UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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RULE 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-12
FIRST INDUSTRIAL REALTY TRUST, INC.
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(Name of Registrant as Specified In Its Charter)
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
FIRST INDUSTRIAL REALTY TRUST, INC.
311 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 2004
NOTICE IS HEREBY GIVEN that the 2004 Annual Meeting of Stockholders
(the "Annual Meeting") of First Industrial Realty Trust, Inc. (the "Company")
will be held on Wednesday, May 12, 2004 at 9:00 a.m. at the offices of the
Company located at 311 South Wacker Drive, 40th Floor, Chicago, Illinois 60606
for the following purposes:
1. To elect two Class I directors of the Company to serve until
the 2007 Annual Meeting of Stockholders and until their respective successors
are duly elected and qualified;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending December 31, 2004; and
3. To consider and act upon any other matters that may properly
be brought before the Annual Meeting and at any adjournments or postponements
thereof.
Any action may be taken on the foregoing matters at the Annual Meeting
on the date specified above, or on any date or dates to which, by original or
later adjournment, the Annual Meeting may be adjourned, or to which the Annual
Meeting may be postponed.
The Board of Directors has fixed the close of business on March 22,
2004 as the record date for the Annual Meeting. Only stockholders of record of
the Company's common stock, $.01 par value per share, at the close of business
on that date will be entitled to notice of and to vote at the Annual Meeting and
at any adjournments or postponements thereof.
You are requested to fill in and sign the enclosed Proxy Card, which is
being solicited by the Board of Directors, and to mail it promptly in the
enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may vote
in person, even if they have previously delivered a signed proxy. "Street name"
stockholders who wish to vote in person will need to obtain a duly executed
proxy form from the institution that holds their shares prior to the Annual
Meeting.
By Order of the Board of Directors
Chicago, Illinois John H. Clayton
April 9, 2004 Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED.
FIRST INDUSTRIAL REALTY TRUST, INC.
311 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
PROXY STATEMENT
FOR THE 2004 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 2004
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of First Industrial Realty Trust, Inc. (the
"Company") for use at the 2004 Annual Meeting of Stockholders of the Company to
be held on Wednesday, May 12, 2004, and at any adjournments or postponements
thereof (the "Annual Meeting"). At the Annual Meeting, stockholders will be
asked to vote on the election of two Class I directors of the Company, to ratify
the appointment of PricewaterhouseCoopers LLP as the Company's independent
auditors for the current fiscal year and to act on any other matters properly
brought before them.
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are first being sent to stockholders on or about April 9, 2004. The
Board of Directors has fixed the close of business on March 22, 2004 as the
record date for the Annual Meeting (the "Record Date"). Only stockholders of
record of the Company's common stock, par value $.01 per share (the "Common
Stock"), at the close of business on the Record Date will be entitled to notice
of and to vote at the Annual Meeting. As of the Record Date, there were
41,088,859 shares of Common Stock outstanding and entitled to vote at the Annual
Meeting. Holders of Common Stock outstanding as of the close of business on the
Record Date will be entitled to one vote for each share held by them on each
matter presented to the stockholders at the Annual Meeting.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY CARD RECEIVED PRIOR TO
THE VOTE AT THE ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL
MEETING AS DIRECTED ON THE PROXY CARD. IF A PROPERLY EXECUTED PROXY CARD IS
SUBMITTED AND NO INSTRUCTIONS ARE GIVEN, THE PERSONS DESIGNATED AS PROXY HOLDERS
ON THE PROXY CARD WILL VOTE (I) FOR THE ELECTION OF THE TWO NOMINEES FOR CLASS I
DIRECTORS OF THE COMPANY NAMED IN THIS PROXY STATEMENT, (II) FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR AND (III) IN THEIR OWN
DISCRETION WITH RESPECT TO ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE
STOCKHOLDERS AT THE ANNUAL MEETING OR AT ANY ADJOURNMENTS OR POSTPONEMENTS
THEREOF. IT IS NOT ANTICIPATED THAT ANY MATTERS OTHER THAN THOSE SET FORTH IN
THE PROXY STATEMENT WILL BE PRESENTED AT THE ANNUAL MEETING.
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The presence, in person or by proxy, of holders of at least a majority
of the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. The affirmative vote of the holders of a majority of the votes cast
with a quorum present at the Annual Meeting is required for the election of
Class I directors and the ratification of the selection of the Company's
auditors. Abstentions and broker non-votes will not be counted as votes cast
and, accordingly, will have no effect on the majority vote required, although
they will be counted for quorum purposes.
A stockholder of record may revoke a proxy at any time before it has
been exercised by filing a written revocation with the Secretary of the Company
at the address of the Company set forth above, by filing a duly executed proxy
bearing a later date, or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in person whether or not a proxy has been previously
given, but the presence (without further action) of a stockholder at the Annual
Meeting will not constitute revocation of a previously given proxy. "Street
name" stockholders who wish to vote in person will need to obtain a duly
executed proxy form from the institution that holds their shares prior to the
Annual Meeting.
The Company's 2003 Annual Report, including financial statements for
the fiscal year ended December 31, 2003, is being mailed to stockholders
concurrently with this Proxy Statement. The Annual Report, however, is not part
of the proxy solicitation material.
PROPOSAL I
ELECTION OF A CLASS OF DIRECTORS
Pursuant to the Articles of Amendment and Restatement of the Company,
as amended (the "Articles"), the maximum number of members allowed to serve on
the Company's Board of Directors is 12. The Board of Directors of the Company
currently consists of nine seats and is divided into three classes, with the
directors in each class serving for a term of three years and until their
successors are duly elected and qualified. The term of one class expires at each
Annual Meeting of Stockholders.
At the Annual Meeting, two directors will be elected to serve until the
2007 Annual Meeting of Stockholders and until their successors are duly elected
and qualified. The Board of Directors has nominated Jay H. Shidler and J. Steven
Wilson to serve as Class I directors (the "Nominees"). Each of the Nominees is
currently serving as a Class I director of the Company and has consented to be
named as a nominee in this Proxy Statement. The Board of Directors anticipates
that each of the Nominees will serve as a director if elected. However, if any
person nominated by the Board of Directors is unable to accept election, the
proxies will vote for the election of such other person or persons as the Board
of Directors may recommend. The proxies will not vote for the election of more
than two persons.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.
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INFORMATION REGARDING NOMINEES AND DIRECTORS
The following biographical descriptions set forth certain information
with respect to the two Nominees for election as Class I directors at the Annual
Meeting, the continuing directors whose terms expire at the Annual Meetings of
Stockholders in 2005 and 2006 and certain executive officers, based on
information furnished to the Company by such persons. The following information
is as of March 22, 2004, unless otherwise specified.
CLASS I NOMINEES FOR ELECTION AT 2004 ANNUAL MEETING - TERM TO EXPIRE IN 2007
JAY H. SHIDLER Director since 1993
Mr. Shidler, 57, has been Chairman of the Board of Directors since the
formation of the Company in August 1993. He is the founder and managing
partner of The Shidler Group. A nationally acknowledged expert in the
field of real estate investment and finance, Mr. Shidler has over 35
years of experience in real estate investment and has acquired and
managed properties involving several billion dollars in aggregate
value. Since 1970, Mr. Shidler has been directly involved in the
acquisition and management of over 1,000 properties in 40 states and
Canada. Mr. Shidler is the Chairman of the Board of Directors of
Corporate Office Properties Trust (NYSE:OFC). Mr. Shidler also serves
as a director of Primus Guaranty, Ltd., a Bermuda holding company of
which Mr. Shidler is a founder and whose subsidiary is a AAA-rated
financial products company.
J. STEVEN WILSON Director since 1994
Mr. Wilson, 60, has been a director of the Company since June 1994.
Since 1985, Mr. Wilson has been President, Chief Executive Officer and
Chairman of the Board of Directors of Riverside Group, Inc., a holding
company. Since February 2003, Mr. Wilson has been President of Advanced
Building Products & Services, L.L.C. From 1991 to April 2003, Mr.
