UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
SCHEDULE
14A
Proxy
Statement Pursuant To Section 14(A) of the Securities
Exchange
Act of 1934
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Filed by the
Registrant x
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Filed by a Party
other than the Registrant o
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Check the
appropriate box:
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o
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Preliminary
Proxy Statement
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o
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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o
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Soliciting
Material Pursuant to §
240.14a-12
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Whitestone
REIT
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(Name
of Registrant as Specified In Its Charter)
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N/A
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
x No fee
required.
o Fee computed on
table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(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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o Fee paid
previously with preliminary materials.
o 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.
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(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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WHITESTONE
REIT
2600
S. GESSNER, SUITE 500
HOUSTON,
TEXAS 77063
April 3,
2009
Dear
Shareholder:
You
are cordially invited to attend the 2009 annual meeting of shareholders to be
held on Thursday, May 7, 2009 at 10:00 a.m., Central Daylight Time, at the
Houston Engineering and Scientific Society Club, San Jacinto Room, located at
5430 Westheimer Road, Houston, Texas, 77056.
The
notice of annual meeting and proxy statement accompanying this letter provide an
outline of the business to be conducted at the meeting. I will also report on
our progress during the past year and answer shareholders’
questions.
It
is important that your shares be represented at the annual meeting. If you are
unable to attend the meeting in person, I urge you to authorize a proxy to vote
your shares via the Internet, or by calling the toll-free telephone number, or
by signing, dating and promptly returning your white proxy card in the enclosed
envelope. Your vote is important.
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Sincerely
yours,
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/s/
James C. Mastandrea
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James
C. Mastandrea
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Chairman
and Chief Executive
Officer
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WHITESTONE
REIT
2600
S. GESSNER, SUITE 500
HOUSTON,
TEXAS 77063
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
be Held May 7, 2009
To our
shareholders:
You
are invited to attend our 2009 annual meeting of shareholders, to be held at the
Houston Engineering and Scientific Society Club, San Jacinto Room,, located at
5430 Westheimer, Houston, Texas, 77056, on Thursday, May 7, 2009 at 10:00 a.m.,
Central Daylight Time for the following purposes:
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1.
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To
elect two trustees to serve until our 2012 annual meeting of shareholders
and thereafter until their successors have been duly elected and
qualified;
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2.
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To
ratify Pannell Kerr Forster of Texas, P.C. as our independent registered
public accounting firm for 2009; and
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3.
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To
act upon any other matters that may properly come before the
meeting.
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The
board of trustees recommends you vote “FOR”
each of the nominees for trustee and “FOR”
the ratification of Pannell Kerr Forster of Texas, P.C. as our independent
registered public accounting firm for 2009.
Shareholders
who are holders of record of common shares at the close of business on March 9,
2009, the record date, will be entitled to receive notice of and to vote at the
annual meeting. A white proxy card is enclosed with this notice of annual
meeting and proxy statement. A copy of our annual report to shareholders for the
fiscal year ended December 31, 2008 is being sent with this report.
YOUR
VOTE IS IMPORTANT - You are urged to authorize a proxy to vote your
shares via the Internet, or by calling the toll-free telephone number, or by
signing, dating and promptly returning your white proxy card in the enclosed
envelope.
When
you submit your proxy, you authorize James C. Mastandrea, John J. Dee and David
K. Holeman or any of them, each with full power of substitution, to vote your
shares at the annual meeting in accordance with your instructions or, if no
instructions are given, to vote for the election of the trustee nominees, and to
vote for any adjournments or postponements of the annual meeting.
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By
order of the Board of Trustees,
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/s/
John J. Dee
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John
J. Dee
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Chief
Operating Officer and Corporate
Secretary
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April 3,
2009
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO
BE HELD ON MAY 7, 2009:
This
proxy statement and Whitestone’s Annual Report to Shareholders for the fiscal
year ended
December
31, 2008 are available at:
http://www.amstock.com/ProxyServices/ViewMaterial.asp?CoNumber=11457
TABLE
OF CONTENTS
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32
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PROXY
STATEMENT
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ANNUAL
MEETING OF SHAREHOLDERS
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Thursday,
May 7, 2009
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Whitestone
REIT
2600
South Gessner, Suite 500
Houston,
Texas 77063
The Board
of Trustees of Whitestone REIT (our “Board”), a Maryland real estate investment
trust (“Whitestone”), is soliciting proxies to be used at our 2009 annual
meeting of shareholders (the “Annual Meeting”) to be held at 10:00 a.m., Central
Daylight Time, on Thursday, May 7, 2009, at the Houston Engineering and
Scientific Society Club, located at 5430 Westheimer Road, Houston, Texas 77056
or at any adjournment thereof. This proxy statement and accompanying white proxy
card are first being mailed to shareholders on or about April 3,
2009.
The
purpose of the meeting is to (1) elect two trustees, and (2) to ratify Pannell
Kerr Forster of Texas, P.C. as our independent registered public accounting firm
for 2009. As of the date of the Proxy Statement, we are not aware of any other
matters that will be presented for consideration at the Annual
Meeting.
Who May
Vote
Only
shareholders who owned our common shares of beneficial interest at the close of
business on March 9, 2009, the record date for the meeting, are entitled to
receive notice of and to vote at the meeting. As of the close of business on
March 9, 2009, we had 10,312,307 common shares of beneficial interest issued and
outstanding. Shareholders are entitled to one vote for each common share of
beneficial interest that they owned as of the record date.
2
Shareholders
may vote at the meeting in person or by proxy. Proxies validly delivered by
shareholders (by Internet, telephone, or mail as described below) and timely
received by us will be voted in accordance with the instructions contained
therein. If a shareholder provides a proxy but gives no instructions, the
shareholder’s shares will be voted in accordance with the recommendation of our
Board.
You may
authorize a proxy in three ways:
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BY
MAIL: Mark, sign and date your white proxy card and return it in
the postage-paid envelope we have provided. If the envelope is missing,
please address your completed white proxy card to Whitestone REIT, c/o
American Stock Transfer & Trust Company, 59 Maiden Lane, New York, New
York 10273-0923.
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BY
INTERNET: Go to www.voteproxy.com and use the Internet to transmit
your voting instructions and for electronic delivery of information until
11:59 p.m. Eastern Daylight Time on May 6, 2009. Have your white proxy
card in hand when you access the website and then follow the
instructions.
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BY
PHONE: Call 1-800-PROXIES (1-800-776-9437) and use any touch-tone
telephone to transmit your voting instructions until 11:59
p.m. Eastern Daylight Time on May 6, 2009. Have your white proxy card in
hand when you call the phone number above and then follow the
instructions.
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You
may revoke your proxy at any time before it is exercised
by:
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giving
written notice of revocation to our Chief Operating Officer and Corporate
Secretary, John J. Dee, at Whitestone REIT, 2600 S. Gessner, Suite 500,
Houston, Texas 77063;
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timely
delivering a properly executed, later-dated proxy; or
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voting
in person at the annual
meeting.
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If your
shares are held by your broker or bank as nominee or agent, you should follow
the instructions provided by your broker or bank.
A quorum
of shareholders is necessary to hold a valid meeting. A quorum will be present
if the holders of a majority of the outstanding shares entitled to vote are
present, in person or by proxy, at the annual meeting. Your shares will be
counted as being present at the meeting if you appear in person at the meeting
or if you submit a properly executed white proxy card.
If there
are not enough votes to establish a quorum or to meet the voting requirement at
the annual meeting, we may propose an adjournment of the annual meeting for the
purpose of soliciting additional proxies. Therefore, please note that, by
delivering a proxy to vote at the annual meeting, you are also granting a proxy
that can be voted in favor of any adjournments or postponements of the annual
meeting.
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1.
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Our
Board recommends a vote “For”
each of the nominees for trustee.
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2.
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Our
Board recommends that you vote “For”
the ratification of Pannell Kerr Forster of Texas, P.C. as our independent
registered public accounting firm for
2009.
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3
Votes
will be counted by the inspector of election appointed for the Annual Meeting,
who will separately count “FOR” and “WITHHOLD AUTHORITY” votes, and, with
respect to proposals other than the election of trustees, “AGAINST,” “ABSTAIN”
and broker non-votes. A broker non-vote occurs when a nominee, such as a broker
or bank, holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that proposal and has not received instructions with respect to that
proposal from the beneficial owner. Abstentions and broker non-votes will be
treated as shares present for the purpose of determining the presence of a
quorum for the transaction of business at the Annual Meeting.
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To
be approved, Proposal No. 1 (election of Mr. Mahaffey and Mr. Mastandrea
as trustees), the affirmative vote of a plurality of all the votes cast at
the annual meeting at which a quorum is present is sufficient, which means
that the two nominees receiving the most “FOR” votes, among votes properly
cast in person or by proxy, will be elected. In the event that Mr.
Mastandrea and/or Mr. Mahaffey should be unavailable for election as a
result of an unexpected occurrence, such shares will be voted for the
election of such substitute nominee(s) as the Nominating and Corporate
Governance Committee may propose. If you vote “WITHHOLD AUTHORITY” with
respect to one or more nominees, your shares will not be included in
determining the number of votes cast and, as a result, will have no effect
on this proposal. Abstentions and broker non-votes will not be counted as
votes and will have no effect on the result of the
vote.
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To
be approved, Proposal No. 2 (ratification of our independent registered
public accounting firm) must receive “FOR” votes from a majority of all
votes cast at the Annual Meeting, whether in person or by proxy (which
means the votes cast “FOR” the proposal must exceed the votes cast
“AGANST” the proposal). For purposes of the vote on this proposal,
abstentions and broker non-votes will not be counted as votes cast and
will have no effect on the result of the
vote.
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This
solicitation is being made by mail on behalf of our Board, but may also be made
without additional remuneration by our officers or employees by telephone,
facsimile transmission, e-mail or personal interview. We will bear the expense
of the preparation, printing and mailing of the enclosed form of proxy, notice
of annual meeting and this proxy statement and any additional material relating
to the meeting that may be furnished to our shareholders by our Board subsequent
to the furnishing of this proxy statement. We will reimburse banks and brokers
who hold shares in their name or custody, or in the name of nominees for others,
for their out-of-pocket expenses incurred in forwarding copies of the proxy
materials to those persons for whom they hold such shares. To obtain the
necessary representation of shareholders at the meeting, supplementary
solicitations may be made by mail, telephone or interview by our officers or
employees, without additional compensation, or selected securities
dealers.
We have
also retained Morrow & Co., LLC to assist in the solicitation of proxies for
a fee of approximately $8,500, plus out-of-pocket expenses. Any proxy given
pursuant to this solicitation may be revoked by notice from the person giving
the proxy at any time before it is exercised. Any such notice of revocation
should be provided in writing signed by the shareholder in the same manner as
the proxy being revoked and delivered to Morrow & Co., LLC at 470 West
Avenue, Stamford, CT 06902, or our Secretary.
