07 8,681 138,889 138,889
Special Award.................... (3) 3/13/07 N/A N/A N/A
Jason M. Barnett
Core Aware....................... 138,889(2) 3/13/03 - 3/13/07 8,681 138,889 138,889
Special Award.................... (3) 3/13/07 N/A N/A N/A
Salvatore Campofranco
Core Award........................ 83,333(2)(4) 3/13/03 - 3/13/07 5,208 83,333 83,333
Special Award.................... (3)(4) 3/13/07 N/A N/A N/A
Philip Waterman III
Core Award....................... 111,111(2) 3/13/03 - 3/13/07 6,944 111,111 111,111
Special Award.................... (3) 3/13/07 N/A N/A N/A
FORMER NAMED EXECUTIVE OFFICERS
ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK
PRICE-BASED PLANS
PERFORMANCE OR OTHER --------------------------------------------------
PERIOD UNTIL THRESHOLD TARGET MAXIMUM
NAME NUMBER OF SHARES MATURATION OF PAYOUT (# OF SHARES) (# OF SHARES) (# OF SHARES)
---- ---------------- -------------------- ------------- ------------- -------------
Mitchell D. Rechler
Core Award.................. 138,889(2)(5) 3/13/03 - 3/13/07 8,681(6) 138,889 138,889
Special Award............... (3)(6) 3/13/07 N/A N/A N/A
Gregg M. Rechler
Core Award.................. 138,889(2)(5) 3/13/03 - 3/13/07 8,681(6) 138,889 138,889
Special Award............... (3)(6) 3/13/07 N/A N/A N/A
--------------
(1) In 2003 the Company reviewed and adopted a Long-Term Incentive Plan (the
"LTIP"), which was recommended by the Compensation Committee, for the
Company's executive officers and other senior officers. The four-year plan
has a core component (the "Core Award"), which provides for annual
stock-based compensation based upon continued service and in part based on
attaining certain annual performance measures. The LTIP has a special
outperformance award (the "Special Outperformance Award"), which provides
for compensation to be earned at the end of a four-year period if the
Company attains certain four-year cumulative performance measures. Amounts
earned under the special outperformance long-term component may be paid in
cash or stock at the discretion of the Compensation Committee. Performance
measures are based on total stockholder returns on a relative and absolute
basis.
29
(2) These shares of restricted stock were awarded on March 13, 2003 as Core
Awards under the Company's LTIP. The Core Award was made in the form of a
grant of shares of restricted stock equal to a target amount to be earned
over the four-year plan period. The shares of restricted stock were
granted from available shares of common stock under the Company's 2002
stock option plan. Under the terms of the LTIP, 6.25% of an officer's
shares will become vested on each of the four anniversaries of the date of
grant, provided that the officer remains in continuous employment with the
Company until such date. 18.75% of an officer's shares will become vested
on each of the four anniversaries of the date of grant, provided that the
officer remains in continuous employment with the Company until such date,
and the Company has achieved a total return to holders of the common
equity of the Company and the Operating Partnership ("Common Equity") that
either (i) is at or above the 50th percentile of the total return to
stockholders achieved by members of a designated peer group during the
same period, or (ii) equals at least 9% per annum. Under the terms of the
LTIP, if the performance requirement is not satisfied for a given year,
the shares from that year will be rolled over to the following year and
will become vested if the performance requirement is satisfied on a
cumulative and compounded basis for the extended period. Dividends on the
shares of restricted stock will be held by the Company until such shares
become vested, and will be distributed thereafter to the applicable
officer.
(3) On March 13, 2003, each officer was also granted a Special
Outperformance Award under the LTIP entitling such officer to a share
of a special outperformance pool. The special outperformance component
of the LTIP consists of a bonus pool equal to 10% of the total return
in excess of a 9% cumulative and compounded annual total return on the
Common Equity for the period through the four-year anniversary after
the date of grant (the "Special Outperformance Pool"). The aggregate
amount payable to such officers from the Special Outperformance Pool is
capped at an amount calculated based upon a total cumulative and
compounded annual return on the Common Equity of 15%. An officer's
Special Outperformance Award represents an allocation of the Special
Outperformance Pool and will become vested on the fourth anniversary of
the date of grant, provided that the officer remains in continuous
employment with the Company or any of its affiliates until such date,
and the Company has achieved on a cumulative and compounded basis,
during the four fiscal years completed on the applicable anniversary
date, a total return to holders of the Common Equity that (i) is at or
above the 60th percentile of the total return to stockholders achieved
by members of the peer group during the same period and (ii) equals at
least 9% per annum. Special Outperformance Awards will be paid in cash;
however, the Compensation Committee, in its sole discretion, may elect
to pay such an award in shares of common stock, valued at the date of
vesting, if shares are available at such time under any of the
Company's existing stock option plans. The LTIP provides that no
dividends or dividend equivalent payments will accrue with respect to
the Special Outperformance Awards.
(4) Subsequent to the grant of his Core Award and Special Award, the terms
of Mr. Campofranco's grant was amended with respect to certain
change-in-control and other provisions. If a change-in-control or death
or disability (an "Event") occurs within the first three years
following the grant of the award, the executive will be entitled to the
Core Award during the current year and a $1 million cash payment and
any remaining portion of the Core Award and the entire Special Award
will be forfeited. However, if an Event occurs in the fourth year
following the grant, the executive will be entitled to the Core Award
during the current year, the $1 million cash payment and to the Special
Award to the extent earned, provided however that with respect to the
Special Award the executive will only be entitled to an amount equal to
the amount by which the Special Award earned exceeds $1 million.