Wilson was Chairman of the Board of Directors and Chief Executive
Officer of Wickes Inc., which is a building and supply company with
revenues of $1 billion with distribution and manufacturing facilities
located primarily in the Midwest and Northeast regions of the United
States.
CLASS II CONTINUING DIRECTORS - TERM TO EXPIRE IN 2005
MICHAEL W. BRENNAN Director since 1996
Mr. Brennan, 47, has been a director since March 1996. He has been
President and Chief Executive Officer of the Company since November
1998, prior to which time he served as Chief Operating Officer of the
Company from December 1995 to November 1998 and as Senior Vice
President -- Asset Management of the Company from April 1994 to
December 1995. He was a partner of The Shidler Group between 1988 and
1994 and the President of the Brennan/Tomasz/Shidler Investment
Corporation and was in charge of asset management, leasing, project
finance, accounting and treasury functions for The Shidler Group's
Chicago operations. Between 1986 and 1988, Mr. Brennan served as The
Shidler Group's principal acquisition executive in Chicago. Prior to
joining The Shidler Group, Mr. Brennan was an investment specialist
with CB Commercial (now CB Richard Ellis, Inc.). His professional
affiliations include the Urban Land Institute ("ULI"), The Real Estate
Roundtable, the National Association of Real Estate Investment Trusts
("NAREIT"), the Young Presidents Organization and the Economic Club of
Chicago.
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MICHAEL G. DAMONE Director since 1994
Mr. Damone, 69, is Director of Strategic Planning for the Company and
has been a director of the Company since June 1994. Between 1973 and
1994, Mr. Damone was Chief Executive Officer of Damone/Andrew, a full
service real estate organization, which developed several million
square feet of industrial, warehouse, distribution and research and
development buildings. Prior to co-founding Damone/Andrew in 1973, Mr.
Damone was the executive vice president of a privately held, Michigan
based real estate development and construction company, where he was
responsible for the development of industrial/business parks. His
professional affiliations include the Society of Industrial and Office
Realtors ("SIOR"), the National Association of Realtors ("NAR"), the
Michigan Association of Realtors and the Detroit Area Commercial Board
of Realtors.
KEVIN W. LYNCH Director since 1994
Mr. Lynch, 51, has been a director of the Company since June 1994. Mr.
Lynch is the co-founder and Principal of The Townsend Group
("Townsend"), an institutional real estate consulting firm, which
provides real estate consulting for pension funds and institutional
investors. In his capacity as Principal, Mr. Lynch is responsible for
strategic development and implementation of client real estate
portfolios. Mr. Lynch is also responsible for new product development.
Prior to founding Townsend, Mr. Lynch was associated with Stonehenge
Capital Corporation, where he was involved in the acquisition of
institutional real estate properties and the structuring of
institutional real estate transactions. Mr. Lynch is a director of
Lexington Corporate Properties Trust. He is a member of the National
Real Estate Advisory Board for the Real Estate Center at New York
University, the National Council of Real Estate Investment Fiduciaries,
and the Pension Real Estate Association.
CLASS III CONTINUING DIRECTORS - TERM TO EXPIRE IN 2006
JOHN RAU Director since 1994
Mr. Rau, 55, has been a director of the Company since June 1994. Since
December 2002, Mr. Rau has served as President and Chief Executive
Officer and as a director of Miami Corporation, an asset management
firm. He is also Chairman of the Chicago Title and Trust Company
Foundation. From January 1997 to March 2000, he was President and Chief
Executive Officer of Chicago Title Corporation, a New York Stock
Exchange listed company, and its subsidiaries Chicago Title and Trust
Co., Chicago Title Insurance Co., Ticor Title Insurance Co. and
Security Union Title Insurance Co. Mr. Rau is a director of LaSalle
Bank, N.A., BorgWarner, Inc. and Nicor Inc. From January 1997 to March
2000, he was a director of Chicago Title Corporation, Chicago Title and
Trust Co. and Chicago Title Insurance Co., as well as Chairman of the
Board of Directors of Ticor Title Insurance Co. and Security Union
Title Insurance Co. From July 1993 until November 1996, Mr. Rau was
Dean of the Indiana University School of Business. From 1991 to 1993,
Mr. Rau served as Chairman of the Illinois Economic Development Board
and as special advisor to Illinois Governor James Edgar. From 1990 to
1993, he was Chairman of the Banking Research Center Board of Advisors
and a Visiting Scholar at Northwestern University's J.L. Kellogg
Graduate School of Management. During that time he also served as
Special Consultant to McKinsey & Company, a worldwide strategic
consulting firm. From 1989 to 1991, Mr. Rau served as President and
Chief Executive Officer of LaSalle National Bank. From 1979 to 1989, he
was associated with The Exchange National Bank, serving as President
from 1983 to 1989, at which time The Exchange
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National Bank merged with LaSalle National Bank. Prior to 1979, he was
associated with First National Bank of Chicago.
ROBERT J. SLATER Director since 1994
Mr. Slater, 66, has been a director of the Company since June 1994.
Since 1985, Mr. Slater has been President of Jackson Consulting, Inc.,
a private consulting company specializing in advising the basic
manufacturing and distribution industries. He has retired as President
of Crane Co., a multinational manufacturing company.
W. ED TYLER Director since 2000
Mr. Tyler, 51, has been a director of the Company since March 2000.
From 1998 to 2000, Mr. Tyler served as Chief Executive Officer and a
director of Moore Corporation Limited, a provider of data capture,
information design, marketing services, digital communications and
print solutions. Prior to joining Moore Corporation, Mr. Tyler served
in various capacities at R.R. Donnelley & Sons Company, most recently
as Executive Vice President and Chief Technology Officer, from 1997 to
1998, and as Executive Vice President and Sector President of
Donnelley's Networked Services Sector, from 1995 to 1997.
EXECUTIVE OFFICERS AND OTHER SENIOR MANAGEMENT
MICHAEL J. HAVALA
Mr. Havala, 44, has been Chief Financial Officer of the Company since
April 1994. He joined The Shidler Group in 1989, and was Chief
Financial Officer for The Shidler Group's Midwest region with
responsibility for accounting, finance, information technology and
treasury functions. With The Shidler Group, Mr. Havala structured joint
ventures, obtained and refinanced project financing, developed and
implemented management information systems and directed all financial
aspects of a several million square foot portfolio located in various
states throughout the Midwest. Prior to joining The Shidler Group, Mr.
Havala was a Senior Tax Consultant with Arthur Andersen & Company,
where he specialized in real estate, banking and corporate finance. Mr.
Havala is a certified public accountant. His professional affiliations
include NAREIT.
JOHANNSON L. YAP
Mr. Yap, 41, has been the Chief Investment Officer of the Company since
February 1997. From April 1994 to February 1997, he served as Senior
Vice President -- Acquisitions of the Company. Prior to joining the
Company, Mr. Yap joined The Shidler Group in 1988 as an acquisitions
associate, and became Vice President in 1991, with responsibility for
acquisitions, property management, leasing, project financing, sales
and construction management functions. Between 1988 and 1994, he
participated in the acquisition, underwriting and due diligence of
several hundred million dollars of commercial properties. His
professional affiliations include ULI, NAREIT and the Council of
Logistics Management.
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DAVID P. DRAFT
Mr. Draft, 52, has been Executive Vice President - Operations of the
Company since January 2001, prior to which time he served as Managing
Director of the Company's Central region from December 1998 to January
2001 and as Senior Regional Director of the Company's Michigan and
Northern Ohio regions from March 1996 to December 1998. He has 28 years
experience in real estate brokerage, sales, leasing and asset
management. Between 1994 and March 1996, Mr. Draft was Co-Founder and
Principal of Draft & Gantos Properties, L.L.C., where he was
responsible for real estate management, construction and development.