Annual
Report
A copy of
our annual report for the year ended December 31, 2008 is being sent with this
proxy statement to shareholders on April 3, 2009. None of the information in our
annual report is proxy solicitation material.
A copy of
our Annual Report on Form 10-K has also been filed with the SEC and may be
accessed from the SEC’s homepage (www.sec.gov).
4
Additional
Questions
If you
have any questions about the 2009 annual meeting, these proxy materials or your
ownership of our common shares, please contact our investor relations department
at Whitestone REIT, Attn: Investor Relations, 2600 S. Gessner, Suite 500,
Houston, Texas 77063, or call (713) 827-9595 x 3021.
Whitestone
REIT’s Board of Trustees is divided into three classes. Each class consists, as
nearly as possible, of one-third of the total number of trustees, and each class
has a three-year term.
The Board
of Trustees presently has six (6) members. Daniel G. DeVos and Chris A. Minton
are our current Class I trustees and their terms expire at our 2010 annual
meeting. Daryl J. Carter and Donald F. Keating are our current Class II
trustees and their terms expire at the 2011 annual meeting. James C. Mastandrea
and Jack L. Mahaffey are our current Class III trustees and their terms
expire at our 2009 annual meeting.
James C.
Mastandrea and Jack L. Mahaffey, the current Class II trustees, who are standing
for re-election at the 2009 annual meeting, were recommended for election to our
Board of Trustees by our Nominating and Corporate Governance Committee and were
nominated for re-election by the Board of Trustees. If elected at the 2009
annual meeting, Mr. Mastandrea and Mr. Mahaffey have agreed to serve until the
2012 annual meeting of shareholders and until their successors are duly elected
and qualified, or until their earlier death, resignation or removal. Mr.
Mastandrea and Mr. Mahaffey’s nominations as trustees are not being proposed for
election pursuant to any agreement or understanding between us and
them.
Our
Board of Trustees unanimously recommends that you vote “For”
the election of James C. Mastandrea and Jack L. Mahaffey.
5
Current
Members of the Board of Trustees
Set forth
below are descriptions of the principal occupation and certain other information
of each of our current trustees, including Messrs. Mastandrea and Mahaffey, and
the period during which each trustee has served.
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Trustee
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Age(1)
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Business
Experience
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Trustee
Since
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Daryl
J.
Carter
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53
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Mr.
Carter is the Founder, Chairman and CEO of Avanath Capital Partners, LLC,
an investment firm focused on urban-themed real estate and mortgage
investments. Previously, Mr. Carter was an Executive Managing Director of
Centerline Capital Group (“Centerline”) a subsidiary of Centerline Holding
Company (NYSE), and head of the Commercial Real Estate Group. He was also
the President of American Mortgage Acceptance Corporation, a
publicly-held, commercial mortgage lender (AMEX) that was externally
managed by Centerline. Mr. Carter became part of Centerline when his
company, Capri Capital Finance (“CCF”), was acquired by Centerline in
2005. Mr. Carter co-founded and served as Co-Chairman of both CCF and
Capri Capital Advisors in 1992. He was instrumental in building Capri to a
diversified real estate firm with $8 billion in real estate equity and
debt investments under management. Prior to Capri, Mr. Carter was Regional
Vice President at Westinghouse Credit Corporation in Irvine and a Second
Vice President at Continental Bank in Chicago. Mr. Carter currently is a
Trustee of Paragon Real Estate Equity and Investment Trust, Trustee of the
Urban Land Institute, Executive Committee Member of the National
Multifamily Housing Association and Vice Chairman of the Commercial Board
of Governors of the Mortgage Bankers Association. Mr. Carter serves on the
Dean’s Advisory Council of the M.I.T. Sloan School of
Management.
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February
2009
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Daniel
G.
DeVos
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51
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Mr.
DeVos is Chairman of the Board and Chief Executive Officer of DP Fox
Ventures, LLC, a diversified management enterprise with investments in
real estate, transportation, and sports teams. In addition, Mr. DeVos is
the majority owner of the Grand Rapids Rampage (AFL), Grand Rapids
Griffins (AHL) and has ownership interests in the Orlando Magic (NBA). Mr.
DeVos is currently a director of Alticor, Inc., the parent of Amway
Corporation, located in Ada, Michigan, and the Orlando Magic (NBA). Mr.
DeVos also has served as a trustee of Paragon Real Estate Equity and
Investment Trust since 2003 and served as a trustee of First Union Real
Estate Investments (NYSE) from 1994 to 1998.
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February
2009
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Donald
F.
Keating
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76
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Mr.
Keating was formerly the Chief Financial Officer of Shell Mining Company.
Mr. Keating retired from Shell Mining Company in 1992 and continued to
provide consulting services to Shell Oil until 2002. Since 2002, Mr.
Keating has managed his personal investments. Mr. Keating graduated from
Fordham University with a Bachelor of Science Degree in Finance and
served in the United States Marine Corps as infantry company
commander. He is a former board member of Billiton Metals Company, R &
F Coal Company and Marrowbone Coal Company.
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2008
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6
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Trustee
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Age(1)
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Business
Experience
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Trustee
Since
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Jack
L.
Mahaffey
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77
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Mr.
Mahaffey was formerly the President of Shell Mining Company. Since
retiring from Shell Mining Company in 1991, Mr. Mahaffey has managed his
personal investments. Mr. Mahaffey graduated from Ohio State University
with a B.S. and M.S. in Petroleum Engineering and served in the United
States Air Force. He is a former board member of the National Coal
Association and the National Coal Counsel.
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2000
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James
C.
Mastandrea
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65
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Mr.
Mastandrea has been our Chairman and Chief Executive Officer since October
2006. Mr. Mastandrea has over 35 years of experience in the real estate
industry. He also serves, since 2003, as the President, Chief Executive
Officer and Chairman of the Board of Trustees of Paragon Real Estate
Equity and Investment Trust, a real estate company currently focused on
value-added real estate and investments in shares of publicly-traded real
estate investment trusts, and, since 1978, as the Chief Executive
Officer/Founder of MDC Realty Corporation, a privately held residential
and commercial real estate development company. From 1999 to 2002, Mr.
Mastandrea served as Chief Executive Officer of Eagle’s Wings Aviation
Corporation. From 1994 to 1998, Mr. Mastandrea served as Chairman and
Chief Executive Officer of First Union Real Estate Investments, a NYSE
listed real estate investment trust. Mr. Mastandrea also served in the
U.S. Army as a Military Police Officer. Mr. Mastandrea currently is a
director of Cleveland State University Foundation Board, director of
University Circle Inc. Board, Cleveland, Ohio, and a director of the
Calvin Business Alliance Board at Calvin College, Grand Rapids,
Michigan.
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2006
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Chris
A.
Minton
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72
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Mr.
Minton was formerly a Vice President with Lockheed Martin. Since retiring
from Lockheed Martin in 1995, Mr. Minton has managed his personal
investments and served as a member of the board of Mount Carmel High
School. Mr. Minton graduated from Villanova University with a Bachelors
Degree, and he is a licensed CPA (retired status) in the State of Texas.
He has been awarded the Gold Knight of Management award for achievements
as a professional manager by the National Management
Association.
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2000
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1) As of
March 15, 2009
7
Our Board
has affirmatively determined that five of our six current trustees are
“independent” as that term is defined by the NASDAQ listing standards and
applicable SEC rules. These trustees are Daryl J. Carter, Daniel G. DeVos,
Donald F. Keating, Jack L. Mahaffey (nominee) and Chris A. Minton.
Our Board
met fifteen times during 2008. Our independent trustees meet separately on a
regular basis — usually immediately following or during a portion of each
regularly scheduled meeting of our Board. Messrs. Carter and DeVos were
appointed to the Board in February 2009. All of our trustees attended at least
75% of the meetings for our Board and their assigned committees during
2008.
All of
our trustees attended our 2008 annual meeting of shareholders. We strongly
encourage our trustees to attend annual meetings, but we do not have a formal
policy regarding attendance.
Our
entire Board considers all major decisions concerning our business. Our Board
has also established committees so that certain matters can be addressed in more
depth than may be possible at a full Board meeting. Our Board has a standing
Nominating and Corporate Governance Committee, Audit Committee, and Compensation
Committee. Our Board’s current committee membership is as follows, with the “X”
denoting the members of the committee:
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Name
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Nominating
and
Corporate
Governance
Committee
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Audit
Committee
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Compensation
Committee
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Non-Employee
Trustees:
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Daryl J. Carter
(1)
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X
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Daniel G. DeVos
(2)
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X
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X
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Donald
F. Keating
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Chairman
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X
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X
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Jack L. Mahaffey
(3)
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X
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Chairman
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Chris A. Minton
(4)
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Chairman
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Number
of Meetings in 2008
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3
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4
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5
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(1)
Mr. Carter has
served as a member of the Audit Committee since February 26,
2009.
(2)
Mr. DeVos has served
as a member of the Nominating and Corporate Governance Committee and the
Compensation Committee since February 26, 2009.
(3)
Mr. Mahaffey also
served on the Audit Committee until February 26,
2009.
(4)
Mr. Minton also
served on the Nominating and Corporate Governance and the Compensation Committee
until February 26, 2009.
Our Board
has adopted a charter for each committee. The charters are available on our
website at www.whitestonereit.com. The information contained on our website is
not, and should not be considered, a part of this proxy
statement.
8
The
primary purposes of the Nominating and Corporate Governance Committee
are:
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identifying
individuals qualified to become trustees;
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recommending
nominees for committees of our Board; and
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overseeing
matters concerning corporate governance
practices.
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The
committee currently consists of Daniel G. DeVos, Donald F. Keating and Jack L.
Mahaffey, with Mr. Keating serving as chairman. Each member of the committee is
“independent” under the NASDAQ listing standards and applicable SEC
rules.
The
committee is responsible for identifying individuals qualified to become
trustees and for evaluating potential or suggested trustee nominees. Pursuant to
our bylaws, as amended, in order for an individual to qualify for nomination or
election as a trustee, an individual, at the time of nomination, must have
substantial expertise, experience or relationships relevant to the business of
Whitestone, which may include:
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Commercial
real estate experience;
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An
in-depth knowledge of and working experience in finance or
marketing;
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Capital
markets or public company experience;
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University
teaching experience in a Master of Business Administration or similar
program;
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A
bachelor’s degree from an accredited university or college in the United
States or the equivalent degree from an equivalent institution of higher
learning in another country;
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Experience
as a chief executive officer, chief operating officer or chief financial
officer of a public or private company; or
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Public
or private board
experience.
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Additionally,
an individual shall not have been convicted of a felony or sanctioned or fined
for a securities law violation of any nature. The committee in its sole
discretion will determine whether a nominee satisfies the foregoing
qualifications or possess such other characteristics as deemed necessary by the
committee. The committee will also recommend nominees to the Board of Trustees
that have a diversity of experience, gender, race, ethnicity and age. Any
individual who does not satisfy the qualifications above is not eligible for
nomination or election as a trustee.