Lastly, upon an Event any other contractual obligations that the
executives may be entitled to will be reduced by the $1 million cash
payment.
(5) In connection with their resignations from the Company, Mitchell Rechler
and Gregg Rechler each received 8,681 shares of the Company's Class A
common stock related to the service component of
30
their Core Award, which was valued at $293,000 in the aggregate. In
addition, since the Company met its annual performance measure under the
March 2003 LTIP in March 2004, these individuals also each received 26,041
shares of Class A common stock representing the balance of the annual Core
Award as if they remained in continuous employment with the Company. The
remainder of their core awards was forfeited as was the entire amount of
the special outperformance component of the March 2003 LTIP award.
(6) Threshold amount shown for the Core Award represents the number of shares
vesting on each of the four anniversaries of the date of grant as long as
the officer remains in continuous employment with the Company until such
date.
EMPLOYMENT AND NONCOMPETITION AGREEMENTS
Each of the Named Executive Officers has entered into an employment and
noncompetition agreement and a severance agreement with the Company.
The employment and noncompetition agreements with each of Scott H.
Rechler, Michael Maturo and Jason M. Barnett were renewed as of August 15, 2000
for five-year terms, unless in each case otherwise extended. The term of each of
their severance agreements is identical to their employment and noncompetition
agreement, including any extension thereof. However, in the event of a "Change
in Control" (as such term is defined in the applicable agreement), each
severance agreement automatically extends the term of the corresponding
employment agreement until the later of (i) the date on which the employment and
noncompetition agreement otherwise would have expired and (ii) the date which is
60 months after the end of the calendar year in which such Change in Control
occurs. Each agreement provides for certain benefits in the event of termination
of the executive by the Company without "Good Reason" (as such term is defined
in the applicable agreement) or the resignation of the executive upon a material
breach of the agreement by the Company or a Change in Control of the Company.
These benefits include the continued payment of the executive's base salary
during the remaining term of the agreement, immediate vesting of all equity
awards as well as continued entitlement to receive other benefits conferred
under the applicable agreement for such remaining term. Under the agreements,
each executive is also entitled to certain specified benefits in the event of
his death or disability.
In addition, the employment and noncompetition agreements for each of
Messrs. Rechler, Maturo and Barnett, subject to limited exceptions, prohibit
each such executive from engaging, directly or indirectly, during the term of
his employment, in any business, which engages or attempts to engage in,
directly or indirectly, the acquisition, development, construction, operation,
management or leasing of any industrial or office real estate property in any of
the submarkets throughout the tri-state metropolitan area of New York, New
Jersey and Connecticut in which the Company is operating ("Competitive
Activities"). These employment and noncompetition agreements also prohibit such
persons from engaging, directly or indirectly, during a specified Noncompetition
Period in any Competitive Activities, subject to limited exceptions. The
Noncompetition Period for each such executive is the period beginning on the
date of the termination of employment and ending on the later of (i) the first
anniversary of such person's termination of employment with the Company and (ii)
the third anniversary of the person's prior employment and noncompetition
agreement.
Mr. Waterman's employment agreement was amended and restated on January
18, 1999 and supplemented on September 7, 2000. Mr. Waterman's employment
agreement is for a term ending on December 31, 2006, unless otherwise extended.
Mr. Waterman's employment agreement provides for certain benefits in the event
the Company terminates his employment without Cause (as defined in the
agreement) or Mr. Waterman terminates his employment for Good Reason (as defined
in the agreement). These benefits include a cash lump sum payment of $2,000,000,
immediate vesting of any stock options,
31
the forgiveness of certain tax loans and the continuation of certain health,
life insurance and disability benefits. Mr. Waterman's employment agreement also
provides for specified benefits upon a change-in-control of the Company and his
death or disability.
Mr. Waterman's employment agreement also prohibits him from engaging,
directly or indirectly, in any business which or attempts to engage in the
acquisition, development, construction, operation, management or leasing of any
industrial or office real estate anywhere in New York, New Jersey or Connecticut
or intentionally interfere with, disrupt or attempt to disrupt the relationship
between the Company and any customer, tenant, supplier, contractor, lender or
employee during a specified Restrictive Period. The Restrictive Period for Mr.
Waterman is the period beginning on the date of termination of his employment
and an additional six months under certain circumstances.
32
STOCK PERFORMANCE GRAPH
The following graph provides a comparison of the cumulative total
stockholder return on the common stock for the period from December 31, 1998 to
December 31, 2003 with the cumulative total return on the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500") and the NAREIT Equity REIT Total
Return Index. Total return values were calculated based on cumulative total
return assuming (i) the investment of $100 in each of the Common Stock on
December 31, 1998, in the S&P 500 and in the NAREIT Equity REIT Total Return
Index on December 31, 1998, and (ii) reinvestment of dividends.
[GRAPHIC]
33
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth the beneficial ownership of Common Stock
for (i) each stockholder of the Company holding more than a 5% beneficial
interest in the common stock of the Company, (ii) each Named Executive Officer
of the Company and (iii) the directors and executive officers of the Company as
a group. Stock ownership of the directors who are not Named Executive Officers
of the Company appears under the heading "Information Regarding Nominees and
Directors" in this Proxy Statement.