From 1990 to 1994, Mr. Draft was Director of Development and Operations
for Robert Grooters Development Company where he was responsible for
land acquisitions, development project planning, financing and
construction of industrial property. From 1977 to 1990, he was with
First Real Estate, Inc., serving in the capacity of chief operating
officer.
ROSS KIRK
Mr. Kirk, 47, has been Managing Director of the Company's East region
since December 1999, prior to which time he served as a Regional
Director of the Company's Tampa region from December 1997 to December
1999. Mr. Kirk has 23 years of real estate experience. Between July
1992 and December 1997, he was President of Thompson-Kirk Properties, a
full-service real estate firm in Tampa. Mr. Kirk is a licensed general
contractor in the state of Florida, a licensed Florida real estate
broker and a licensed Florida mortgage broker. He holds memberships in
the National Association of Industrial and Office Properties ("NAIOP"),
Tampa's Real Estate Investment Council and the Council of Logistics
Management.
TIMOTHY E. GUDIM
Mr. Gudim, 44, has been Managing Director of the Company's California
region since December 1999, prior to which time he served as Managing
Director of the Company's West/Gulf region from December 1998 to
December 1999; as a Senior Regional Director of the Company's West
region from June 1998 to December 1998; and as a Regional Director for
Colorado from November 1997 to June 1998. Mr. Gudim has 22 years
experience in the industrial real estate field. Between 1991 and
October 1997, he was Vice President and a Principal of Pacifica Holding
Company, a full service real estate company operating in Denver. Mr.
Gudim's professional affiliations include NAIOP, SIOR and the
Association of Industrial Realtors.
ARNE M. COOK
Mr. Cook, 44, has been Managing Director of the Company's Central
region since January 2001, prior to which time he served as Senior
Regional Director of the Company's Minnesota region from January 2000
to December 2000, as Regional Director of the Company's Minnesota
region from April 1998 to December 1999 and as Regional Development
Manager from April 1997 to March 1998. He has 19 years of experience in
the office and industrial real estate industry. From January 1995 to
March 1997, Mr. Cook served as Senior Director of Real Estate
Development with Opus Northwest LLC, a member of the Opus Group of
Companies, where he was responsible for the development, sales,
financing and asset management of office and industrial properties
throughout the Midwest. His professional affiliations include NAIOP,
NAREIT, ULI, the
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Minnesota Commercial Association of Realtors and the University of
Wisconsin Real Estate Alumni Association.
GREGORY S. DOWNS
Mr. Downs, 55, has been Managing Director of the Company's
Gulf/Mountain region since July 2001, prior to which time he served as
a Senior Regional Director from January 2000 to July 2001 and as a
Regional Director from June 1998 to December 1999 of the Company's
Denver region. From November 1997 to June 1998, he served as a Regional
Development Officer of the Company. Mr. Downs has over 25 years of real
estate experience. Between June 1994 and November 1997, he was Vice
President of Development for Pacifica Holding Company, a full-service
real estate company operating in Denver. Mr. Downs' professional
affiliations include NAIOP and SIOR.
SCOTT A. MUSIL
Mr. Musil, 36, has been Senior Vice President of the Company since
March 2001; Controller of the Company since December 1995; Treasurer of
the Company since May 2002; and Assistant Secretary of the Company
since May 1996. In addition, he served as a Vice President of the
Company from May 1998 to March 2001. Prior to joining the Company, he
served in various capacities with Arthur Andersen & Company,
culminating as an audit manager specializing in the real estate and
finance industries. Mr. Musil is a certified public accountant. His
professional affiliations include the American Institute of Certified
Public Accountants and NAREIT.
THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
The Board of Directors. The Board of Directors of the Company is
currently comprised of eight members, a majority of whom are independent as
affirmatively determined by the Board of Directors. In determining the
independence of its members, the Board of Directors applied the following
standards:
1) The member must meet the definition of "Independent Director"
contained in the Company's Articles, which requires that he or she be
neither an employee of the Company nor a member of The Shidler Group.
2) In accordance with Section 303A.02(a) of the Listed Company Manual
of the New York Stock Exchange (the "NYSE"), the member must obtain the
Board of Directors' affirmative determination, after taking into
account all relevant facts and circumstances, that the member has no
material relationships with the Company (either directly or as a
partner, shareholder or officer of an organization that has a
relationship with the Company). Relationships to be considered include
commercial, industrial, banking, consulting, legal, accounting,
charitable and familial relationships.
3) The member must satisfy the independence tests set forth in Section
303A.02(b) of the Listed Company Manual of the NYSE.
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Applying such standards, the Board of Directors has affirmatively determined
that its current independent directors are Messrs. Lynch, Rau, Slater, Tyler and
Wilson.
Pursuant to the terms of the Company's Articles, the directors are
divided into three classes. Class I directors hold office for a term expiring at
this Annual Meeting. Class II directors hold office for a term expiring at the
Annual Meeting of Stockholders to be held in 2005. Class III directors hold
office for a term expiring at the Annual Meeting of Stockholders to be held in
2006. Each director will hold office for the term to which he is elected and
until his successor is duly elected and qualified. At each Annual Meeting of
Stockholders, the successors to the class of directors whose term expires at
that meeting will be elected to hold office for a term continuing until the
Annual Meeting of Stockholders held in the third year following the year of
their election and the election and qualification of their successors.
The Board of Directors held nine meetings and acted once by unanimous
consent during the fiscal year of 2003. Each of the directors serving in 2003
attended at least 75% of the total number of meetings of the Board of Directors
and of the respective committees of the Board of Directors of which he was a
member, except for John L. Lesher, who is no longer a director, and J. Steven
Wilson, who attended 71% of such meetings due to his unavailability on one day
on which a meeting of the Board of Directors and meetings of two committees on
which he serves were held. Although the Company does not have a formal policy
regarding director attendance at Annual Meetings of Stockholders, eight of the
nine directors then serving attended the 2003 Annual Meeting of Stockholders.
The Board of Directors has adopted Corporate Governance Guidelines to
reflect the principles by which it operates. These guidelines, as well as the
charters of the Audit Committee, Compensation Committee and Nominating/Corporate
Governance Committee of the Board of Directors, are accessible at the investor
relations pages of the Company's website at www.firstindustrial.com. The Company
has adopted a Code of Business Conduct and Ethics which includes the principles
by which the Company expects its employees, officers and directors to conduct
Company business and which is accessible at the investor relations pages of the
Company's website at www.firstindustrial.com. The Company intends to post on its
website amendments to, or waivers from, any provision of the Company's Code of
Business Conduct and Ethics.
The Board of Directors has appointed an Audit Committee, a Compensation
Committee, an Investment Committee, a Nominating/Corporate Governance Committee
and a Special Committee.
Audit Committee. The Audit Committee is directly responsible for the
appointment, discharge, compensation, and oversight of the work of any
independent public accountants employed by the Company for the purpose of
preparing or issuing an audit report or related work. In connection with such
responsibilities, the Audit Committee approves the engagement of independent
public accountants, reviews with the independent public accountants the audit
plan, the audit scope, and the results of the annual audit engagement,
pre-approves audit and non-audit services provided by the independent public
accountants, reviews the independence of the independent public accountants,
pre-approves audit and non-audit fees and reviews the adequacy of the Company's
internal accounting controls.
The membership of the Audit Committee currently consists of Messrs.
Rau, Lynch and Wilson, each of whom, in the judgment of the Company's Board of
Directors, is independent as required by the listing
8
standards of the NYSE and the rules of the Securities and Exchange Commission
("SEC"). In the judgment of the Company's Board of Directors, each member is
financially literate as required by the listing standards of the NYSE. Further,
in the judgment of the Company's Board of Directors, Mr. Rau is an "audit
committee financial expert," as such term is defined in the SEC rules, and has
"accounting or related financial management expertise," as defined in the
listing standards of the NYSE. See Mr. Rau's biography above. The Audit
Committee met four times in 2003. In addition, Mr. Rau, as Chairman of the Audit
Committee, holds a meeting on a quarterly basis with the Company's independent
public accountants to discuss the review of quarterly information prior to the
issuance of the quarterly earnings release. On May 14, 2003, the Board of
Directors, on the unanimous recommendation of the Audit Committee, reaffirmed
the Company's Audit Committee Charter.