The
committee performs a preliminary evaluation of potential candidates primarily
based on the need to fill any vacancies on our Board, the need to expand the
size of our Board and the need to obtain representation in key disciplines
and/or market areas. The committee will seek to identify trustee candidates
based on input provided by a number of sources, including committee members and
other members of the Board of Trustees. The committee also has the authority to
consult with or retain advisors to carry out its duties. Once a potential
candidate is identified that fills a specific need, the committee performs a
full evaluation of the potential candidate. This evaluation includes reviewing
the potential candidate’s background information, relevant experience,
willingness to serve, independence and integrity. In connection with this
evaluation, the committee may interview the candidate in person or by telephone.
After completing its evaluation, the committee makes a recommendation to the
full Board as to the persons who should be nominated by our Board. Our Board
determines the nominees after considering the recommendations and a report of
the committee. The Nominating and Corporate Governance Committee will consider
all persons recommended by shareholders in the same manner as all other trustee
candidates provided that such recommendations are submitted in accordance with
the procedures set forth in our bylaws. For more information see the section
entitled “Shareholder Proposals.”
To date,
the committee has not paid a fee to any third party to assist in the process of
identifying or evaluating trustee candidates.
9
Audit
Committee
The
primary purposes of the Audit Committee are:
|
●
|
overseeing
Whitestone’s accounting and financial reporting process, the audits of its
financial statements; and
|
|||
|
●
|
assisting
the Board in monitoring the following:
|
|||
|
●
|
the
integrity of Whitestone’s financial statements and financial reporting
processes and systems of internal controls;
|
|||
|
●
|
the
qualifications and independence of Whitestone’s independent
accountants;
|
|||
|
●
|
the
performances of Whitestone’s independent accountants;
and
|
|||
|
●
|
Whitestone’s
compliance with legal and regulatory
requirements.
|
|||
The
committee also prepares a report each year for inclusion in our annual proxy
statement in accordance with the rules of the SEC.
The
committee currently consists of Daryl J. Carter, Donald F. Keating and Chris A.
Minton, with Mr. Minton serving as chairman. Our Board of Trustees has
determined that Mr. Minton is an “audit committee financial expert” as defined
by the rules promulgated by the SEC. Each member of the committee is
“independent” under the NASDAQ listing standards and applicable SEC
rules.
The
primary purposes of the Compensation Committee are as follows:
|
●
|
to
assist our Board in discharging its responsibilities relating to
compensation of Whitestone’s overall compensation and benefit structure;
and
|
||
|
●
|
to
produce an annual report on executive compensation for inclusion in
Whitestone’s annual meeting proxy statement in accordance with applicable
rules and regulations.
|
The
committee currently consists of Daniel G. DeVos, Donald F. Keating and Jack L.
Mahaffey, with Mr. Mahaffey serving as chairman. Each member of the committee is
“independent” under the NASDAQ listing standards and applicable SEC
rules.
The
committee has the sole authority to oversee the administration of compensation
programs applicable to our executive officers and trustees. Executive
compensation will be reviewed at least annually by the committee. Our chief
executive officer and chief operating officer complete performance reviews
annually and provide recommendations with respect to our other executive
officers. Trustee compensation is reviewed periodically by the committee as its
members deem appropriate. The committee may delegate some or all of its
authority to subcommittees when it deems appropriate. See “Compensation
Discussion and Analysis” for more information regarding the committee’s
processes and procedures for consideration and determination of executive
compensation.
The
committee has the authority to engage and approve fees and other retention terms
of outside advisors, without the approval of the Board of Trustees or
management, to assist it in the performance of its duties. In 2007 and 2008, the
committee engaged CEL & Associates, Inc./CEL Compensation Advisors, LLC
(“CEL”), an independent executive compensation consulting firm to assist the
committee’s analysis and determination of the 2008 compensation for our
executive officers. CEL was selected for its specific expertise in the real
estate industry and was directed by the committee to conduct a review and
provide the committee with relevant market data and plan alternatives to
consider when designing and adopting compensation programs for our executive
officers.
10
Our Board
has adopted a code of business conduct that is applicable to all members of our
Board, our executive officers and our employees. We have posted our Code of
Business Conduct and Ethics on the Corporate Governance section of our website
at www.whitestonereit.com.
We have
established procedures for shareholders or other interested parties to
communicate with our Board of Trustees, including our independent trustees. Such
parties can contact the Board by sending a letter to: Whitestone REIT, Attn:
Corporate Secretary, 2600 S. Gessner, Suite 500, Houston, Texas 77063. Our
Corporate Secretary will review all communications made by this means and
forward the communication to our Board or to any individual trustee to whom the
communication is addressed.
11
The
following table sets forth beneficial ownership information, as of March 9,
2009, including shares such persons had a right to acquire within 60 days after
March 9, 2009 through the exercise of vested restricted common shares or
restricted common share units for (i) each person known by us to own
beneficially 5% or more of the outstanding common shares, (ii) each of our
trustees, (iii) each of our Named Executive Officers and (iv) all of our
trustees and executive officers as a group. We are not aware of any shareholder
who owns 5% or more of our outstanding common shares.
|
Name
of Beneficial Owner
|
Shares
Beneficially
Owned (1)
|
Percent
|
|||||
|
Named
Executive Officers:
|
|||||||
|
James
C. Mastandrea
|
200,000
|
(2)
|
1.9
|
%
|
|||
|
John
J. Dee
|
125,000
|
(3)
|
1.2
|
%
|
|||
|
David
K. Holeman
|
75,000
|
(4)
|
*
|
||||
|
Valarie
L. King
|
50,000
|
(5)
|
*
|
||||
|
Daniel
E. Nixon, Jr.
|
50,000
|
(6)
|
*
|
||||
|
Non-Employee
Trustees:
|
|||||||
|
Daryl
J. Carter
|
5,000
|
(7)
|
*
|
||||
|
Daniel
G. DeVos
|
5,000
|
(8)
|
*
|
||||
|
Donald
F. Keating
|
44,433
|
(9)
|
*
|
||||
|
Jack
L. Mahaffey
|
77,730
|
(10)
|
*
|
||||
|
Chris
A. Minton
|
49,672
|
(11)
|
*
|
||||
|
All executive
officers and trustees as a Group (10 persons) (12)
|
681,835
|
6.6
|
%
|
||||
|
*
Less
than
1%
|
|
(1)
|
Beneficial
ownership is determined in accordance with the rules of the SEC that deem
shares to be beneficially owned by any person or group who has or shares
voting or investment power with respect to those
shares.
|
|
(2)
|
Includes
200,000 restricted common shares and excludes 381,190 restricted common
share units and 703,912 units in our Operating Partnership, which are
redeemable for cash or, at our option, for common shares on a one-for-one
basis.
|
|
(3)
|
Includes
125,000 restricted common shares and excludes 317,497 restricted common
share units.
|
|
(4)
|
Includes
75,000 restricted common shares and excludes 60,000 restricted common
share units.
|
|
(5)
|
Includes
50,000 restricted common shares and excludes 60,000 restricted common
share units.
|
|
(6)
|
Includes
50,000 restricted common shares and excludes 75,000 restricted common
share units.
|
|
(7)
|
Represents
5,000 restricted common shares.
|
|
(8)
|
Represents
5,000 restricted common shares.
|
|
(9)
|
Includes
5,000 restricted common shares and excludes 23,957 units in our Operating
Partnership, which are redeemable for cash or, at our option, for common
shares on a one-for-one basis.
|
|
(10)
|
Includes
5,000 restricted common shares and excludes 31,943 units in our Operating
Partnership, which are redeemable for cash or, at our option, for common
shares on a one-for-one basis.
|
|
(11)
|
Includes
5,000 restricted common shares and 44,672 common shares owned by Mr.
Minton’s wife for which Mr. Minton shares voting and dispositive power and
excludes 30,231 units in our Operating Partnership, which are redeemable
for cash or, at our option, for common shares on a one-for-one
basis.
|
|
(12)
|
None
of the shares beneficially owned by our trustees or named executive
officers have been pledged as security for an
obligation.
|
12
Section
16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
requires our trustees and officers and persons who own more than 10% of our
common shares to file reports of ownership and changes in ownership with the
SEC. These persons are required by SEC rules to furnish us with copies of these
reports. Based solely on our review of the copies of these reports received by
us and representations from certain reporting persons that they have complied
with the relevant filing requirements, we believe that all of these filing
requirements were complied with during the year ended December 31, 2008, except
that Donald F. Keating, Trustee, failed to file a Form 3, Initial Statement of
Beneficial Ownership of Securities, when he joined the Board of the Company in
January 2008. Mr. Keating filed a Form 3 on June 25, 2008.
13
The
following table sets forth certain information about our executive
officers.
|
Executive
Officers
|
Age(1)
|
Position
|
Recent
Business Experience
|
|||
|
James
C.
Mastandrea
|
65
|
Chairman
of the Board of Trustees and Chief Executive Officer (October 2006 –
present)
|
President,
Chief Executive Officer and Chairman of the Board of Trustees of Paragon
Real Estate Equity and Investment Trust, a real estate company currently
focused on value-added real estate and investments in shares of
publicly-traded real estate investment (2003 – present), Chief Executive
Officer/Founder of MDC Realty Corporation, a privately held residential
and commercial real estate development company (1978 – present), Chief
Executive Officer of Eagle’s Wings Aviation Corporation (1999 -2002),
Chairman of the Board of Trustees and Chief Executive Officer of First
Union Real Estate Investments, a NYSE listed REIT (1994 –
1998).
|
|||
|
John
J. Dee
|
57
|
Chief
Operating Officer (October 2006 – present)
|
Trustee,
Senior Vice President, and Chief Financial Officer of Paragon Real Estate
Equity and Investment Trust (2003 – present), Senior Vice President and
Chief Financial Officer of MDC Realty Corporation, a privately held
residential and commercial real estate development company (2002 – 2003),
Director of Finance and Administration for Frantz Ward, LLP (2000 – 2002),
several management positions and most recently Senior Vice President and
Chief Accounting Officer with First Union Real Estate Investments, a NYSE
listed REIT (1978 to 2000).
|
|||
|
David
K.
Holeman
|
45
|
Chief
Financial Officer (November 2006 – present)
|
Chief
Financial Officer of Hartman Management, our former advisor (2006), Vice
President and Chief Financial Officer of Gexa Energy, a NASDAQ listed
retail electricity provider (2004 – 2006), Controller and most recently
Chief Financial Officer of Houston Cellular Telephone Company (1994 –
2003).
|
|||
|
Valarie
L.
King
|
48
|
Sr.