SHARES OF COMMON STOCK AND UNITS
BENEFICIALLY OWNED AS OF MARCH 22, 2004(1)
------------------------------------------
PERCENT OF
NAME OF BENEFICIAL OWNERS NUMBER CLASS(2)
------------------------- ------ --------
Cohen & Steers Capital Management, Inc.(3)............................ 8,094,415 11.6%
FMR Corp.(4).......................................................... 6,687,021 9.6%
LaSalle Investment Management, Inc.(5)................................ 4,519,141 6.5%
Security Capital Research & Management Incorporated(6)................ 4,985,706 7.2%
Stichting Pensioenfonds ABP(7)........................................ 2,132,700 3.1%
Scott H. Rechler(8)................................................... 765,440 1.09%
Donald J. Rechler(9).................................................. 995,208 1.41%
Michael Maturo(10).................................................... 695,115 *
Jason M. Barnett(11).................................................. 265,118 *
Salvatore Campofranco(12)............................................. 124,416 *
Philip Waterman III(13)............................................... 351,847 *
F. D. Rich III(14) ................................................... 214,593 *
Mitchell Rechler(15).................................................. 589,831 *
Gregg Rechler(16)..................................................... 537,025 *
----------- -----------
All directors and executive officers as a group
(17 persons).......................................................... 4,700,382 6.46%
* Less than one percent.
-------------
(1) All information has been determined as of March 22, 2004. For purposes of
this table a person is deemed to have "beneficial ownership" of the number
of shares of common stock that person has the right to acquire pursuant to
the exercise of stock options within 60 days or upon the redemption of
Units (assuming the Company elects to issue common stock rather than pay
cash upon such redemption). Units are exchangeable for cash or, at the
option of the Company, on a one-for-one basis for shares of common stock,
subject to certain limitations. See "Executive Compensation" for a
discussion of the vesting of stock options granted to directors and
officers.
(2) For purposes of computing the percentage of outstanding shares of Common
Stock held by each person, any shares of common stock which such person
has the right to acquire pursuant to the exercise of a stock option
exercisable within 60 days is deemed to be outstanding, but is not deemed
to be outstanding for the purposes of computing the percent ownership of
any other person. In addition, for purposes of such calculation, Units
held by each person are treated as if such person had converted and held
the related equivalent number of shares of common stock.
(3) This information is based upon information reported by the stockholder in
filings made with the SEC. The address of Cohen & Steers Capital
Management Inc. is 757 Third Avenue, New York, NY 10017.
34
(4) This information is based upon information reported by the stockholder in
filings made with the SEC. The address of FMR Corp. is 82 Devonshire
Street, Boston, MA 02109 and the address of Geode is 53 State Street,
Boston, MA 02109.
(5) This information is based upon information reported by the stockholder in
filings made with the SEC. LaSalle Investment Management, Inc. ("LaSalle")
owns 1,118,772 shares of common stock of the Company (1.7% of total shares
of common stock outstanding) and LaSalle Investment Management
(Securities), L.P. ("LIM"), a subsidiary of LaSalle, owns 3,400,369 shares
of common stock of the Company (5.1% of total shares of common stock
outstanding). The address of both LaSalle and LIM is 200 East Randolph
Drive, Chicago, IL 60601.
(6) This information is based upon information reported by the stockholder in
filings made with the SEC. The address of Security Capital Research &
Management Incorporated is 11 South LaSalle Street, 2nd Floor, Chicago, IL
60603.
(7) This information is based upon information reported by the stockholder in
filings made with the SEC. The address of Stichting Pensioenfonds ABP is
Oude Lindestraat 70, Postbus 2889, 6401 DL Heerlen, The Netherlands.
(8) Represents (a) 342,940 shares of common stock, including 339,357 shares of
common stock owned directly, 576 shares of common stock owned through the
Company's 401(k) plan and 3,007 shares of common stock held in trust for
the benefit of his children, and (b) 422,500 exercisable options.
(9) Represents (a) 497,708 shares of common stock, including 496,885 shares of
common stock owned directly, 823 shares of common stock owned through the
Company's 401(k) plan and (b) 497,500 exercisable options.
(10) Represents (a) 40,988 Units, (b) 176,627 shares of common stock, including
175,365 shares of common stock owned directly, 1,262 shares of common
stock owned through the Company's 401(k) plan, and (c) 477,500 exercisable
options.
(11) Represents (a) 133,118 shares of common stock, (b) 130,000 exercisable
options, and (c) 2,000 Units.
(12) Represents (a) 54,416 shares of common stock and (b) options to purchase
70,000 shares of common stock.
(13) Represents (a) 161,847 shares of common stock and (b) options to purchase
190,000 shares of common stock.
(14) Represents (a) 36,593 shares of common stock, (b) options to purchase
170,000 shares of common stock and (c) 8,000 Units.
(15) Represents (a) 192,331 shares of common stock, including 185,082 shares of
common stock owned directly, 269 shares of common stock owned through the
Company's 401(k) plan and 6,980 shares owned in trust for the benefit of
his children, and (b) 397,500 exercisable options.
(16) Represents (a) 139,525 shares of common stock, including 134,010 shares of
common stock owned directly and 5,515 shares of common stock owned in
trust for the benefit of his children, and (b) 397,500 exercisable
options.