Compensation Committee. The Compensation Committee has overall
responsibility for approving and evaluating the compensation plans, policies and
programs relating to the executive officers of the Company. The Compensation
Committee administers, and has authority to grant awards under, the First
Industrial Realty Trust, Inc. 1994 Stock Incentive Plan (the "1994 Stock Plan"),
the First Industrial Realty Trust, Inc. 1997 Stock Incentive Plan (the "1997
Stock Plan"), the First Industrial Realty Trust, Inc. Deferred Income Plan (the
"Deferred Income Plan") and the First Industrial Realty Trust, Inc. 2001 Stock
Incentive Plan (the "2001 Stock Plan"). The Compensation Committee currently
consists of Messrs. Slater and Tyler, each of whom, in the judgment of the
Company's Board of Directors, is independent as required by the listing
standards of the NYSE. The Compensation Committee met seven times in 2003.
Investment Committee. The Investment Committee provides oversight and
discipline to the acquisition and new investment process. New investment
opportunities are described in written reports based on detailed research and
analyses in a standardized format applying appropriate underwriting criteria.
The Investment Committee meets with the Company's acquisition personnel, reviews
each submission thoroughly and approves acquisitions and development projects
having a total investment of greater than $3 million. The Investment Committee
makes a formal recommendation to the Board of Directors for all acquisitions and
development projects with a total investment in excess of $30 million. The
membership of the Investment Committee currently consists of Messrs. Shidler,
Brennan and Damone. The Investment Committee met 29 times and acted by unanimous
consent 14 times during 2003.
Nominating/Corporate Governance Committee. The Nominating/Corporate
Governance Committee recommends individuals for election as directors at the
Annual Meeting of Stockholders of the Company and in connection with any vacancy
that may develop on the Board of Directors. The Board of Directors, in turn, as
a whole by a majority vote either approves all of the nominations so recommended
by the Nominating/Corporate Governance Committee or rejects all of the
nominations in whole, but not in part. In the event that the Board of Directors
as a whole by a majority vote rejects the recommended nominations, the
Nominating/Corporate Governance Committee develops a new recommendation. In
addition, the Nominating/Corporate Governance Committee develops and oversees
the Company's corporate governance policies. The membership of the
Nominating/Corporate Governance Committee consists of independent directors
selected by the entire Board of Directors of the Company from among those
independent directors whose term is not expiring in the calendar year that the
Nominating/Corporate Governance Committee is making its recommendation. The
Nominating/Corporate Governance Committee that recommended the Nominees approved
by the Board of Directors and set forth in this Proxy Statement consisted of
Messrs. Lynch, Slater and Tyler, each of whom, in the judgment of the Company's
Board of Directors, is
9
independent as required by the listing standards of the NYSE. Mr. Lynch is the
current Chairman of the Nominating/Corporate Governance Committee and also
presides at meetings of non-management directors. The Nominating/Corporate
Governance Committee met three times during 2003 and once in February 2004 to
determine its nominations for this Proxy Statement.
The Nominating/Corporate Governance Committee will consider nominees
recommended by stockholders of the Company. In order for a stockholder to
nominate a candidate for election as a director at an Annual Meeting, notice
must be given in accordance with the Bylaws of the Company to the Secretary of
the Company not more than 180 days nor less than 75 days prior to the first
anniversary of the preceding year's Annual Meeting. The fact that the Company
may not insist upon compliance with the requirements contained in its Bylaws
should not be construed as a waiver by the Company of its right to do so at any
time in the future.
In general, it is the Nominating/Corporate Governance Committee's
policy that, in its judgment, its recommended nominees for election as members
of the Board of Directors of the Company, at a minimum, have business experience
of a breadth, and at a level of complexity, sufficient to understand all aspects
of the Company's business and, through either experience or education, have
acquired such knowledge as is sufficient to qualify as financially literate. In
addition, recommended nominees must be persons of integrity and be committed to
devoting the time and attention necessary to fulfill their duties to the
Company.
The Nominating/Corporate Governance Committee may identify nominees for
election as members of the Board of Directors of the Company through its own
sources (including through nominations by stockholders made in accordance with
the Company's Bylaws), through sources of other directors of the Company, and
through the use of third-party search firms. The Company has engaged a third
party search firm to identify potential nominees and may do so again in the
future. Subject to the foregoing minimum standards, the Nominating/Corporate
Governance Committee will evaluate each nominee on a case-by-case basis,
assessing each nominee's judgment, experience, independence, understanding of
the Company's business or that of other related industries, and such other
factors as the Nominating/Corporate Governance Committee concludes are pertinent
in light of the current needs of the Company's Board of Directors.
Special Committee. The Special Committee is authorized, within limits
specified by the Board of Directors, to approve the terms under which the
Company issues common stock, preferred stock or depository shares representing
fractional interests in preferred stock, or under which the Company or any of
the Company's subsidiaries, including First Industrial, L.P., issues debt. The
membership of the Special Committee currently consists of Messrs. Shidler,
Brennan and Rau. The Special Committee did not meet during 2003.
Communications by Stockholders. Stockholders of the Company may send
communications to the Board of Directors as a whole, its individual members, its
committees or its non-management members as a group. Communications to the Board
of Directors as a whole should be addressed to "The Board of Directors";
communications to any individual member of the Board of Directors should be
addressed to such individual member; communications to any committee of the
Board of Directors should be addressed to the Chairman of such committee; and
communications to non-management members of the Board of Directors as a group
should be addressed to the Chairman of the Nominating/Corporate Governance
Committee. In each case, communications should be further addressed "c/o First
Industrial Realty Trust, Inc., 311 South Wacker
10
Drive, Suite 4000, Chicago, Illinois 60606." All communications will be
forwarded to their respective addressees and, if a stockholder marks his or her
communication "Confidential", will be forwarded directly to the addressee.
DIRECTOR COMPENSATION
Directors of the Company who are also employees receive no additional
compensation for their services as a director. Non-employee directors of the
Company receive an annual director's fee equivalent in value to $30,000. At
least 50% of the value of such fee must be taken in the form of restricted
stock. The Chairman of the Audit Committee receives an additional fee of $5,000
for his service as Chairman of the Audit Committee. Each non-employee director
also receives $1,500 for each in-person meeting of the Board of Directors
attended, $1,000 for each telephonic Board meeting participated in, $1,500 for
each in-person committee meeting attended and $1,000 for each telephonic
committee meeting participated in. Following the 2003 Annual Meeting of
Stockholders, each of the Company's non-employee directors received 1,000 shares
of restricted stock under the 1997 Stock Plan.