Vice President of Property Management (October 2006 –
present)
|
Several
management positions and most recently Vice President of Property
Management for Hartman Management, our former advisor (2000 –
2006).
|
|||
|
Daniel
E.
Nixon,
Jr.
|
60
|
Sr.
Vice President of Leasing and Redevelopment (July 2007 –
present)
|
Executive
Vice President for Hull Storey Retail Group, LLC, owner of 17 enclosed
malls, totaling 11 million square feet (2000 – 2007), several management
positions and most recently Executive Vice President, Director of Retail
at First Union Real Estate Investments, a NYSE listed REIT
(1978-1999).
|
|
(1)
|
As
of March 15,
2009.
|
14
The
Compensation Committee of our Board (for purposes of this discussion and
analysis, the “Committee”) has responsibility for establishing, implementing,
and continually monitoring our executive compensation programs. Additionally,
they are responsible for the assessment of the relationship of compensation
relative to Whitestone’s performance, the rationale in the application of our
compensation plans to specific incentive awards, and all recommendations to the
Board relative to compensation under its charter.
The scope
of this Compensation Discussion and Analysis (“CD&A”) relates to (1) all
compensation components for the Named Executive Officers, as defined below, of
Whitestone and, (2) to the extent appropriate in order to define Committee
activities, responsibilities and decisions, summary information on:
|
●
|
Overall
Whitestone compensation programs;
|
|
|
●
|
Performance
evaluation methodology;
|
|
|
●
|
Compensation
plan development/adoption; and
|
|
|
●
|
Comparative
market compensation
assessment.
|
Throughout
this discussion, James C. Mastandrea, our Chairman and Chief Executive Officer,
John J. Dee, our Chief Operating Officer, David K. Holeman, our Chief Financial
Officer, Valarie L. King, our Senior Vice President of Property Management, and
Daniel E. Nixon, Jr., our Senior Vice President of Leasing and Redevelopment,
are referred to as the “Named Executive Officers.”
Compensation
Strategy and Philosophy
The
Committee believes that the most effective executive compensation strategy is
one that encourages entrepreneurship, which is a core driver of creating real
estate value and is designed to target specific annual and long-term goals
defined by management and approved by the Board, which align the economic
interests of employees with shareholders. This strategy should be designed to
reward the achievement of performance above established goals that contribute to
increased shareholder value.
The
Committee believes that an effective executive compensation strategy has several
components aimed at specific objectives and timeframes.
|
●
|
Base
Salary. The Committee believes the base salary should be reflective
of position, responsibility and experience, and correlated with
market-based salary levels for similar positions and competitor companies.
The Committee presently believes that the competitive market 50th
percentile level is the appropriate benchmark to target for base
salary at this time in Whitestone’s growth and size, which members of the
senior management, including the Chief Executive Officer, Chief Operating
Officer, and Chief Financial Officer, fall below. Because of the current
economic conditions all senior management salaries were frozen in August
2008 at their March 2008
levels.
|
15
|
●
|
Annual
Incentive Bonus. A bonus provides an opportunity for selected
employees (and potentially all employees) to receive an annual cash (or
potentially cash and shares) award based on the achievement of specific
organization, operating and financial goals and objectives at three levels
during any fiscal year of Whitestone
operation:
|
|
●
|
Corporate
performance;
|
||
|
●
|
Business
unit (functional area) performance; and
|
||
|
●
|
Individual
performance.
|
|
Whitestone
currently has not formalized an annual incentive bonus plan, but may
design a plan in the future. The Committee believes that any design of an
annual incentive plan should establish a threshold, target and maximum
incentive opportunity for participants. Additionally, the annual incentive
plan should be designed to provide an effective weighting and performance
measurement system to Whitestone, business unit (functional) and
individual objectives, and be flexible to adapt to changing Whitestone
needs and circumstances. Because of the current economic conditions all
senior management annual incentive bonuses were eliminated subsequent to
March 2008. Discretionary bonuses were paid in the first quarter of 2008
to certain Named Executive Officers for accomplishments made in 2007 and
to make up for below market salary levels.
|
||
|
●
|
Long-Term
Equity Incentive Plan. On July 29, 2008 our shareholders approved
the 2008 Long-Term Equity Incentive Ownership Plan (the “2008 Plan”) to
provide equity-based grants as incentive compensation to our employees. A
long-term incentive plan is an opportunity for selected key employees (and
potentially all employees) to participate in a plan which would provide
awards of equity (restricted shares, phantom units or options) upon the
long-term achievement of incremental value of Whitestone and its
shareholders. This plan would be designed to encourage entrepreneurship
and align employees with the long-term strategy of Whitestone and is
expected to be an important component of total compensation and key
employee retention.
|
|
|
●
|
Benefits
and Other Perquisites. Whitestone provides the Named Executive
Officers (and all other employees) a full range of benefits related to
insurances for health and security. These benefit plans, and other
perquisites to key employees, are consistent with Whitestone’s competitors
for experienced executives and are an important component of employee
retention.
|
The
Compensation Committee Charter outlines the Committee’s key objectives in the
governance of compensation plan development and award decisions, including its
major responsibilities to evaluate Whitestone’s performance and executive
compensation (and the relationship between them in any year and over time), one
of the fundamental rationales for incentive compensation. Additionally, the
Committee must ensure to the extent possible that Whitestone maintains its
ability to attract and retain superior employees in key positions and that
compensation opportunities to key employees remain competitive relative to that
paid to similarly situated executives of our peer companies. To that end, the
Committee believes executive compensation packages provided and to be developed
will reflect the elements outlined above, and will require Whitestone to define
specific performance measurement and accountability procedures to correlate with
incentive awards.
16
Compensation
Objectives
In
association with the overall compensation strategy and philosophy outlined
above, the Committee defines its core values and fundamental guiding principles
relating to executive compensation as follows:
|
●
|
Compensation
is linked to performance. Executive pay is linked to company and
individual performance. Named Executive Officers should be rewarded for
achieving annual strategic, operating, and financial goals. Goals should
be defined and directed by Whitestone’s strategic plan. Long-term
compensation should promote retention and align management and employees
with the long-term interests of
shareholders.
|
|
|
●
|
Compensation
elements should be appropriately balanced. The mix of compensation
elements will vary with position and with Whitestone’s circumstances. Base
salary and benefits are designed to attract and retain experienced key
personnel. Annual incentives emphasize annual objectives, while long-term
compensation emphasizes growth in profitability and shareholder value. The
proportion of “guaranteed” and “at risk (incentive)” compensation should
be structured by position consistent with responsibility, target total
compensation level, and market benchmarks. Additionally, a severance
benefits program is appropriate to encourage retention and objectivity in
connection with events that may trigger a change in control of Whitestone
or other circumstances of separation. Whitestone does not currently have a
severance benefits program, but will develop one in the future. Whitestone
has agreed to reimburse its Chief Executive Officer, Chief Operating
Officer and Sr. Vice President of Leasing for certain relocation
expenses.
|
|
|
●
|
Compensation
should be fair and competitive. Whitestone and the Committee strive
to establish fair and competitive compensation for the Named Executive
Officers (and other management), and does so by the process and assessment
methods as described in the Compensation Committee
Charter.
|
|
|
●
|
Executive
stock ownership is expected. Whitestone believes that all executive
officers (and to the extent possible, all employees) should be
shareholders of Whitestone. Whitestone and the Committee seek to
facilitate, and have adopted the 2008 Plan to assist in achievement of
this objective.
|
|
|
●
|
The
Committee and Board exercise independent judgment. On behalf of the
shareholders, the Committee and the Board ensure that executive
compensation is appropriate and effective, and that all assessments,
advisors, analysis, discussion, rationale and decision making are through
the exercise of independent judgment.
|
|
|
●
|
Compensation
may be structured to meet corporate tax and accounting rules.
Whitestone generally structures the Named Executive Officers’ compensation
so that all elements of pay are tax deductible to Whitestone. Section
162(m) of the Internal Revenue Code limits the amount of compensation
Whitestone may deduct in any fiscal year. Compensation above these limits
can be deducted if it is awarded under a shareholder approved “performance
based” incentive compensation plan. Under an annual incentive plan, awards
which would limit the deductibility of compensation by Whitestone may
(upon approval of the Committee) be delayed into a period where the
deduction can be taken. Whitestone adheres to all Financial Accounting
Standards Board rules and regulations related to the accounting treatment
and reporting of compensation expense and
valuation.
|
17
Roles
and Responsibilities in Compensation Decisions
The
Committee is specifically responsible for compensation decisions related to the
Chairman and Chief Executive Officer.
The
Committee reviews, assesses and approves recommendations from the Chairman and
Chief Executive Officer regarding any determination regarding base salary and
bonuses to all officers, management and employees, including the other Named
Executive Officers. The Committee’s philosophy and strategy, and the programs
adopted by the Board, establish the general parameters within which the Chairman
and Chief Executive Officer determines the recommended compensation for the
other Named Executive Officers.
James C.
Mastandrea, Chairman and Chief Executive Officer, and John J. Dee, Chief
Operating Officer, annually review the performance of our other executive
officers. The conclusions reached and recommendations made based on these
reviews, including base salary adjustments as well as bonuses, are presented to
the Committee. The Committee can exercise its discretion in modifying any
recommended salary adjustment or bonus award. The Committee reviews in detail
the performance of our Named Executive Officers.
Compensation
consultants familiar with the real estate industry and Whitestone’s competitors
are used by the Chairman and Chief Executive Officer, Chief Operating Officer,
and the Committee to provide updated market compensation information regarding
competitor compensation levels for various positions; to provide trends in the
industry related to compensation awards and industry performance; and to address
questions related to effective compensation plans and employee
retention.
Setting
Executive Compensation
Based on
the strategy and philosophy described above, the Committee has structured our
annual and long-term executive compensation to motivate executive officers to
achieve our business goals and reward the executive officers for achieving such
goals. In furtherance of this agenda in 2007 and 2008, the Committee engaged
CEL, an independent executive compensation consulting firm with specific
expertise in the real estate industry, to conduct a review and benchmarking of
total compensation levels for our executive officers and to assist in setting
executive compensation for 2008. CEL has provided the Committee with relevant
market data and plan alternatives to consider when designing and adopting
compensation programs for our executive officers. The Committee also
independently reviews public disclosures made by companies in the real estate
industry and on published surveys with particular focus on companies of similar
size within our industry.
As a part
of the compensation decision making process, the Committee compares each element
comprising total compensation for Whitestone positions against similar positions
in a peer group of publicly-traded REITs and private owner/developer/investment
companies (collectively, the “Compensation Peer Group”). The Compensation Peer
Group, which is periodically reviewed and updated by the Committee, consists of
companies with which we believe we compete for talent, investment opportunity,
and shareholder investment.