35
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 and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities ("10% Holders"), to file reports of ownership and changes in
ownership with the SEC and the New York Stock Exchange. Officers, directors and
10% Holders are required by SEC regulation to furnish the Company with copies of
all Section 16(a) forms that they file. To the Company's knowledge, based solely
on review of the copies of such reports furnished to the Company, all Section
16(a) filing requirements applicable to its executive officers, directors and
10% Holders were satisfied during 2003, except as follows: Ronald Menaker, Peter
Quick, John V. N. Klein, Conrad Stephenson, Lewis Ranieri, Douglas Crocker,
Philip Waterman and Michael Maturo each filed a Form 4 with respect to one
transaction subsequent to its due date; Donald Rechler and Scott Rechler each
filed two Form 4s with respect to two transactions subsequent to the due date;
Donald Rechler, Scott Rechler and Michael Maturo each reported a transaction on
Form 5 that should have previously been reported on a Form 4; and Scott Rechler
reported on his 2003 Form 5 a transaction that should have been reported on his
2002 Form 5.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PROPERTY TRANSACTIONS
In connection with our initial public offering in May 1995 (the "IPO"),
the Company was granted ten-year options to acquire ten properties (the "Option
Properties") which were either owned by certain Rechler family members who were
also executive officers of the Company, or in which the Rechler family members
owned a non-controlling minority interest at a price based upon an agreed upon
formula. In years prior to 2001, one Option Property was sold by the Rechler
family members to a third party and four of the Option Properties were acquired
by the Company for an aggregate purchase price of approximately $35 million,
which included the issuance of approximately 475,000 OP Units valued at
approximately $8.8 million.
On November 10, 2003, in connection with the Company's sale of its Long
Island industrial building portfolio, four of the five remaining options (the
"Remaining Option Properties") granted to the Company at the time of the IPO to
purchase interests in properties owned by Rechler family members were
terminated. In return the Company received an aggregate payment from the Rechler
family members of $972,000. Rechler family members have also agreed to extend
the term of the remaining option on the property located at 225 Broadhollow
Road, Melville, NY (the Company's current headquarters) for five years and to
release the Company from approximately 15,500 square feet under its lease at
this property. In connection with the restructuring of the remaining option the
Rechler family members paid the Company $1 million in return for the Company's
agreement not to exercise the option during the next three years. As part of the
agreement, the exercise price of the option payable by the Company was increased
by $1 million.
As part of the Company's REIT structure it is provided management, leasing
and construction related services through taxable REIT subsidiaries as defined
by the Code. These services are currently provided by the Service Companies in
which, as of September 30, 2002, the Operating Partnership owned a 97%
non-controlling interest. An entity that is substantially owned by certain
Rechler family members, who are also executive officers of the Company, owned a
3% controlling interest in the Service Companies. In order to minimize the
potential for corporate conflicts of interests, which became possible as a
result of changes to the Code that permit REITs to own 100% of taxable REIT
subsidiaries, the independent directors of the Company approved the purchase by
the Operating Partnership of the
36
remaining 3% interests in the Service Companies. On October 1, 2002, the
Operating Partnership acquired such 3% interests in the Service Companies for an
aggregate purchase price of approximately $122,000. Such amount was less than
the total amount of capital contributed by the Rechler family members. During
the year ended December 31, 2003, Reckson Construction Group, Inc. billed
approximately $775,000 of market rate services and Reckson Management Group,
Inc. billed approximately $279,000 of market rate management fees to the
Remaining Option Properties. In addition, for the year ended December 31, 2003,
Reckson Construction Group, Inc. performed market rate services, aggregating
approximately $207,000, for a property in which certain former executive
officers of the Company maintain an equity interest.
Reckson Management Group, Inc. leases approximately 28,000 square feet of
office and storage space at a Remaining Option Property located at 225
Broadhollow Road, Melville, NY for its corporate offices at an annual base rent
of approximately $785,000. The Company had also entered into a short term
license agreement at the property for 6,000 square feet of temporary space which
expired in January 2004. Reckson Management Group, Inc. also leases 10,722
square feet of warehouse space used for equipment, materials and inventory
storage at a property owned by certain members of the Rechler family at an
annual base rent of approximately $75,000.
In November 2003, the Company disposed of all but three of its 95
property, 5.9 million square foot, Long Island industrial building portfolio to
members of the Rechler family (the "Disposition") for approximately $315.5
million, comprised of $225.1 million in cash and debt assumption and 3,932,111
Units valued at approximately $90.4 million. Approximately $204 million of cash
sales proceeds from the Disposition were used to repay borrowings under the
Company's credit facility. Two of the remaining three properties, which are
subject to transfer pursuant to Section 1031 of the Internal Revenue Code of
1986, as amended (the "Code"), are anticipated to close during 2004. The
disposition of the other property, which is subject to certain environmental
issues, is conditioned upon the approval of the buyer's lender, which has not
been obtained. These three remaining properties aggregate approximately $7.1
million of the $315.5 million sales price. In addition, four of the five
remaining options granted to the Company at the time of the Company's IPO to
purchase interests in properties owned by Rechler family members (including
three properties in which the Rechler family members hold non-controlling
interests and one industrial property) were terminated along with management
contracts relating to three of such properties.
In connection with the closing, the employment of Donald Rechler, Roger
Rechler, Gregg Rechler and Mitchell Rechler as officers of the Company
terminated and Roger Rechler, Gregg Rechler and Mitchell Rechler resigned as
members of the Board of Directors. In connection with the Disposition and the
terminations of employment, the Company incurred the following restructuring
charges: (i) approximately $7.5 million related to outstanding stock loans under
the Company's historical long-term incentive program ("LTIP") were transferred
to the entity that acquired the Long Island industrial building portfolio and
approximately $642,000 of loans related to life insurance contracts were
extinguished, (ii) approximately $2.9 was million paid to the departing Rechler
family members in exchange for 127,689 of rights to receive shares of common
stock that were granted in 2002 and their rights that were granted in 2003 were
forfeited in their entirety and (iii) with respect to two of the departing
Rechler family members participating in the Company's March 2003 LTIP, each
received 8,681 shares of the Company's common stock related to the service
component of their core award which was valued at $293,000 in the aggregate. In
addition, since the Company attained its annual performance measure under the
March 2003 LTIP in March 2004, these individuals also each received 26,041
shares of common stock representing the balance of the annual core award as if
they remained in continuous employment with the Company. The remainder of their
core awards was forfeited as was the entire amount of the special outperformance
component of the March 2003 LTIP. The Company also incurred additional
restructure charges of approximately $1.2 million related primarily to the
release and severance
37
of approximately 25 employees. Total restructure charges of approximately $12.5
million were mitigated by a $972,000 fee from departing Rechler family members,
related to the termination of the Company's option to acquire certain property,
which was either owned by certain Rechler family members or in which the Rechler
family members own a non-controlling minority interest.