11
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation, including
cash compensation and restricted stock and option awards, paid by the Company
with respect to the fiscal years ended December 31, 2001, 2002 and 2003 to the
Company's Chief Executive Officer and the four other most highly compensated
executive officers of the Company (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Long Term
Compensation
----------------------------
Restricted Shares All Other
Name and Annual Stock Underlying Compensation
Principal Position Year Salary($) Bonus($)(1) Awards($)(2) Options(#)(3) ($)(4)
- ------------------------ ---- ----------- ----------- ------------ ------------- ------------
Michael W. Brennan 2003 $ 500,000 $ 0 $ 1,011,956 0 $ 34,577
President and 2002 500,000 247,500 721,815 0 426,964
Chief Executive Officer 2001 490,000 735,000 338,002 72,000 337,673
Michael J. Havala 2003 $ 284,000 $ 0 $ 584,776 0 $ 19,848
Chief Financial Officer 2002 284,000 122,500 426,786 0 320,128
2001 275,600 440,000 372,492 64,000 248,505
Johannson L. Yap 2003 $ 309,000 $ 0 $ 337,280 0 $ 18,827
Chief Investment Officer 2002 309,000 148,500 455,315 0 286,620
2001 300,000 480,000 372,492 70,000 216,312
David P. Draft 2003 $ 278,000 $ 0 $ 517,894 0 $ 12,494
Executive Vice 2002 278,000 100,000 334,968 0 167,469
President - Operations 2001 270,000 340,000 196,593 44,100 170,645
Ross Kirk 2003 $ 214,000 $ 0 $ 360,763 0 $ 9,600
Managing Director 2002 214,000 195,007 499,000 0 67,455
2001 208,000 308,880 115,886 25,800 40,414
- ---------------
(1) Amounts for 2001 represent bonuses awarded in February 2002 based on
performance for the year ended December 31, 2001. Amounts for 2002
represent bonuses awarded in February 2003 based on performance for the
year ended December 31, 2002.
(2) Amounts for 2001 represent restricted Common Stock awarded in March
2002. Amounts for 2002 represent restricted Common Stock awarded in
March 2003. Amounts for 2003 represent restricted Common Stock awarded
in March 2004. The dollar amount shown is approximately equal to the
product of the number of shares of restricted Common Stock granted
multiplied by the closing price of the Common Stock as reported by the
NYSE on the date of grant ($34.49 on March 15, 2002 for 2001 amounts;
$29.26 on March 20, 2003 for 2002 amounts; $38.75 on March 17, 2004 for
2003 amounts). This valuation does not take into account any diminution
in value that results from the restrictions applicable to such Common
Stock. From and after the date of issuance, holders of the restricted
Common Stock are entitled to vote such Common Stock and receive
dividends at the same rate applicable to unrestricted shares of Common
Stock. The total number of shares, and the value, of restricted Common
Stock held by each Named Executive Officer as of December 31, 2003
(based on the closing price per share of Common Stock as reported on
the NYSE on December 31, 2003 ($33.75)) is as
12
follows: Mr. Brennan - 116,272 shares ($3,924,180), Mr. Havala - 95,098
shares ($3,209,558), Mr. Yap - 88,573 shares ($2,989,339), Mr. Draft -
52,806 shares ($1,782,203) and Mr. Kirk - 37,780 shares ($1,275,075).
Of the 40,460 shares of restricted Common Stock awarded in March 2002
to the Named Executive Officers as part of 2001 compensation, one-third
vested in January 2003 and January 2004, as to which restrictions have
been removed, and one-third will vest in January 2005. Of the 83,318
shares of restricted Common Stock awarded in March 2003 to the Named
Executive Officers as part of 2002 compensation, one-third vested in
January 2004, as to which restrictions have been removed, and one-third
will vest in each of January 2005 and January 2006. Of the 72,585
shares of restricted Common Stock awarded in March 2004 to the Named
Executive Officers as part of 2003 compensation, one-third will vest in
each of January 2005, January 2006 and January 2007.
(3) Amounts for 2001 represent an aggregate of 275,900 options granted to
the Named Executive Officers under the 1997 Stock Plan on January 16,
2002 at an exercise price equal to $30.53 per share. Such options vest
in three equal installments on the first, second and third
anniversaries of the date of grant. No options were granted to the
Named Executive Officers with respect to 2002 and 2003.
(4) Includes premiums paid by the Company on term life insurance and long
term disability insurance ($20,792 in 2003; $15,510 in 2002; $15,511 in
2001) for the benefit of certain of the Named Executive Officers. Also
includes car allowances ($62,400 in 2003; $62,400 in 2002; $62,400 in
2001), a moving allowance ($47,000 in 2001) and personal financial
planning allowances ($12,154 in 2003; $8,400 in 2002; $8,400 in 2001)
for certain of the Named Executive Officers. Also includes benefits
accrued in 2001 and 2002 on units awarded to the Named Executive
Officers under the Deferred Income Plan. A portion of the amount
accrued under the Deferred Income Plan to Mr. Draft in 2001 was used to
acquire Common Stock having a value at the time of acquisition of
$57,022, with the remainder of such amount paid in cash. The amounts
accrued under the Deferred Income Plan to each of the other Named
Executive Officers in 2001 were paid in cash. The amounts accrued under
the Deferred Income Plan to each of the Named Executive Officers in
2002 were paid in cash.
13
OPTION GRANTS AND EXERCISES
Option Grants. No options were granted in the fiscal year ended
December 31, 2003 to the Named Executive Officers.
Option Exercises and Year-End Holdings. Certain of the Named Executive
Officers exercised an aggregate of 158,700 options in 2003. The following table
sets forth information with respect to options exercised during, and the value
of options held at the end of, 2003 by the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2003
AND FISCAL YEAR-END 2003 OPTION VALUES
Number of Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options at
Shares at December 31, 2003(#) December 31, 2003($)(2)
Acquired on Value ------------------------------- ----------------------------
Name Exercise(#)(1) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- ------------ ----------- ------------- ----------- -------------
Michael W. Brennan 0 0 354,000 73,000 1,936,655 170,185
Michael J. Havala 47,500 298,771 111,000 60,000 245,984 148,221
Johannson L. Yap 10,000 130,008 166,000 64,000 618,174 161,101
David P. Draft 83,900 255,571 22,800 40,800 14,250 101,793
Ross Kirk 17,300 72,087 22,400 28,400 14,000 62,384
- --------------
(1) Represents shares with respect to which options were exercised in 2003
by the Named Executive Officers.
(2) Based on the closing price per share of Common Stock as reported on the
NYSE on December 31, 2003 ($33.75).
EMPLOYMENT AGREEMENTS
In February 1997, the Company entered into a written employment
agreement with Michael W. Brennan, who became the Company's President and Chief
Executive Officer in November 1998. The agreement provides for an initial annual
minimum base salary of $195,000, which may be increased at the discretion of the
Compensation Committee, and an annual bonus at the discretion of the
Compensation Committee. The agreement provides for an initial term of two years
and subsequent two-year periods unless otherwise terminated; provided, however,
that the agreement will expire on Mr. Brennan's 70th birthday. Upon certain
changes in control of the Company or a termination without cause, Mr. Brennan is
entitled to severance in an amount equal to two times his annual base salary,
plus two times his average bonus over the prior two years. In addition, upon
termination, Mr. Brennan's options and awards under the 1994 Stock Plan, the
1997 Stock Plan and Deferred Income Plan will fully vest and his other benefits
will continue for a period of two years. Severance amounts payable to Mr.
Brennan upon termination will be reduced if such amounts become payable after
Mr. Brennan's 67th birthday. Mr. Brennan has agreed to a two-year covenant not
to compete after termination.
In March 2002, the Company entered into written employment agreements
with Michael J. Havala, the Company's Chief Financial Officer, Johannson L. Yap,
the Company's Chief Investment Officer, and David P. Draft, the Company's
Executive Vice President - Operations. Mr. Havala's and Mr. Yap's agreements
amend and restate their prior employment agreements with the Company. The
agreements
14
provide for a minimum annual base salary of $284,000 for Mr. Havala, $309,000
for Mr. Yap and $278,000 for Mr. Draft, which amounts may be increased at the
recommendation of the Chief Executive Officer, with the approval of the
Compensation Committee, and for annual bonuses as recommended by the Chief
Executive Officer and approved by the Compensation Committee. Each of the
agreements provides for a continuous and self-renewing two-year "evergreen" term
unless earlier terminated; provided, however, that the agreements will expire on
Mr. Havala's, Mr. Yap's and Mr. Draft's respective 70th birthdays. Upon his
termination without cause, through constructive discharge, or upon a
work-related disability, each of Mr. Havala, Mr. Yap and Mr. Draft is entitled
to severance in an amount equal to three times his annual base salary, plus 75%
of his maximum bonus potential for the then-current year prorated through the
date of termination. Upon certain changes in control of the Company, each of Mr.