18
The
companies comprising the Compensation Peer Group were selected based on the
following criteria:
|
●
|
Competitive
public real estate companies in Whitestone’s major
markets;
|
|
|
●
|
Public
companies with market capitalization (implied market cap) of $150 million
to $750 million and within the retail shopping center, office, industrial
and diversified sectors; and
|
|
|
●
|
Private
real estate investment and development companies based on portfolio size
and range of geographic
investments.
|
A total
of seventeen (17) public companies and nine (9) private companies were used in
the CEL analysis. The public companies include:
|
Acadia
Realty Trust
|
PS
Business Parks, Inc.
|
|
|
AmREIT
|
Ramco-Gershenson
Properties Trust
|
|
|
Capital
Lease Funding, Inc.
|
Republic
Property Trust
|
|
|
Cedar
Shopping Centers, Inc.
|
Saul
Centers, Inc.
|
|
|
Columbia
Equity Trust
|
Spirit
Finance Corporation
|
|
|
First
Potomac Realty Trust
|
Thomas
Properties Group, Inc.
|
|
|
Government
Properties Trust, Inc.
|
Urstadt
Biddle Properties, Inc.
|
|
|
Kite
Realty Group Trust
|
Winthrop
Realty Trust
|
|
|
Marcus
Corporation
|
Whitestone
competes with many companies for experienced executives, and the Committee
generally has set compensation for executive officers relative to the range of
compensation paid to similarly situated executives of the companies comprising
the Compensation Peer Group. Variations to this objective may occur as dictated
by the experience level of the individual, market factors, and Whitestone’s
situation.
In late
2006, the Company was restructured from an externally managed REIT to one with
its own employees and infrastructure. As a result of this change, salaries were,
by necessity and directive, to be below market (below the 50th
percentile). Bonuses were awarded in 2007 and 2008 (on a discretionary basis but
highly related to performance in a new company start-up environment) to account
for some of this difference. In addition, the Committee (and Whitestone)
believes that it is important to have an equity-based incentive program to
retain experienced and qualified executives and to provide them long-term
compensation aligned with the economic growth of the company and the creation of
shareholder value.
The
philosophy of the Committee is to provide programs that offer a significant
percentage of total compensation from performance based incentives. Alignment of
key management and employees with the growth of Whitestone and the creation of
value is the guiding principle of Whitestone’s compensation program. Currently,
given Whitestone’s limited operating history as a self-managed REIT, policies,
specific incentive compensation opportunity “targets,” and the mix between cash
and equity incentives for key employees are not completed. The Committee will
continue to review a variety of information, including that provided by CEL, to
determine the appropriate level and mix of incentive compensation. Income from
incentive compensation is realized as a result of Whitestone’s performance and
that of individual performance, measured against established goals. The
Committee believes that our executive officers must think and act like owners to
create value, and therefore a significant portion of total compensation to our
executive officers should be in the form of non-cash share-based long-term
incentive compensation. Annual and long-term incentive plans are currently being
reviewed and evaluated by the Committee and management. A comprehensive
incentive compensation program is a key strategic plan element for Whitestone.
With the adoption of the 2008 Plan in 2008 and its implementation in 2009, the
Committee believes the Named Executive Officers have a long-term equity program
that meets the philosophy of the Committee to link executive compensation to
increased value of the Company.
19
2008
Executive Compensation Elements
Several
significant components of our executive compensation were under development in
2008, including an annual bonus opportunity based on strategic, operating and
financial performance and a long-term incentive compensation plan. Our
shareholders approved on July 29, 2008 our 2008 Plan, which includes grants of
restricted common shares and restricted common share units that vest based on
the achievement of future growth performance measures. Although this plan was
approved in 2008, no awards of equity-based compensation were granted to our
named executive officers until January 2009. As such, during 2008, we relied
upon base salary and discretionary bonuses for superior performance and
competitive company benefits and perquisites. A description of Whitestone
compensation elements during 2008 are presented below.
|
Base
Salary. The Named Executive Officers receive a base salary
established by an assessment of the responsibilities, skills and
experience related to their respective positions, and an evaluation of
base salary of comparable positions in peer companies and the market in
general. Other factors considered in base salary determinations are
individual performance, the success of each business unit (functional
area), the competitiveness of the executive’s total compensation, our
ability to pay an appropriate and competitive salary, and internal and/or
external equity. The Named Executive Officers are eligible for annual
increases in their base salary as a result of: individual performance;
their salary relative to the compensation paid to similarly situated
executives in companies comprising the Compensation Peer Group; cost of
living considerations; and the time interval and changes in responsibility
since the last salary increase. In August 2008 the Board of Trustees
implemented a salary freeze at the March 2008 salary levels for all
employees above the Assistant Vice President level, which includes all of
our Named Executive Officers.
|
|
|
Annual
Bonus. At this time, Whitestone does not have a formal annual
incentive plan. In the future, the Committee may adopt an annual incentive
plan and may, in accordance with such a plan, award annual bonuses to
executives for the achievement of specific operating and financial goals
by Whitestone; the individual’s business unit or functional area; and the
individual’s personal achievements and performance. During 2008, the
Committee awarded discretionary bonuses for accomplishments in 2007 and to
make up for below-market base salary levels to James C. Mastandrea
($75,000), John J. Dee ($50,000), David K. Holeman ($5,000), Valarie L.
King ($10,000) and Daniel E. Nixon
($5,396).
|
|
|
Long-Term
Equity Incentive Compensation. In
July 2008 our shareholders approved the 2008 Long-Term Equity Incentive
Ownership Plan, which includes grants of restricted common shares and
restricted common share units which vest based on the achievement of
future growth performance measures. Although the plan was approved during
2008, no awards were granted until January
2009.
|
|
|
Perquisites
and Other Personal Benefits. Whitestone provides the Named
Executive Officers with benefits and other personal perquisites that
Whitestone deems reasonable and consistent with our overall compensation
program. Such benefits enable Whitestone to attract and retain superior
employees for key positions. The Committee periodically reviews our
overall compensation program and specific perquisites provided to the
Named Executive
Officers.
|
20
Three of
the Named Executive Officers (James C. Mastandrea, John J. Dee, and Daniel E.
Nixon, Jr.) have relocated to the Houston area, but their personal homes, though
listed with real estate agents, did not sell during 2008. To accommodate this
relocation, Whitestone, with review and approval by the Committee, has agreed to
pay certain relocation expenses for each of Messrs. Mastandrea, Dee and Nixon.
For Mr. Nixon, Whitestone has agreed to pay a moving allowance of $20,000 upon
relocation to Houston. For Mr. Mastandrea and Mr. Dee, Whitestone has agreed to
pay for all costs associated with moving household items and personal cars,
including but not limited to packing, shipping, storage, and necessary roundtrip
air travel. Relative to the move, Whitestone has also agreed to pay for the
costs associated with selling Mr. Mastandrea’s and Mr. Dee’s homes, including
the cost of preparing the houses for sale, sales consultation costs,
reimbursement of realtor’s commission upon sale, and other selling costs.
Whitestone currently pays for the cost of medical, dental, and disability
insurance for Mr. Mastandrea and has agreed to pay for the cost of transferring
health, dental, and disability care to Houston. As part of Mr. Mastandrea and
Mr. Dee’s relocation expenses, Whitestone has agreed to pay for the cost of
executive search services for their spouses, and any other reasonable costs and
expenses that are necessary to relocate to Houston. In recognition of the
personal sacrifices made by Messrs. Mastandrea, Dee and Nixon and to minimize
the relocation hardship on their families, as a result of their relocation to
Houston, the Company has provided automobiles for business and personal
purposes, housing, and reimbursements for personal travel. We also maintain
other executive benefits we consider necessary in order to offer fully
competitive opportunities to our executive officers. These include 401(k)
retirement savings plans, including Whitestone matching contributions, car
allowances and related travel reimbursements. Executive officers are also
eligible to participate in all of our employee benefit plans, including medical,
dental, group life, disability and accidental death and dismemberment insurance,
in each and all cases on the same basis as other employees.
2009
Compensation Actions
In
January 2009, the Committee granted restricted common shares and restricted
common share units pursuant to our 2008 Plan to the following named executive
officers:
|
Name
|
Grant
Date
|
Number
of
Shares
|
Award Type (1)
|
||||
|
James
C. Mastandrea
|
1/2/2009
|
200,000
|
Restricted
Common Shares
|
||||
|
1/2/2009
|
381,190
|
Restricted
Common Share Units
|
|||||
|
John
J. Dee
|
1/2/2009
|
125,000
|
Restricted
Common Shares
|
||||
|
1/2/2009
|
317,497
|
Restricted
Common Share Units
|
|||||
|
David
K. Holeman
|
1/2/2009
|
75,000
|
Restricted
Common Shares
|
||||
|
1/2/2009
|
60,000
|
Restricted
Common Share Units
|
|||||
|
Valarie
L. King
|
1/2/2009
|
50,000
|
Restricted
Common Shares
|
||||
|
1/2/2009
|
60,000
|
Restricted
Common Share Units
|
|||||
|
Daniel
E. Nixon, Jr.
|
1/2/2009
|
50,000
|
Restricted
Common Shares
|
||||
|
1/2/2009
|
75,000
|
Restricted
Common Share Units
|
(1) The
awards shall vest in accordance with performance targets as set forth in the
applicable award agreements.
Employment
Agreements for Named Executive Officers
None of
the Named Executive Officers are subject to an employment agreement or
individual severance agreement and were not in 2008. However, in the event of a
Change in Control, the vesting of restricted common shares and restricted common
share units granted to Named Executive Officers will accelerate. See
“Payment/Rights Upon Termination or Change in Control on page 23.”