A company affiliated with Lewis S. Ranieri, a director of the Company,
leases 15,566 square feet at the Company's property located in Mitchel Field,
New York, at an annual base rent of approximately $447,500. In addition, Reckson
Strategic Venture Partners LLC leased 5,144 square feet in one of the Company's
joint venture properties at an annual base rent of approximately $176,000. On
June 15, 2003, this lease was mutually terminated and RSVP vacated the premises.
HQ, one of the largest providers of flexible officing solutions in the
world and which was formerly controlled by FrontLine Capital Group
("FrontLine"), previously operated eleven executive office centers comprising
approximately 205,000 square feet at the Company's properties, including two
operated at the Company's joint venture properties. On March 13, 2002, as a
result of experiencing financial difficulties, HQ voluntarily filed a petition
for relief under Chapter 11 of the U.S. Bankruptcy Code and subsequently
rejected three of its leases with the Company and surrendered approximately an
additional 20,500 square feet from two other leases. The Company has since
re-leased 100% of the rejected space. In September 2003, the Bankruptcy Court
approved the assumption and amendment by HQ of its remaining eight leases with
the Company. The assumed leases expire between 2007 and 2011, encompass
approximately 150,000 square feet and provide for current annual base rents
totaling approximately $3.5 million. A committee designated by the Board and
chaired by an independent director conducted all negotiations with HQ.
FRONTLINE CAPITAL GROUP
During 1997, the Company formed FrontLine and Reckson Strategic Venture
Partners LLC ("RSVP"). RSVP is a real estate venture capital fund, which
invested primarily in real estate and real estate operating companies outside
the Company's core office focus and whose common equity is held indirectly by
FrontLine. In connection with the formation and spin-off of FrontLine, the
Operating Partnership established an unsecured credit facility with FrontLine
(the "FrontLine Facility") in the amount of $100 million for FrontLine to use in
its investment activities, operations and other general corporate purposes. The
Company advanced approximately $93.4 million under the FrontLine Facility. The
Operating Partnership also approved the funding of investments of up to $100
million relating to RSVP (the "RSVP Commitment"), through RSVP-controlled joint
ventures (for REIT-qualified investments) or advances made to FrontLine under an
unsecured loan facility (the "RSVP Facility") having terms similar to the
FrontLine Facility (advances made under the RSVP Facility and the FrontLine
Facility hereafter, the "FrontLine Loans"). During March 2001, the Company
increased the RSVP Commitment to $110 million and as of December 31, 2003
approximately $109.1 million was funded under the RSVP Commitment, of which
$59.8 million represents investments by the Company in RSVP-controlled
(REIT-qualified) joint ventures and $49.3 million represents loans made to
FrontLine under the RSVP Facility. As of December 31, 2003, interest accrued
(net of reserves) under the FrontLine Facility and the RSVP Facility was
approximately $19.6 million.
At June 30, 2001, the Company assessed the recoverability of the FrontLine
Loans and reserved approximately $3.5 million of the interest accrued during the
three-month period then ended. In addition, the Company formed a committee of
its Board of Directors, comprised solely of independent directors, to consider
any actions to be taken by the Company in connection with the FrontLine Loans
and its investments in joint ventures with RSVP. During the third quarter of
2001, the Company noted a significant deterioration in FrontLine's operations
and financial condition and, based on its assessment of value and recoverability
and considering the findings and recommendations of the committee and its
38
financial advisor, the Company recorded a $163 million valuation reserve charge,
inclusive of anticipated costs, in its consolidated statements of operations
relating to its investments in the FrontLine Loans and joint ventures with RSVP.
The Company has discontinued the accrual of interest income with respect to the
FrontLine Loans. The Company has also reserved against its share of GAAP equity
in earnings from the RSVP controlled joint ventures funded through the RSVP
Commitment until such income is realized through cash distributions.
At December 31, 2001, the Company, pursuant to Section 166 of the Code,
charged off for tax purposes $70 million of the aforementioned reserve directly
related to the FrontLine Facility, including accrued interest. On February 14,
2002, the Company charged off for tax purposes an additional $38 million of the
reserve directly related to the FrontLine Facility, including accrued interest,
and $47 million of the reserve directly related to the RSVP Facility, including
accrued interest.
FrontLine is in default under the FrontLine Loans from the Operating
Partnership and on June 12, 2002, filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code.
In September 2003, RSVP completed the restructuring of its capital
structure and management arrangements. In connection with the restructuring,
RSVP redeemed the interest of the preferred equity holders of RSVP for an
aggregate of approximately $137 million in cash including proceeds from the
disposition of all of the privatization and medical offices assets and the
transfer to the preferred equity holders of the assets that comprised RSVP's
parking investment valued at approximately $28.5 million. RSVP also restructured
its management arrangements whereby a management company formed by its former
managing directors has been retained to manage RSVP pursuant to a management
agreement and the employment contracts of the managing directors with RSVP have
been terminated. The management agreement provides for an annual base management
fee and disposition fees equal to 2% of the net proceeds received by RSVP on
asset sales. (The base management fee and disposition fees are subject to a
maximum over the term of the agreement of $7.5 million.) In addition, the
managing directors retained a one-third residual interest in RSVP's assets which
is subordinated to the distribution of an aggregate amount of $75 million to
RSVP and/or the Company in respect of its joint ventures with RSVP. The
management agreement has a three-year term, subject to early termination in the
event of the disposition of all of the assets of RSVP.