Havala, Mr. Yap and Mr. Draft is entitled to severance in an amount equal to two
times his annual base salary, plus 100% of his maximum cash bonus for the
then-current year prorated through the date of termination, plus two times the
product of his annual base salary and an average of his actual cash bonus
percentage for the prior two years and his maximum cash bonus percentage for the
then-current year. In addition, upon his termination other than for cause, each
of Mr. Havala's, Mr. Yap's and Mr. Draft's options and awards under the 1994
Stock Plan, the 1997 Stock Plan, the 2001 Stock Plan, the Deferred Income Plan
and any subsequent similar plan will fully vest, and his health insurance
benefits will continue for a period of three years. Severance amounts payable to
Mr. Havala, Mr. Yap and Mr. Draft upon their termination will be reduced if such
amounts become payable after their respective 67th birthdays. Each of Mr.
Havala, Mr. Yap and Mr. Draft has agreed to a one-year covenant not to compete
after his termination, except in connection with certain changes in control of
the Company. Each of Mr. Havala, Mr. Yap and Mr. Draft has agreed to a six-month
covenant not to compete in connection with certain changes in control of the
Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Slater and Tyler.
Neither of them has served as an officer of the Company or had any other
business relationship or affiliation with the Company in 2003, except his
service as a director.
15
STOCK PERFORMANCE GRAPH
The incorporation by reference of this Proxy Statement into any
document filed with the SEC by the Company shall not be deemed to include the
following performance graph unless such graph is specifically stated to be
incorporated by reference into such document.
The following graph provides a comparison of the cumulative total
stockholder return among the Company, the NAREIT Equity REIT Total Return Index
(the "NAREIT Index"), an industry index which, as of December 31, 2003, was
comprised of 144 tax-qualified equity REITs (including the Company), and the
Standard & Poor's 500 Index ("S&P 500"). The comparison is for the period from
December 31, 1998 to December 31, 2003 and assumes the reinvestment of any
dividends. The closing price for the Company's Common Stock quoted on the NYSE
at the close of business on December 31, 1998 was $26.813 per share. The NAREIT
Index includes REITs with 75% or more of their gross invested book value of
assets invested directly or indirectly in the equity ownership of real estate.
Upon written request, the Company will provide stockholders with a list of the
REITs included in the NAREIT Index. The historical information set forth below
is not necessarily indicative of future performance. The following graph was
prepared at the Company's request by Research Data Group, Inc., San Francisco,
California.
16
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
[PERFORMANCE GRAPH]
- --------------------------------------------------------------------------------
5 YEAR CUMULATIVE TOTAL RETURN
- --------------------------------------------------------------------------------
12/98 12/99 12/00 12/01 12/02 12/03
- -----------------------------------------------------------------------------------
FIRST INDUSTRIAL REALTY TRUST, INC. $ 100 $ 112 $ 151 $ 150 $ 148 $ 194
NAREIT EQUITY 100 95 121 137 143 196
S & P 500 100 121 110 97 76 97
- -----------------------------------------------------------------------------------
17
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is composed of two
of the Company's independent directors, Messrs. Slater and Tyler. The
Compensation Committee has overall responsibility for evaluating and approving
the compensation plans, policies and programs relating to the executive officers
of the Company.
Objectives of Executive Compensation. The Company maintains the
philosophy that compensation of its executive officers and other employees
should serve the best interests of the Company's stockholders. Accordingly, the
Compensation Committee has designed its compensation policy to provide
management proper incentives, directly and materially linked to operating
performance, to maximize the Company's overall performance. Consistent with
this, executive compensation is weighted towards bonuses and incentive awards
(e.g. restricted stock awards) paid or granted on the basis of the Company's and
each executive's performance. Thus, while annual salary increases are based on
personal performance of the executive officers and general economic conditions,
annual bonuses and incentive awards are directly tied to the Company's actual
economic performance during the applicable fiscal year.
With respect to performance in years prior to 2002, executive
compensation has included other incentive awards (e.g. stock option grants and
deferred income awards) along with restricted stock. With respect to performance
in 2002 and 2003, the Compensation Committee determined not to grant such other
incentive awards and to utilize restricted stock awards exclusively as the
Company's incentive award. Currently, the Compensation Committee anticipates
that it will continue in the future to utilize restricted stock awards
exclusively as the Company's incentive award; however, it reserves the right to
utilize other incentive awards in the future if and when it determines such
incentive awards would be appropriate.
Restricted stock is granted to the executives under the provisions of
the 1997 Stock Plan and will also be granted under the 2001 Stock Plan in the
future. Other incentive awards (e.g., stock options and deferred income awards)
were granted to the executives under the provisions of the 1994 Stock Plan, the
1997 Stock Plan and the Deferred Income Plan, and, if granted in the future, may
be granted under such plans and under the 2001 Stock Plan. The Compensation
Committee determines those executives who will receive restricted stock and
other incentive awards and the size of such awards. Generally, stock options
were, and, if granted in the future, would be expected to be, granted at the
market price of the Common Stock at the date of grant so that executives and the
Company's stockholders are similarly benefited by appreciation in the price of
the Common Stock.
2003 Bonus and Incentive Compensation/CEO Compensation. The bonuses and
incentive awards awarded for 2003 performance to each of the Chief Executive
Officer and the other executive officers of the Company were based on the
Company's internal plan targets for 2003, including the Company's (i) stock
price, including total return, (ii) earnings per share, (iii) funds from
operations, (iv) net asset value, (v) return on assets, (vi) portfolio
performance, including same store net operating income, tenant retention,
occupancy and capital expenditures, (vii) general and administrative expense,
(viii) investment/divestment activity, (ix) capital markets activity, and (x)
certain balance sheet objectives, including leverage and pay-out ratios.
Generally, bonuses and incentive awards for 2003, including those for the Chief
Executive Officer, were lower as a percentage of annual salary than in 2002, due
to the Company's performance in 2003 below some of its internal plan targets in
a difficult economic environment. The 2003 annual salary for Mr. Brennan,
18
Chief Executive Officer of the Company, was set prior to the beginning of such
year and reflects general economic conditions prevailing at the time.
Compensation Committee Procedures. The Compensation Committee annually
evaluates the Company's performance, as well as the personal performance of the
Chief Executive Officer and the other executive officers of the Company. Company
performance is evaluated by quantitative factors based on the Company's internal
plan targets for the applicable year. Personal performance is evaluated both by
qualitative factors, including organizational and management development
exhibited from year to year, and by quantitative factors based on the Company's
internal plan targets for the applicable year. Generally, the Compensation
Committee will meet prior to the beginning of each fiscal year to establish base
salary and performance targets for the upcoming year and will meet again at the
beginning of each year to review performance and approve incentive awards for
the preceding fiscal year.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
the deductibility on the Company's tax return of compensation over $1 million to
any of the Named Executive Officers unless, in general, the compensation is paid
pursuant to a plan which is performance-related, non-discretionary and has been
approved by the Company's stockholders. The Compensation Committee's policy with
respect to Section 162(m) is to make reasonable efforts to ensure that
compensation is deductible to the extent permitted while simultaneously
providing Company executives with appropriate rewards for their performance.
The Compensation Committee believes that it has designed and
implemented a compensation structure that provides appropriate awards and
incentives for the Company's executive officers as they work to sustain and
improve the Company's overall performance.
Submitted by the Compensation Committee:
Robert J. Slater, Chairman W. Ed Tyler
REPORT OF THE AUDIT COMMITTEE
Pursuant to a meeting of the Audit Committee on February 25, 2004, the
Audit Committee reports that it has: (i) reviewed and discussed the Company's
audited financial statements with management; (ii) discussed with the
independent auditors the matters (such as the quality of the Company's
accounting principles and internal controls) required to be discussed by
Statement on Auditing Standards No. 61; and (iii) received written confirmation
from PricewaterhouseCoopers LLP that it is independent and written disclosures
regarding such independence as required by Independence Standards Board No. 1,
and discussed with the auditors the auditors' independence. Based on the review
and discussions referred to in items (i) through (iii) above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's annual report for the Company's fiscal
year ended December 31, 2003.