COMPENSATION
COMMITTEE REPORT
The
Committee has reviewed and discussed the Compensation Discussion and Analysis
required by Item 402(b) of Regulation S-K with management and, based on the
review and discussions, the Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this Proxy
Statement.
|
Respectfully
submitted,
|
|
|
Whitestone
REIT Compensation Committee
|
|
|
Jack
L. Mahaffey, Chairman
|
|
|
Daniel
G. DeVos
|
|
|
Chris
A. Minton
|
|
|
Donald
F. Keating
|
21
The table
below summarizes the total compensation paid or earned to each of the Named
Executive Officers in 2006, 2007 and 2008.
|
Name
and Principal
Position
|
Year
|
Salary (1)
|
Bonus (2)
|
All
Other
Compensation (3)
|
Total (4)
|
|||||||||||
|
James
C. Mastandrea
|
2008
|
$
|
284,616
|
$
|
75,000
|
$
|
89,130
|
(5)
|
$
|
448,746
|
||||||
|
Chairman
& Chief
|
2007
|
200,000
|
—
|
51,541
|
(6)
|
251,541
|
||||||||||
|
Executive
Officer
|
2006
|
50,000
|
—
|
—
|
50,000
|
|||||||||||
|
John
J. Dee
|
2008
|
193,846
|
50,000
|
40,074
|
(7)
|
283,920
|
||||||||||
|
Chief
Operating Officer
|
2007
|
160,000
|
—
|
26,994
|
(8)
|
186,994
|
||||||||||
|
2006
|
39,385
|
20,000
|
—
|
59,385
|
||||||||||||
|
David
K. Holeman
|
2008
|
176,703
|
5,000
|
4,676
|
(9)
|
186,379
|
||||||||||
|
Chief
Financial Officer
|
2007
|
170,000
|
—
|
2,550
|
(10)
|
172,550
|
||||||||||
|
2006
|
21,577
|
—
|
—
|
21,577
|
||||||||||||
|
Valarie
L. King
|
2008
|
103,385
|
10,000
|
3,402
|
(11)
|
116,787
|
||||||||||
|
SVP
- Property
|
2007
|
100,375
|
—
|
1,500
|
(12)
|
101,875
|
||||||||||
|
Management
|
2006
|
19,231
|
—
|
—
|
19,231
|
|||||||||||
|
Daniel
E. Nixon, Jr.
|
2008
|
175,000
|
5,396
|
26,324
|
(13)
|
206,720
|
||||||||||
|
SVP
- Leasing and
|
2007
|
77,085
|
10,000
|
11,073
|
(14)
|
98,158
|
||||||||||
|
Redevelopment
|
2006
|
—
|
—
|
—
|
—
|
|||||||||||
|
(1)
|
Base
salary paid in 2008, 2007 and 2006. The 2006 salary represents a partial
year salary for Messrs. Mastandrea, Dee and Holeman and Ms.
King.
|
|
(2)
|
Discretionary
bonuses for 2008, 2007 and 2006. Bonuses paid were based on prior year
performance and to make up for below-market base salary
levels
|
|
(3)
|
See
individual footnotes for details.
|
|
(4)
|
Total
of all items in this table.
|
|
(5)
|
Represents
(a) the incremental cost of a Whitestone automobile not used exclusively
for business purposes, (b) housing cost of $37,354, (c) matching
contributions under our 401(k) plan of $10,173, (d) health insurance, and
(e) personal travel of $25,825.
|
|
(6)
|
Represents
(a) the incremental cost of a Whitestone automobile not used exclusively
for business purposes, (b) housing costs, (c) matching contributions under
our 401(k) plan of $3,000, (d) health insurance, and (e) personal
travel.
|
|
(7)
|
Represents
(a) the incremental cost of a Whitestone automobile not used exclusively
for business purposes, (b) housing costs, (c) matching contributions under
our 401(k) plan of $7,750, (d) health insurance, and (e) personal
travel.
|
|
(8)
|
Represents
(a) the cost of a Whitestone automobile not used exclusively for business
purposes, (b) housing costs, (c) matching contributions under our 401(k)
plan of $2,400, and (d) personal
travel.
|
22
|
(9)
|
Represents
matching contributions under our 401(k) plan of $4,676.
|
|
(10)
|
Represents
matching contributions under our 401(k) plan of $2,550.
|
|
(11)
|
Represents
matching contributions under our 401(k) plan of $3,402.
|
|
(12)
|
Represents
matching contributions under our 401(k) plan of $1,500.
|
|
(13)
|
Represents
(a) auto allowance, (b) temporary housing costs, (c) matching
contributions under our 401(k) plan of $4,038, (d) health insurance and
(e) personal travel.
|
|
(14)
|
Represents
(a) auto allowance, (b) temporary housing costs, (c) health insurance and
(d) personal travel.
|
Our
shareholders approved our 2008 Plan in July 2008. No awards were granted
pursuant to the plan during 2008. For information regarding awards granted in
2009, see “Compensation Discussion and Analysis – 2009 Compensation
Actions.”
We have
not entered into employment agreements with any of our executive officers.
However, our 2008 Plan provides for certain vesting in the event of a change in
control. The following summarizes the compensation payable to each Named
Executive Officer in the event of a termination of the executive’s
employment.
Payments
Made Upon Any Termination.
In all events, we are obligated to pay all salary and benefits accrued to
the executive through and including the date of
termination.
Payments
Made Upon Death or Disability. In the event of the employee’s death or
disability, any unvested restricted common shares or unvested restricted common
share units shall immediately vest.
Award Vesting Acceleration. In the event
of a Change in Control, as defined below, any unvested restricted common shares
or restricted common share units granted pursuant to the 2008 Plan will
automatically vest prior to the consummation of such Change in Control. In
addition, if there are any restricted common share units which have been
allocated but not yet granted and the employee remains employed with the
acquiring or successor entity, then the employee must receive an award of a
comparable value covering shares of a successor
corporation.
Change in
Control shall mean, unless otherwise defined in the applicable award agreement,
any of the following events:
|
1.
|
any
person or entity, including a “group” as defined in Section 13(d)(3) of
the Exchange Act, other than Whitestone or a wholly-owned subsidiary
thereof or any employee benefit plan of Whitestone or any of its
Subsidiaries, becomes the beneficial owner of Whitestone’s securities
having 35% or more of the combined voting power of the then outstanding
securities of Whitestone that may be cast for the election of trustees of
Whitestone (other than as a result of an issuance of securities initiated
by Whitestone in the ordinary course of business);
|
|
|
2.
|
as
the result of, or in connection with, any cash tender or exchange offer,
merger or other business combination or contested election, or any
combination of the foregoing transactions, less than a majority of the
combined voting power of the then outstanding securities of Whitestone or
any successor company or entity entitled to vote generally in the election
of the trustees of Whitestone or such other corporation or entity after
such transaction are held in the aggregate by the holders of Whitestone’s
securities entitled to vote generally in the election of trustees of
Whitestone immediately prior to such
transaction;
|
23
|
3.
|
during
any period of two (2) consecutive years, individuals who at the beginning
of any such period constitute the Board cease for any reason to constitute
at least a majority thereof, unless the election, or the nomination for
election by Whitestone’s shareholders, of each trustee of Whitestone first
elected during such period was approved by a vote of at least two-thirds
(2/3rds) of the trustees of Whitestone then still in office who were (a)
trustees of Whitestone at the beginning of any such period, and (b) not
initially (1) appointed or elected to office as result of either an actual
or threatened election and/or proxy contest by or on behalf of a person
other than the Board, or (2) designated by a person who has entered into
an agreement with Whitestone to effect a transaction described in (1) or
(2) above or (4) or (5) below;
|
|
|
4.
|
a
complete liquidation or dissolution of Whitestone;
|
|
|
5.
|
the
sale or other disposition of all or substantially all of the assets of
Whitestone to any person (other than a transfer to a subsidiary);
or
|
|
|
6.
|
with
respect to award agreements for the chief executive officer, the chief
operating officer and the chief financial officer only, a termination of
the chief executive officer without cause, excluding non-appealable
determinations by a court of law for fraud, gross negligence, or willful
neglect, which would be considered termination for
cause.
|
During
2008, the Compensation Committee was comprised of Messrs. Keating, Mahaffey, and
Minton. None of the members of the Compensation Committee during 2008 is or has
been an officer or employee of Whitestone and no executive officer of Whitestone
served on the compensation committee of any company that employed any member of
Whitestone’s Compensation Committee.
24
Cash
Compensation
Our
non-employee trustees are paid an annual fee of $10,000. In addition, our
non-employee trustees receive $1,000 for each in-person or telephonic board
meeting they attend. Effective for fiscal year 2009, we pay an annual fee of
$10,000 and our non-employee trustees receive $1,000 for each in-person board
meeting and $500 for each telephonic board meeting they attend. Trustees do not
receive additional compensation for committee meetings. Non-employee trustees
also are reimbursed for out-of-pocket expenses incurred to attend board
meetings.
Equity
Awards
Our
trustees are eligible to receive award grants pursuant to our 2008 Plan. No
trustees received any grants during 2008. On March 25, 2009 each of our five
independent trustees were granted 5,000 restricted common shares which vest in
equal installments in 2010, 2011, and 2012.
2008
Trustee Compensation
The table
below summarizes the compensation we paid to each non-employee trustee in 2008.
No employee who serves as a trustee is paid for those services.
|
Name (1)
|
Fees
Earned or Paid
in
Cash
|
Share Awards (2)
|
Total (3)
|
|||||||||||
|
Daryl J. Carter
(4)
|
$ | — | $ | — | $ | — | ||||||||
|
Daniel G. DeVos
(4)
|
— | — | — | |||||||||||
|
Donald
F. Keating
|
24,000 | — | 24,000 | |||||||||||
|
Jack
L. Mahaffey
|
25,000 | — | 25,000 | |||||||||||
|
Chris
A. Minton
|
25,000 | — | 25,000 | |||||||||||
|
(1)
|
James
C. Mastandrea, our Chairman of the Board and Chief Executive Officer is
not included in the table as he is an employee and thus received no
compensation for his services as a trustee. The compensation received by
Mr. Mastandrea as an employee is shown in the Summary Compensation Table
on page 25.
|
|
(2)
|
Represents
the dollar amount recogized for financial statement reporting purposes
with respect to the fiscal year for awards of shares accounted in
accordance with FAS 123R. No grants were awarded in 2008, thus no amounts
were recorded for financial statement purposes.
|
|
(3)
|
We
do not have a pension plan or non-qualified deferred compensation
plan.
|
|
(4)
|
Messrs.
Carter and DeVos were appointed as trustees in 2009; therefore, they
received no compensation
in 2008.
|
25
The Audit
Committee is composed of three independent non-employee trustees and operates
under a written charter adopted by the board (a copy of which is available on
our web site). The Board has determined that each committee member is
independent within the meaning of the applicable NASDAQ listing standards
currently in effect and as required by the Sarbanes-Oxley Act of 2002.
Management is responsible for the financial reporting process, including the
preparation of the consolidated financial statements in accordance with
generally accepted accounting principles (“GAAP”) and for the establishment and
effectiveness of internal control over financial reporting. Our independent
registered public accounting firm is responsible for auditing those financial
statements and expressing an opinion as to their conformity with GAAP. The
committee’s responsibility is to oversee and review this process. We are not,
however, professionally engaged in the practice of accounting or auditing, and
do not provide any expert or other special assurances as to such financial
statements concerning compliance with the laws, regulations or GAAP or as to the
independence of the registered public accounting firm. The committee relies,
without independent verification, on the information provided to us and on the
representations made by management and the independent registered public
accounting firm. We held four meetings during 2008. The meetings were designed,
among other things, to facilitate and encourage communication among the
committee, management and our independent registered public accounting firm,
Pannell Kerr Forster of Texas, P.C. (“PKF”). We discussed with PKF the overall
scope and plans of their audit. We met with PKF, with and without management
present, to discuss the results of their examinations.
We have
reviewed and discussed the audited consolidated financial statements for the
fiscal year ended December 31, 2008 with management and PKF. We also discussed
with management and PKF the process used to support certifications by our Chief
Executive Officer and Chief Financial Officer that are required by the SEC and
the Sarbanes-Oxley Act of 2002 to accompany our periodic filings with the SEC.