In connection with the restructuring, RSVP and certain of its affiliates
obtained a $60 million secured loan. In connection with this loan, the Operating
Partnership agreed to indemnify the lender in respect of any environmental
liabilities incurred with regard to RSVP's remaining assets in which the
Operating Partnership has a joint venture interest (primarily certain student
housing assets held by RSVP) and guaranteed the obligation of an affiliate of
RSVP to the lender in an amount up to $6 million plus collection costs for any
losses incurred by the lender as a result of certain acts of malfeasance on the
part of RSVP and/or its affiliates. The loan is scheduled to mature in 2006 and
is expected to be repaid from proceeds of asset sales by RSVP.
As a result of the foregoing, the net carrying value of the Company's
investments in the FrontLine Loans and joint venture investments with RSVP,
inclusive of the Company's share of previously accrued GAAP equity in earnings
on those investments, is approximately $65 million, which was reassessed with no
change by management as of December 31, 2003. Such amount has been reflected in
investments in service companies and affiliate loans and joint ventures on the
Company's consolidated balance sheet.
Scott H. Rechler, who serves as President, Chief Executive Officer and a
director of the Company, serves as CEO and Chairman of the Board of Directors of
FrontLine and is its sole board member. Scott H. Rechler also serves as a member
of the management committee of RSVP.
39
LOANS
The Company has historically structured long-term incentive programs using
restricted stock and stock loans. In addition, the Company had loaned, on behalf
of executive officers, the payment of premiums on life insurance policies under
which the executive has an interest in the cash surrender value of the policy,
subject to the refund of such premiums to the Company upon the termination of
such policies. Consistent with the requirements of the Sarbanes-Oxley Act of
2002, the Company has discontinued the use of loans in its long-term incentive
programs and with regard to such life insurance policies. In connection with
long-term incentive program grants made prior to the enactment of the
Sarbanes-Oxley Act of 2002, with respect to each fiscal year from 1996 through
2000, each of the Company's executive officers received a loan from the Company
to purchase shares of common stock (the "1996 Stock Loans," the "1997 Stock
Loans," the "1998 Stock Loans," the "1999 Stock Loans" and the "2000 Stock
Loans" and collectively, the "Stock Loans"). The 1996 and 1997 Stock Loans
matured in 2003 and were satisfied in full with the return to the Company of
shares of restricted common stock securing the loans.
Each 1998 Stock Loan has a term of seven years, accrues interest at the
mid-term "Applicable Federal Rate" ("AFR"), is secured by the shares purchased
and is otherwise non-recourse. Each 1998 Stock Loan is forgiven ratably each
year during the term of the loan, provided that the officer is then employed by
the Company. By their terms, the 1998 Stock Loans also provide for the Company
to loan to each officer an amount equal to his aggregate tax liability resulting
from such forgiveness, which loans (together with interest thereon) are forgiven
in one year, provided that the officer is still employed by the Company and for
tax-gross-up payments upon forgiveness of the tax loans. Consistent with the
requirements of the Sarbanes-Oxley Act of 2002, the Company has discontinued the
use of tax loans, but may make tax payments in lieu of such tax loans. The 1998
Stock Loans also provide for forgiveness upon the occurrence of certain events,
including a change-in-control of the Company, the officer's death or permanent
disability, termination of his employment by the Company without cause or a
reduction in the nature or scope of his duties. In the event an officer leaves
the employ of the Company or is terminated with cause, the outstanding amount of
the applicable loans is immediately due and payable.
Each 1999 Stock Loan and 2000 Stock Loan has a term of ten years, accrues
interest at the AFR, is secured by the shares purchased and is otherwise
non-recourse. Forty percent of each officer's 1999 and 2000 Stock Loan (together
with accrued interest) is forgiven ratably each year during the ten-year term of
the loan, provided that the officer is then employed by the Company. The other
60% (together with accrued interest) is forgiven ratably each year during the
term of the loan if the performance of the Company's common stock since the
Company's IPO is ranked in the top 40% for office and industrial REITs (as
reported by NAREIT or, if not available from NAREIT, from such other standard
industry source as may be approved by the Compensation Committee) at the end of
the respective year. In the event this criteria is not satisfied in any
particular year, the portion of the 1999 Stock Loan or 2000 Stock Loan that is
not forgiven in respect of such year is carried forward and forgiven in a
subsequent year only if the Company's common stock satisfies the aforementioned
performance criteria. The terms of the 1999 Stock Loans and 2000 Stock Loans are
otherwise substantially similar to the terms of the 1998 Stock Loans with
respect to tax loans and forgiveness upon the occurrence of certain events.
Consistent with the requirements of the Sarbanes-Oxley Act of 2002, the Company
has discontinued the use of tax loans, but may make tax payments in lieu of such
tax loans.
Messrs. Campofranco and Waterman also have outstanding loans which were
made to them prior to the time they became executive officers.