Submitted by the Audit Committee:
John Rau, Chairman Kevin Lynch J. Steven Wilson
19
CERTAIN RELATIONSHIPS AND TRANSACTIONS
The Company often engages in transactions for which CB Richard Ellis,
Inc. ("CB Richard Ellis") acts as a broker. The brother of Michael W. Brennan,
the President and Chief Executive Officer and a director of the Company, is an
employee of CB Richard Ellis and, in 5 transactions in 2003 in which the Company
sold properties for approximately $29.0 million, received $116,081 as a portion
of the brokerage commission paid by the Company to CB Richard Ellis in
connection with such transactions. Management of the Company believes the terms
of brokerage services provided by CB Richard Ellis in such transactions were as
favorable to the Company as could be obtained in arm's length transactions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (as amended, the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the SEC
and the NYSE. Officers, directors and "greater than ten-percent" stockholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms so filed.
Based solely on review of the copies of such forms furnished to the
Company for 2003, all Section 16(a) filing requirements applicable to the
Company's officers, directors and "greater than ten-percent" stockholders were
complied with, except that John Lesher, a former director of the Company, filed
late one Form 4 with respect to a transaction on January 6, 2003, and filed late
his Form 5 for 2002.
20
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table presents information concerning the ownership of
Common Stock of the Company and limited partnership units ("Units") of First
Industrial, L.P. (which generally are exchangeable on a one-for-one basis,
subject to adjustments, for Common Stock) by all directors, the Named Executive
Officers, the directors and executive officers of the Company as a group and
persons and entities, if any, known to the Company to be beneficial owners of
more than 5% of the Company's Common Stock. The information is presented as of
March 22, 2004, unless otherwise indicated, and is based on representations of
officers and directors of the Company and filings received by the Company on
Schedule 13G under the Exchange Act. As of March 22, 2004, there were 41,088,859
shares of Common Stock and 6,670,921 Units outstanding.
Common Stock/Units
Beneficially
Owned
-----------------------
Percent
Number of Class
------ --------
Names and Addresses of
5% Stockholders
----------------------
Cohen & Steers Capital Management, Inc.
757 Third Avenue
New York, New York 10017 (1)............ 4,195,600 10.2%
Names and Addresses of
Directors and Officers*
-----------------------
Jay H. Shidler (2)....................... 1,324,843 3.2%
Michael W. Brennan (3)................... 574,924 1.4%
Michael G. Damone (4).................... 209,067 **
Kevin W. Lynch (5)....................... 3,362 **
John Rau (6)............................. 88,937 **
Robert J. Slater (7)..................... 13,762 **
W. Ed Tyler (8).......................... 33,813 **
J. Steven Wilson (9)..................... 88,223 **
Michael J. Havala (10)................... 135,940 **
Johannson L. Yap (11).................... 263,514 **
David P. Draft (12)...................... 85,860 **
21
Ross Kirk (13)........................... 55,136 **
All directors, Named Executive
Officers and other executive officers 3,056,197 7.2%
as a group (16 persons) (14)...........
- ----------------
* The business address for each of the directors and executive officers
of the Company is 311 South Wacker Drive, Suite 4000, Chicago, Illinois
60606.
** Less than 1%
(1) Pursuant to a Schedule 13G dated February 17, 2004 filed by Cohen &
Steers Capital Management, Inc., Cohen & Steers Capital Management,
Inc. has the sole power to dispose of all 4,195,600 shares reported,
but has the sole power to vote only 4,157,900 of such shares.
(2) Includes 910,660 shares held by Shidler Equities, L.P., a Hawaii
limited partnership owned by Mr. Shidler and Mrs. Shidler, 68,020 Units
held by Mr. Shidler directly, 254,541 Units held by Shidler Equities,
L.P., 1,223 Units held by Mr. and Mrs. Shidler jointly, and 22,079
Units held by Holman/Shidler Investment Corporation. Also includes
50,000 shares which may be acquired upon the exercise of vested options
granted under the 1997 Stock Plan, consisting of 10,000 shares at an
exercise price of $30.50 per share, 10,000 shares at an exercise price
of $31.13 per share, 10,000 shares at an exercise price of $30.00 per
share, 10,000 shares at an exercise price of $31.05 per share and
10,000 shares at an exercise price of $33.15 per share. Also includes
5,723 shares of restricted Common Stock issued under the 1997 Stock
Plan.
(3) Includes 243,000 shares that may be acquired by Mr. Brennan upon the
exercise of vested options granted under the 1997 Stock Plan,
consisting of 45,000 shares at an exercise price of $30.38 per share,
60,000 shares at an exercise price of $31.13 per share, 15,000 shares
at an exercise price of $27.25 per share, 75,000 shares at an exercise
price of $33.13 per share and 48,000 shares at an exercise price of
$30.53 per share. Also includes 3,806 Units and 114,091 shares of
restricted Common Stock issued under the 1997 Stock Plan.
(4) Includes 7,500 shares held by a trust for the benefit of Mr. Damone's
wife. Also includes 4,467 shares that may be acquired upon the exercise
of vested options granted under the 1997 Stock Plan at an exercise
price of $30.53 per share. Also includes 144,296 Units. Also includes
9,892 shares of restricted Common Stock issued under the 1997 Stock
Plan.
(5) Includes 3,362 shares of restricted Common Stock issued under the 1997
Stock Plan.
(6) Includes 22,500 shares that may be acquired by Mr. Rau upon the
exercise of vested options granted under the 1994 Stock Plan,
consisting of 15,000 shares at an exercise price of $23.50 per share
and 7,500 shares at an exercise price of $18.25 per share. Also
includes 60,000 shares that may be acquired upon the exercise of vested
options granted under the 1997 Stock Plan, consisting of 10,000 shares
at an exercise price of $30.50 per share, 10,000 shares at an exercise
price of $31.13 per share, 10,000 shares at an exercise price of $27.69
per share, 10,000 shares at an exercise price of $30.00 per share,
10,000 shares at an exercise price of $31.05 per share and 10,000
shares at an exercise price of $33.15 per share. Also includes 4,437
shares of restricted Common Stock issued under the 1997 Stock Plan.
(7) Includes 12,762 shares of restricted Common Stock issued under the 1997
Stock Plan.
(8) Includes 30,000 shares that may be acquired by Mr. Tyler upon the
exercise of vested options granted under the 1997 Stock Plan,
consisting of 10,000 shares at an exercise price of $30.00 per share,
10,000 shares at an exercise price of $31.05 per share and 10,000
shares at an exercise price of $33.15 per share. Also includes 3,813
shares of restricted Common Stock issued under the 1997 Stock Plan.
(9) Includes 22,500 shares that may be acquired by Mr. Wilson upon the
exercise of vested options granted under the 1994 Stock Plan,
consisting of 15,000 shares at an exercise price of $23.50 per share
and 7,500 shares at an exercise price of $18.25 per share. Also
includes 60,000 shares that may be acquired upon the exercise of vested
options granted under the 1997 Stock Plan, consisting of 10,000 shares
at an exercise price of $30.50 per share, 10,000 shares at an exercise
price of $31.13 per share, 10,000 shares at an exercise price of $27.69
per share, 10,000 shares at an exercise price of $30.00 per share,
10,000 shares at an exercise price of $31.05 per share and 10,000
shares at an exercise price of $33.15 per share. Also includes 5,723
shares of restricted Common Stock issued under the 1997 Stock Plan.
22
(10) Includes 1,251 shares held in custodial accounts for Mr. Havala's
children. Also includes 83,131 shares of restricted Common Stock issued
under the 1997 Stock Plan.