In addition, we reviewed and discussed with management our compliance as of
December 31, 2008 with Section 404 of the Sarbanes-Oxley Act of
2002.
The Audit
Committee has discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, as superseded by Statement
on Auditing Standards No. 114, The
Auditor’s Communication With Those Charged With Governance. The Audit
Committee has received the written disclosures and the letter from the
independent auditors required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent auditors’ communications
with the audit committee concerning independence,
and has discussed with the independent auditors their independence. When
considering the independence of PKF, we considered whether their array of
services to Whitestone beyond those rendered in connection with their audit of
our consolidated financial statements and reviews of our consolidated financial
statements, including our quarterly reports on Form 10-Q, was compatible with
maintaining their independence. We also reviewed, among other things, the audit
and non-audit services performed by, and the amount of fees paid for such
services to PKF.
Based on
the foregoing review and discussions and relying thereon, we have recommended to
our Board of Trustees that the audited financial statements for the year ended
December 31, 2008 be included in Whitestone’s Annual Report on Form 10-K. The
Audit Committee also reappointed, subject to shareholder ratification, PKF as
our independent registered public accountants for 2009. This section of the
proxy statement is not deemed “filed” with the SEC and is not incorporated by
reference into our Annual Report on Form 10-K.
The
undersigned members of the Audit Committee have furnished this report to our
Board.
|
Respectfully
submitted,
|
|
|
Audit
Committee
|
|
|
Chris
A. Minton, Chairman
|
|
|
Daryl
J. Carter
|
|
|
Donald
F. Keating
|
|
|
Jack
L. Mahaffey
|
26
The
following table sets forth the fees for professional audit services rendered by
PKF, our independent registered public accounting firm, for the audit of our
annual consolidated financial statements for the years ended December 31, 2008
and 2007, and fees billed for other services rendered by PKF for those
periods:
|
Total
Approximate Fees
|
||||||||
|
2008
|
2007
|
|||||||
|
Type
of Services
|
||||||||
|
Audit Fees (1)
|
$ | 250,068 | $ | 233,437 | ||||
|
Tax Fees (2)
|
84,357 | 58,873 | ||||||
|
All
Other Fees
|
— | — | ||||||
|
Total
|
$ | 334,425 | $ | 292,310 | ||||
|
(1)
|
Audit
fees were for professional services rendered in connection with the audit
of our 2008 and 2007 consolidated financial statements and reviews of our
quarterly consolidated financial statements within those
years.
|
|
(2)
|
Tax
fees were for assistance with matters principally related to tax
compliance, tax planning and tax
advice.
|
Our Audit
Committee has considered the audit and non-audit services rendered by PKF and
has determined that the provision of these services is compatible with
maintaining the independence of PKF.
Our Audit
Committee has adopted a policy requiring it to approve all services (audit
and/or non-audit) to be performed by our independent registered public
accounting firm to assure that the provision of the services does not impair the
firm’s independence. All services, engagement terms, conditions and fees, as
well as changes in the terms, conditions and fees must be approved by our Audit
Committee in advance. Our Audit Committee will annually review and approve
services that may be provided by our independent registered public accounting
firm during the next year and will revise the list of approved services from
time to time based on subsequent determinations. Our Audit Committee believes
that our independent registered public accounting firm can provide tax services
to us, such as tax compliance, tax planning and tax advice, without impairing
the firm’s independence and that the tax services do not constitute prohibited
services pursuant to the SEC and/or NASDAQ rules. The authority to approve
services may be delegated by our Audit Committee to one or more of its members,
but may not be delegated to management. If authority to approve services has
been delegated to an Audit Committee member, any approval of services must be
reported to our Audit Committee at its next scheduled meeting. All audit and
non-audit services rendered by our independent registered public accounting firm
during 2008 and 2007 were pre-approved by our Audit Committee.
27
PUBLIC
ACCOUNTING FIRM
The Audit
Committee of the Board of Trustees has appointed Pannell Kerr Forster of Texas,
P.C. to serve as our independent registered public accounting firm for the year
ending December 31, 2009.
The Board
of Trustees asks shareholders to ratify the selection of Pannell Kerr Forster of
Texas, P.C. as our independent registered public accounting firm. Although
ratification is not required by our bylaws or otherwise, and the Audit Committee
is not bound by a vote either for or against the proposal, the Board of Trustees
believes ratification by shareholders is a matter of good corporate governance.
If the selection is not ratified, the Audit Committee will consider whether it
is appropriate to select another registered public accounting firm. Even if the
selection is ratified, the Audit Committee in its discretion may select a
different registered public accounting firm at any time during the year if it
determines that such a change would be in the best interests of Whitestone and
our shareholders. Whitestone does not expect a representative from Pannell Kerr
Forster of Texas, P.C. to attend the 2008 annual meeting and, accordingly, no
representative from Pannell Kerr Forster of Texas, P.C. is expected to make a
statement or be available to respond to questions.
Our
Board of Trustees unanimously recommends that you vote “For” the ratification of the Audit
Committee’s appointment of Pannell Kerr Forster of Texas, P.C. as our
Independent Registered Public Accounting Firm for the year ending December 31,
2009.
TRANSACTIONS
WITH RELATED PERSONS
On
January 16, 2009, Whitestone REIT, operating through our Operating Partnership,
acquired Spoerlein Commons, a mixed use-garden style complex of retail, medical,
and professional office tenants located in Buffalo Grove, Illinois (the
“Property”). The Operating Partnership acquired the Property pursuant to the
terms and conditions of the purchase, sale and contribution agreement dated
December 18, 2008 (the “Agreement”) between the Operating Partnership and Bank
One, Chicago, NA, as trustee under the Trust Agreement dated January 29, 1986
and known as Trust Number TWB-0454 (“Seller”). Midwest Development Venture IV,
an Illinois limited partnership (“Midwest”), is the sole beneficiary of the
Seller under the Trust Agreement.
The
Property represented an acquisition for Whitestone, and a substantial equity
investment on behalf of the Seller. In exchange for the Property, the Operating
Partnership paid the Seller $5,500,000, received credit for net prorations of
$275,854 and issued 703,912 Operating Partnership Units, valued at $5.15 per
Unit, for a total purchase price of $9,401,000.
Midwest,
the sole beneficiary of the Seller, is entitled to all earnings and proceeds
from the sale of the Property. James C. Mastandrea, our Chairman, President and
Chief Executive Officer, is the controlling limited partner in Midwest and as
such, had an ownership interest in the Property and is entitled to a portion of
the proceeds from the sale of the Property to the Operating Partnership. Because
of Mr. Mastandrea’s relationship with the Seller, a special committee of the
independent members of the Board of Trustees, including Donald F. Keating, Jack
L. Mahaffey, and Chris A. Minton, determined the terms of the transaction, which
included the use of an independent appraiser to value the Property.
In
connection with the closing of the Property and the investment on behalf of the
Seller, the Operating Partnership issued 703,912 Operating Partnership Units to
Midwest for its contribution of the Property to the Operating Partnership. The
Operating Partnership Units were issued in reliance on the exemption from
registration provided by Section 4(2) under the Securities Act of 1933, as
amended. The issuance was not affected using any form of general advertising or
general solicitation and the issuance was made to a qualified
investor.
28
The
Operating Partnership Units are convertible on a one-for-one basis into Common
Shares of Whitestone at any time after July 1, 2009 in
accordance with the terms of the Operating Partnership’s Limited Partnership
Agreement, as amended (the “Limited Partnership Agreement”). The Seller will not
be entitled to any dividends or distributions with respect to the Operating
Partnership Units prior to June 30, 2009. In the event Mr. Mastandrea is not
re-elected as a trustee of Whitestone at the 2009 Annual Meeting of Shareholders
and appointed Chairman, President and Chief Executive Officer for any reason,
the Operating Partnership would be obligated to repurchase the Operating
Partnership Units or any common shares issued upon conversion of the Operating
Partnership Units (as the case may be), in cash for $5.15 for each Operating
Partnership Unit or common share issued to Midwest in connection with the sale
of the Property discussed above.
Policies
and Procedures for Transactions with Related Persons
Pursuant
to its charter, our Nominating and Corporate Governance Committee is responsible
for reviewing any potential or actual conflicts of interest between our trustees
and between Whitestone and other companies on which a trustee of Whitestone may
serve.
Under our
Declaration of Trust, we may enter into any contract or transaction with our
trustees, officers, employees or agents (or any affiliated person), provided
that in the case of any contract or transaction in which any of our trustees,
officers, employees or agents (or any affiliated person) have a material
financial interest in the transaction, the fact of the interest is disclosed or
known to the following: (1) the Board of Trustees, and the Board of Trustees
shall approve or ratify the contract or transaction by the affirmative vote of a
majority of disinterested trustees, even if the disinterested trustees
constitute less than a quorum, or (2) the shareholders entitled to vote, and the
contract or transaction is authorized, approved or ratified by a majority of the
votes cast by the shareholders entitled to vote other than the votes of shares
owned of record or beneficially by the interested party; or (3) the contract or
transaction is fair and reasonable to Whitestone.
According
to our Code of Business Conduct and Ethics, Whitestone’s employees and trustees
are expected to exhibit and promote the highest standard of honest and ethical
conduct, by their adherence to the following policies and procedures: (1) they
shall engage in only honest and ethical conduct, including the ethical handling
of actual or apparent conflicts of interest between personal and professional
relationships; and (2) they shall inform our chief operating officer of any
deviations in practice from policies and procedures governing honest and ethical
behavior or any material transaction or relationship that comes to their
attention that could reasonably be expected to create a conflict of interest.
Our Audit Committee oversees compliance with our Code of Business Conduct and
Ethics.
We will
consider for inclusion in our proxy materials for the 2010 annual meeting of
shareholders, shareholder proposals that are received at our executive offices
no later than December 4, 2009 and that comply with all applicable requirements
of Rule 14a-8 promulgated under the Exchange Act. Proposals must be sent to our
Corporate Secretary at Whitestone REIT, 2600 S. Gessner, Suite 500, Houston,
Texas 77063.
Pursuant
to Whitestone’s bylaws, as amended, shareholders wishing to submit proposals or
trustee nominations, whether or not included in our proxy materials, must have
given timely notice thereof in writing to our Corporate Secretary. Under the
current bylaws, to be timely for the 2010 annual meeting of shareholders, you
must notify our Corporate Secretary, in writing, not later than the close of
business on January 3, 2010, nor earlier than the close of business on December
4, 2009. We also advise you to review Whitestone REIT’s bylaws, which contain
additional requirements about advance notice of shareholder proposals and
trustee nominations, including the different notice submission date requirements
in the event that the date for our 2010 annual meeting of shareholders is more
than 30 days before or after May 7, 2010. The Chairman of the 2010 annual
meeting of shareholders may determine, if the facts warrant, that a matter has
not been properly brought before the meeting and, therefore, may not be
considered at the meeting. In addition, the proxy solicited by the Board of
Trustees for the 2010 annual meeting of shareholders will confer discretionary
voting authority with respect to (i) any proposal presented by a shareholder at
that meeting for which Whitestone has not been provided with timely notice and
(ii) any proposal made in accordance with Whitestone’s bylaws, if the 2010 proxy
statement briefly describes the matter and how management’s proxy holders intend
to vote on it and if the shareholder does not comply with the requirements of
Rule 14a-4(c)(2) promulgated under the Exchange Act.