As of March 25, 2004, the aggregate principal amount outstanding under
the loans was $2,069,458 in the case of Scott H. Rechler; $1,864,521 in the
case of Michael Maturo; $1,684,366 in the case of Jason M. Barnett; $88,959
in the case of Salvatore Campofranco and $1,503,807 in the case of Philip
Waterman III. The largest aggregate principal amount outstanding under all
loans during fiscal 2003 was $2,490,814 in the case of Donald J. Rechler;
$2,525,638 in the case of Scott H. Rechler; $2,265,546 in the case of Michael
Maturo; $2,048,673 in the case of Jason M. Barnett, $180,725 in the case of
Salvatore Campofranco and $1,771,554 in the case of Philip Waterman III.
40
OTHER
During the year ended December 31, 2003 and prior to his appointment to
the Board, the Company paid approximately $16,000 to Mr. Steinberg in consulting
fees.
STOCKHOLDER PROPOSALS FOR 2005 ANNUAL MEETING
For a proposal of a stockholder to be presented at an annual meeting to be
included in the Company's proxy statement pursuant to Rule 14a-8 of the Exchange
Act ("Rule 14a-8"), the Secretary of the Company must receive written notice
thereof on or before December 13, 2004.
The Company's Bylaws provide that any stockholder wishing to nominate a
director or have a stockholder proposal, other than a stockholder proposal
included in the Company's proxy statement pursuant to Rule 14a-8, considered at
an annual meeting must provide written notice of such nomination or proposal and
appropriate supporting documentation, as set forth in the Bylaws, to the Company
at its principal executive offices not less than 120 days nor more than 180 days
prior to the anniversary of the immediately preceding annual meeting of
stockholders (the "Anniversary Date"); provided, however, that in the event that
the annual meeting is scheduled to be held more than seven calendar days prior,
or more than 60 days subsequent, to the Anniversary Date, such nominations or
proposals must be delivered to the Company not earlier than the 180th day prior
to such meeting and not later than the later of the 120th day prior to such
annual meeting or the twentieth day following the earlier of the day on which
public announcement of the meeting is first made or notice of the meeting is
mailed to stockholders. Accordingly, for a proposal of a stockholder to be
presented at the Company's 2005 annual meeting of stockholders, other than a
stockholder proposal included in the Company's proxy statement pursuant to Rule
14a-8, it must be received at the principal executive offices of the Company
after December 4, 2004 and on or before February 2, 2005. Any such proposal
should be mailed to: Reckson Associates Realty Corp., 225 Broadhollow Road,
Melville, New York 11747, Attn: Jason M. Barnett, Secretary.
In addition, pursuant to Rule 14a-4 of the Exchange Act, if a stockholder
fails to notify the Company after December 4, 2004 and on or before February 2,
2005, management proxies are allowed to use their discretionary voting authority
if the Board determines to permit the proposal at the annual meeting, without
any discussion of the matter in the proxy statement.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement that will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
41
ANNEX A
RECKSON ASSOCIATES REALTY CORP.
ARTICLES OF AMENDMENT
THIS IS TO CERTIFY THAT:
FIRST: The charter of Reckson Associates Realty Corp., a Maryland
corporation (the "Corporation"), is hereby amended by deleting Article V,
Section 1 in its entirety and by adding a new Article V, Section 1 to read as
follows:
"Section 1. NUMBER AND ELECTION OF DIRECTORS. The business and
affairs of the Corporation shall be managed under the direction of the
Board of Directors of the Corporation (the "Board of Directors"). The
number of directors of the Corporation shall be eleven, which number may
be increased or decreased pursuant to the Bylaws of the Corporation, but
shall never be less than the minimum number required by the Maryland
General Corporation Law nor more than 15. The directors shall be elected
by the stockholders at every annual meeting thereof in the manner provided
in the Bylaws or, in order to fill a vacancy on the Board of Directors, in
the manner provided in the Bylaws. Subject to the provisions of this
Section 1, the directors may increase the number of directors and may fill
any vacancy, whether resulting from an increase in the number of directors
or otherwise, on the Board of Directors. All directors shall hold office
for a term expiring at the next succeeding annual meeting of stockholders,
with the directors to hold office until their successors are duly elected
and qualified. Election of directors shall require the vote and be in
accordance with the procedures set forth in the Bylaws."
SECOND: The amendment to the charter as set forth above has been duly
advised by the Board of Directors and approved by the stockholders of the
Corporation as required by law.
THIRD: The undersigned Chief Executive Officer and President acknowledges
these Articles of Amendment to be the corporate act of the Corporation and as to
all matters of facts required to be verified under oath, the undersigned Chief
Executive Officer and President acknowledges that to the best of his knowledge,
information and belief, these matters and facts are true in all material
respects and that this statement is made under the penalties of perjury.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
A-1
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
to be signed in its name and on its behalf by its Chief Executive Officer and
President and attested to by its Secretary on this _____ day of , 2004.
ATTEST: RECKSON ASSOCIATES REALTY CORP.
_____________________________ By: ____________________________(SEAL)
_____________________________ _______________________________
Secretary Chief Executive Officer and President
A-2
ANNEX B
RECKSON ASSOCIATES REALTY CORP.
ARTICLES OF AMENDMENT
THIS IS TO CERTIFY THAT:
FIRST: The charter of Reckson Associates Realty Corp., a Maryland
corporation (the "Corporation"), is hereby amended by deleting Article VII,
Section 11 in its entirety and by adding a new Article VII, Section 11 to read
as follows:
"Section 11. EXEMPTIONS BY BOARD. (i) The Board of Directors may, in
its sole discretion, waive the Ownership Limit with respect to any
particular Person or Persons if evidence satisfactory to the Board of
Directors and the Corporation's tax counsel is presented that the changes
in ownership pursuant to such waiver will not cause the Corporation not to
continue to be qualified as a REIT and are not reasonably likely to cause
the Corporation not to continue to be qualified as a REIT in the future
and the Board of Directors otherwise decides that such action is in the
best interest of the Corporation.