(11) Includes 98,667 shares that may be acquired by Mr. Yap upon the
exercise of vested options granted under the 1997 Stock Plan,
consisting of 52,000 shares at an exercise price of $33.13 per share
and 46,667 shares at an exercise price of $30.53 per share. Also
includes 1,680 Units. Also includes 75,963 shares of restricted Common
Stock issued under the 1997 Stock Plan.
(12) Includes 52,777 shares of restricted Common Stock issued under the 1997
Stock Plan.
(13) Includes 36,248 shares of restricted Common Stock issued under the 1997
Stock Plan.
(14) Includes 45,000 shares in the aggregate that may be acquired by
directors or executive officers upon the exercise of vested options
granted under the 1994 Stock Plan, consisting of 30,000 shares at an
exercise price of $23.50 per share and 15,000 shares at an exercise
price of $18.25 per share. Also includes 591,001 shares in the
aggregate that may be acquired by directors and executive officers upon
the exercise of vested options granted under the 1997 Stock Plan,
consisting of 45,000 shares at an exercise price of $30.38, 30,000
shares at an exercise price of $30.50, 93,500 shares at an exercise
price of $31.13, 20,000 shares at an exercise price of $27.69, 15,000
shares at an exercise price of $27.25, 151,300 shares at an exercise
price of $33.13, 40,000 shares at an exercise price of $30.00, 40,000
shares at an exercise price of $31.05, 40,000 shares at an exercise
price of $33.15 and 116,201 shares at an exercise price of $30.53. Also
includes 501,465 Units. Also includes 504,322 shares of restricted
Common Stock issued under the 1997 Stock Plan.
PROPOSAL II
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The accounting firm of PricewaterhouseCoopers LLP (or its predecessor,
Coopers & Lybrand L.L.P.) has served as the Company's independent auditors since
the Company's formation in August 1993. On February 25, 2004, the Audit
Committee of the Board of Directors appointed PricewaterhouseCoopers LLP as the
Company's independent auditors for the current fiscal year. A representative of
PricewaterhouseCoopers LLP will be present at the Annual Meeting, will be given
the opportunity to make a statement if he or she so desires and will be
available to respond to appropriate questions.
AUDIT FEES
The aggregate fees billed by PricewaterhouseCoopers LLP in connection
with the audit of the Company's 2003 financial statements were approximately
$392,537, including expenses. The aggregate fees billed by
PricewaterhouseCoopers LLP in connection with the audit of the Company's 2002
financial statements were approximately $324,766, including expenses.
AUDIT-RELATED FEES
The aggregate fees billed by PricewaterhouseCoopers LLP for assurance and
related services, including joint venture audits, an employee benefit plan audit
and Sarbanes-Oxley Act consultation, for 2003 were approximately $108,150,
including expenses. The aggregate fees billed by PricewaterhouseCoopers LLP for
assurance and related services, including Rule 3-14 audit work, joint venture
audits and an employee benefit plan audit, for 2002 were approximately $142,995,
including expenses.
23
TAX FEES
Tax Compliance. The aggregate fees billed by PricewaterhouseCoopers LLP for
tax compliance, including tax return preparation, in 2003 were approximately
$201,855, including expenses. The aggregate fees billed by
PricewaterhouseCoopers LLP for tax compliance, including tax return preparation,
in 2002 were approximately $214,194, including expenses.
Tax Consulting. The aggregate fees billed by PricewaterhouseCoopers LLP for
tax advice and tax planning services, including 1031 Exchange consultation, REIT
compliance consultation, state audit consultation, transaction consultation,
return of capital review and federal and state regulation consultation, in 2003
were approximately $175,054, including expenses. The aggregate fees billed by
PricewaterhouseCoopers LLP for tax advice and tax planning services, including
1031 Exchange consultation, REIT compliance consultation, state audit
consultation, transaction consultation, return of capital review and federal and
state regulation consultation, in 2002 were approximately $111,257, including
expenses.
ALL OTHER FEES
During fiscal 2003 and 2002, PricewaterhouseCoopers LLP did not provide
any services to the Company other than those in the categories noted above.
PRE-APPROVAL
The Audit Committee pre-approves all audit, audit-related, tax and
other services proposed to be provided by the Company's independent auditor
prior to engaging the auditor for that purpose. Consideration and approval of
such services generally occur at the Audit Committee's regularly scheduled
meetings. In situations where it is impractical to wait until the next regularly
scheduled meeting, the Audit Committee has delegated the authority to approve
the audit, audit-related, tax and other services to each of its individual
members. Approvals of audit, audit-related, tax and other services pursuant to
the above-described delegation of authority must be reported to the full Audit
Committee at its next regularly scheduled meeting.
The Audit Committee commenced pre-approval of audit, audit-related, tax
and other services provided by the Company's independent auditor in December
2002. Since that time all services provided by the Company's independent auditor
have been pre-approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT AUDITORS
FOR FISCAL 2004.
24
OTHER MATTERS
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2005 Annual Meeting
of Stockholders must be received by the Secretary of the Company no later than
December 10, 2004, in order to be considered for inclusion in the proxy
statement and on the proxy card that will be solicited by the Board of Directors
in connection with the 2004 Annual Meeting of Stockholders.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement that will be presented for action at the
Annual Meeting. If other matters are presented, it is the intention of the
persons named as proxies in the accompanying Proxy Card to vote in their
discretion all shares represented by validly executed proxies.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
TODAY.
25
FIRST INDUSTRIAL REALTY TRUST, INC.
C/O EQUISERVE TRUST COMPANY, N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
[X] PLEASE MARK |
VOTES AS IN | 0936
THIS EXAMPLE. |
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1. Election of two Class I Directors 2. Ratification of the selection of FOR AGAINST ABSTAIN
(Please see reverse) PricewaterhouseCoopers LLP as the [ ] [ ] [ ]
Company's independent auditors.
FOR WITHHELD 3. In their discretion, on any and all other matters that may properly
ALL [ ] [ ] FROM ALL come before the meeting.
NOMINEES NOMINEES
[ ]
---------------------------------------------------
For all nominees except as written above
NOTE: Please date proxy and sign exactly as name or names appear to
the left. All joint owners of shares should sign. State full title if
signing as executor, administrator, trustee, guardian, or other.
Please return signed proxy in the enclosed envelope.
The undersigned hereby revokes any proxy or proxies heretofore given
to vote upon or act with respect to said shares and hereby confirms
all that the proxies named herein and their substitutes, or any of
them, may lawfully do by virtue hereof.
Signature: Date: Signature: Date:
--------------------------------- ----------- -------------------------------- ----------
DETACH HERE
FIRST INDUSTRIAL REALTY TRUST, INC.
P PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON MAY 12, 2004
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
O The undersigned appoints Michael W. Brennan and Michael J. Havala, or either of them, with full powers of substitution, as
proxies of the undersigned, with the authority to vote upon and act with respect to all shares of stock of First Industrial
X Realty Trust, Inc. (the "Company"), which the undersigned is entitled to vote, at the Annual Meeting of Stockholders of the
Company, to be held at the offices of the Company, 311 South Wacker Drive, 40th Floor, Chicago, Illinois 60606, commencing
Y Wednesday, May 12, 2004, at 9:00 a.m., and at any and all adjournments thereof, with all the powers the undersigned would
possess if then and there personally present, and especially (but without limiting the general authorization and power
hereby given) with the authority to vote on the reverse side.
Nominees (term, if elected, expires in 2007):
(1) Jay H. Shidler and (02) J. Steven Wilson
This proxy, when properly executed, will be voted as specified herein. If this proxy does not indicate a contrary choice, it
will be voted for all nominees for director listed in Item 1, for the ratification of auditors in Item 2, and in the
discretion of the persons named as proxies herein with respect to any and all matters referred to in Item 3.
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PLEASE VOTE, DATE AND SIGN THIS PROXY ON THE OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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