29
Shareholder
Nominations for Trustee
If a
shareholder is recommending a candidate to serve on the Board of Trustees, the
recommendation must include the information specified in Whitestone’s bylaws,
including the following:
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(1)
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As
to each individual whom the shareholder proposes to nominate for election
or reelection that meets the criteria of serving as a trustee as set forth
in the qualifications of trustees section of our bylaws (Article III,
Section 3), all information relating to the proposed nominee that would be
required to be disclosed in connection with the solicitation of proxies
for the election of the proposed nominee as a trustee in an election
contest (even if an election contest is not involved), or would otherwise
be required in connection with the solicitation, in each case pursuant to
Regulation 14A (or any successor provision) under the Exchange Act and the
rules thereunder (including the proposed nominee’s written consent to
being named in the proxy statement as a nominee and to serving as a
trustee if elected).
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(2)
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As
to any business that the shareholder proposes to bring before the
meeting:
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●
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a
description of the business; and
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●
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the
shareholder’s reasons for proposing the business at the meeting and any
material interest in the business of the shareholder or any shareholder
associated person (as defined in the bylaws), individually or in the
aggregate, including any anticipated benefit from the proposal to the
shareholder or the shareholder associated person.
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(3)
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As
to the shareholder giving the notice, any proposed nominee and any
shareholder associated person:
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●
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the
class, series and number of all shares of stock or other securities of
Whitestone or any of its affiliates (also referred to as Whitestone
securities), if any, which are owned (beneficially or of record) by the
shareholder, proposed nominee or shareholder associated person, the date
on which each Whitestone security was acquired and the investment intent
of the acquisition, and any short interest (including any opportunity to
profit or share in any benefit from any decrease in the price of stock or
other security) in any Whitestone securities of any
person;
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●
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the
nominee holder for, and number of, any Whitestone securities owned
beneficially but not of record by the shareholder, proposed nominee or
shareholder associated person;
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●
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whether
and the extent to which the shareholder, proposed nominee or shareholder
associated person, directly or indirectly (through brokers, nominees or
otherwise), is subject to or during the last six months has engaged in any
hedging, derivative or other transaction or series of transactions or
entered into any other agreement, arrangement or understanding (including
any short interest, any borrowing or lending of securities or any proxy or
voting agreement), the effect or intent of which is to (i) manage risk or
benefit of changes in the price of (x) Whitestone securities or (y) any
security of any entity that was listed in the peer group in the stock
performance graph in the most recent annual report to security holders of
the trust for the shareholder, proposed nominee or shareholder associated
person or (ii) increase or decrease the voting power of the shareholder,
proposed nominee or shareholder associated person in Whitestone or any
affiliate thereof (or, as applicable, in any peer group company)
disproportionately to the person’s economic interest in the company
securities (or, as applicable, in any peer group company);
and
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●
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any
substantial interest, direct or indirect (including, without limitation,
any existing or prospective commercial, business or contractual
relationship with Whitestone), by security holdings or otherwise, of the
shareholder, proposed nominee or shareholder associated person, in
Whitestone or any affiliate thereof, other than an interest arising from
the ownership of Whitestone’s securities where the shareholder, proposed
nominee or shareholder associated person receives no extra or special
benefit not shared on a pro rata basis by all other holders of the same
class or series.
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30
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(4)
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As
to the shareholder giving the notice, any shareholder associated person
with an interest or ownership referred to in paragraphs (2) and (3) above
and any proposed nominee:
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●
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the
name and address of the shareholder, as they appear on Whitestone’s stock
ledger, and the current name and business address, if different, of each
shareholder associated person and any proposed nominee;
and
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●
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the
investment strategy or objective, if any, of the shareholder and each
shareholder associated person who is not an individual and a copy of the
prospectus, offering memorandum or similar document, if any, provided to
investors or potential investors in the shareholder, each shareholder
associated person and any proposed nominee.
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(5)
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To
the extent known by the shareholder giving the notice, the name and
address of any other shareholder supporting the nominee for election or
reelection as a trustee or the proposal of other business on the date of
the shareholder’s
notice.
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The
foregoing description of Whitestone’s advance notice provisions is a summary and
is qualified in its entirety by reference to the full text of our bylaws.
Accordingly, we advise you to review our bylaws for additional stipulations
relating to advance notice of trustee nominations and shareholder
proposals.
Changes
from Our Previous Bylaws
Our
current bylaws, as amended and restated by our Board effective October 9, 2008,
revise the notice period for a shareholder to make a trustee nomination or make
a shareholder proposal at the annual meeting of shareholders and add
informational requirements for shareholder nominees for trustee and other
shareholder proposals at annual or special meetings. For example, the amended
bylaws calculate the deadline for shareholder nominations and/or proposals based
on the anniversary of the date of the prior year’s proxy statement (rather than
the anniversary of the mailing of the notice). In addition, in the event the
annual meeting date changes by more than 30 days from the anniversary of the
prior year’s annual meeting date, the amended bylaws calculate the deadline for
shareholder nominations and/or proposals based on the new annual meeting date
(rather than the anniversary of the of the mailing of the
notice).
31
The Board
of Trustees knows of no other business to be presented for action at the annual
meeting. If any matters do come before the meeting on which action can properly
be taken, it is intended that the proxies shall vote in accordance with the
discretion of the person or persons exercising the authority conferred by the
proxy at the meeting. The submission of a proposal does not guarantee its
inclusion in our proxy statement or presentation at the meeting unless certain
securities law and other requirements are met.
You are
cordially invited to attend the annual meeting of shareholders in person.
Whether or not you plan to attend the meeting, you are requested to complete,
date, sign and promptly return the accompanying white proxy card in the enclosed
postage-paid envelope.
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By
order of the Board of Trustees,
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/s/
John J. Dee
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John
J. Dee
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Chief
Operating Officer and Corporate Secretary
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April
3, 2009
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Houston,
Texas
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32
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ANNUAL
MEETING OF SHAREHOLDERS OF
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WHITESTONE
REIT
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May
7, 2009
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PROXY
AUTHORIZATION INSTRUCTIONS
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INTERNET - Access “www.voteproxy.com”
and follow the on-screen instructions. Have your proxy card available when
you access the web page, and use the Company Number and Account Number
shown on your proxy card.
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TELEPHONE - Call
toll-free 1-800-PROXIES
(1-800-776-9437) in the United States or 1-718-921-8500
from foreign countries from any touch-tone telephone and follow the
instructions. Have your proxy card available when you call and use the
Company Number and Account Number shown on your proxy
card.
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COMPANY
NUMBER
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Vote
online/phone until 11:59 PM EST the day before the
meeting.
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ACCOUNT
NUMBER
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MAIL - Sign, date and
mail your proxy card in the envelope provided as soon as
possible.
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IN PERSON - You may vote
your shares in person by attending the Annual
Meeting.
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IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS
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FOR
THE SHAREHOLDER MEETING TO BE HELD ON MAY 7, 2009:
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The Notice of
Meeting, proxy statement, proxy card and 2008 Annual Report
are available
at
http://www.amstock.com/ProxyServices/ViewMaterial.asp?CoNumber=11457
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 Please detach along perforated
line and mail in the envelope provided IF
you are not authorizing your proxy via telephone or the Internet.
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20230000000000001000 9
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050709
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THE
BOARD OF TRUSTEES RECOMMENDS A VOTE “FOR” THE FOLLOWING
PROPOSALS.
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PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
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FOR
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AGAINST
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ABSTAIN
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| 1. Election of the following nominees to the Company’s Board: |
2.
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Ratification
of Pannell Kerr Forster of Texas, P.C. as our independent registered
public accountants.
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o
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o
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o
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NOMINEES:
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FOR
ALL NOMINEES
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James C.
Mastandrea
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Jack L.
Mahaffey
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3.
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To vote and
otherwise represent the undersigned on any other matter that may properly
come before the meeting or any adjournment or postponement thereof in the
discretion of the Proxy holder.
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o
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WITHHOLD
AUTHORITY
FOR
ALL NOMINEES
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o
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FOR
ALL EXCEPT
(See
instructions below)
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The votes
entitled to be cast by the undersigned will be cast in the manner directed
herein. If
this proxy is executed but no direction is given, the votes entitled to be
cast by the undersigned will be cast “FOR” the nominees for trustee and
“FOR” each of the other proposals as described in the Proxy Statement.
The votes entitled to be cast by the undersigned will be cast in
the discretion of the Proxy holder upon all other matters that may
properly come before the meeting or any adjournment or postponement
thereof.
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INSTRUCTIONS:
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To withhold
authority to vote for any individual nominee(s), mark “FOR
ALL EXCEPT” and fill in the circle next to each nominee you wish to
withhold, as shown here:
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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.
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o
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Please
mark here if you plan to attend the Annual Meeting of
Shareholders.
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o
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|||||||||||||
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Signature of
Shareholder
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Date:
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Signature of
Shareholder
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Date:
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Note:
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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 signer is a partnership,
please sign in partnership name by authorized person.
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THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
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As
an alternative to completing this form, you may enter your vote
instruction by telephone at 1-800-PROXIES, or via the Internet at
WWW.VOTEPROXY.COM and follow the simple instructions. Use the Company
Number and Account Number shown on your proxy card.
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The
undersigned shareholder of WHITESTONE REIT, a Maryland real estate
investment trust (the “Company”), hereby appoints James C. Mastandrea,
John J. Dee and David K. Holeman, and each of them, with full power of
substitution, as Proxies, to attend the Annual Meeting of Shareholders to
be held on Thursday, May 7, 2009, 10:00 a.m. CDT, at the Houston
Engineering and Scientific Society Club, San Jacinto Room, located at 5430
Westheimer Road, Houston, Texas 77056, or any adjournment thereof, to cast
on behalf of the undersigned all votes that the undersigned is entitled to
cast at such meeting and otherwise to represent the undersigned at the
meeting with all powers possessed by the undersigned if personally present
at the meeting. The undersigned hereby acknowledges receipt of the Notice
of the Annual Meeting of Shareholders and of the accompanying Proxy
Statement, the terms of each of which are incorporated by reference, and
revokes any proxy heretofore given with respect to such
meeting.
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(Continued and to be signed on
the reverse side)
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14475
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