(ii) Notwithstanding Section 11(i), the Board of Directors shall
waive the Ownership Limit with respect to any particular Person or Persons
(other than a Person that is an individual, including any Person that is
considered an individual for purposes of Section 542(a)(2) of the Code) to
the extent that evidence satisfactory to the Board of Directors and the
Corporation's tax counsel is presented that the changes in ownership
pursuant to such waiver will not cause any individual, including any
Person that is considered an individual for purposes of Section 542(a)(2)
of the Code, to Beneficially Own shares of Common Stock in excess of the
Ownership Limit.
(iii) In granting any such waiver under (i) or (ii) above the
Board of Directors may provide that the waiver is subject to compliance,
at or after the time of the granting of the waiver, with any terms and
conditions determined by the Board of Directors.
SECOND: The amendment to the charter as set forth above has been duly
advised by the Board of Directors and approved by the stockholders of the
Corporation as required by law.
THIRD: The undersigned Chief Executive Officer and President acknowledges
these Articles of Amendment to be the corporate act of the Corporation and as to
all matters of facts required to be verified under oath, the undersigned Chief
Executive Officer and President acknowledges that to the best of his knowledge,
information and belief, these matters and facts are true in all material
respects and that this statement is made under the penalties of perjury.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
B-1
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be signed in its name and on its behalf by its Chief Executive
Officer and President and attested to by its Secretary on this _____ day of ,
2004.
ATTEST: RECKSON ASSOCIATES REALTY CORP.
_____________________________ By: ____________________________(SEAL)
_____________________________ _______________________________
Secretary Chief Executive Officer and President
B-2
RECKSON ASSOCIATES REALTY CORP.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 2, 2004
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Scott H. Rechler and Peter
Quick, or either of them, as Proxies of the undersigned, with full power of
substitution in each of them, to represent the undersigned and to vote all
shares of Common Stock of Reckson Associates Realty Corp., a Maryland
Corporation (the "Company") held of record by the undersigned as of the close of
business on March 22, 2004, on behalf of the undersigned at the Annual Meeting
of Stockholders (the "Annual Meeting") to be held at the MGM Theatre at 1350
Avenue of the Americas, New York, New York, 10:30 a.m., local time, on
Wednesday, June 2, 2004, and at any adjournments or postponements thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1, FOR PROPOSAL 2, FOR THE NINE NOMINEES OF THE BOARD
OF DIRECTORS LISTED IN PROPOSAL 3 AND FOR PROPOSAL 4. IN THEIR DISCRETION, THE
PROXIES ARE EACH AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF. A
STOCKHOLDER WISHING TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS(1)
RECOMMENDATIONS NEED ONLY SIGN AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE.
PLEASE VOTE AND SIGN ON OTHER SIDE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
SEE REVERSE SIDE
--------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS OF
RECKSON ASSOCIATES REALTY CORP.
June 2, 2004
Please date, sign and mail your proxy card in the envelope provided
as soon as possible.
Please detach along perforated line and mail in the envelope provided.
--------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROPMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE /X/
3. If Proposal 1 is approved, to elect nine directors of the Company to serve
until the 2005 Annual Meeting of Stockholders. The 5 nominees named below
and Scott H. Rechler, Donald J. Rechler, Ronald Menaker and Peter Quick.
/ / FOR ALL NOMINEES
/ / WITHHOLD AUTHORITY FOR ALL NOMINEES
/ / FOR ALL EXCEPT (See instructions below)
If Proposal 1 is not approved, to elect three Class III Directors of the
Company to serve until the 2007 Annual Meeting of Stockholders, one Class
I Director of the Company to serve until the 2005 Annual Meeting of
Stockholders, and one Class II Director to serve until the 2006 Annual
Meeting of Stockholders, and until their respective successors are duly
elected and qualified.
NOMINEES:
/ / FOR ALL NOMINEES Douglas Crocker II Class III Director
Elizabeth McCaul Class III Director
/ / WITHHOLD AUTHORITY FOR ALL NOMINEES Peter Quick Class III Director
Stanley Steinberg Class II Director
/ / FOR ALL EXCEPT (See instructions below) John Ruffle Class I Director
INSTRUCTIONS: To withold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and write the nomniee name(s) below:
--------------------------------------
--------------------------------------
FOR AGAINST ABSTAIN
1. To amend the Artcles of Incorporation of the / / / / / /
Company to eliminate the classification of the
Board of Directors.
2. To amend the Articles of Incorporation to amend / / / / / /
the provision regarding waivers of the Company's
common stock ownership limit.
4. To ratify the selection of Ernst & Young LLP as / / / / / /
the independent auditors of the Company for the
fiscal year ending December 31, 2004.
5. To consider and act upon any other matters that / / / / / /
may properly be brought before the Annual Meeting
and at any adjournments or postponements thereof.
The undersigned hereby acknowledge(s) receipt of a copy of the
accompanying Notice of Annual Meeting of Stockholders, the Proxy Statement with
respect thereto and the Company's 2003 Annual Report to Stockholders and hereby
revoke(s) any proxy or proxies heretofore given. This proxy may be revoked at
any time before it is exercised.
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this method. ?
Signature of Stockholder: ___________________ Date:_______ Signature of Stockholder: ___________________Date:________
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signed is a partnership, please sign in
partnership name by authorized person.