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Corporate Office Properties Trust
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[CORPORATE OFFICE PROPERTIES LOGO]
Corporate Office Properties Trust
401 City Avenue, Suite 615
Bala Cynwyd, Pennsylvania 19004-1126
Telephone 610-538-1800
Facsimile 610-538-1801
Website www.copt.com[LETTERHEAD]
To: Our Shareholders
From: Clay W. Hamlin, III
Subject: Invitation to the Corporate Office Properties Trust
20012002 Annual Meeting of Shareholders
You are cordially invited to attend our 2002 Annual Meeting of Shareholders
to be held 10:00 a.m. on Thursday, May 17,16, 2002, at The World Trade Center
Baltimore, 401 East Pratt Street, Baltimore, Maryland 21202. At this year's
meeting, you will be asked to elect two members of our Board of Trustees.
In addition to the formal business to be transacted, we will make a
presentation regarding our accomplishments in 2001 to
find out more about Corporate Office Properties Trust and the significant
progress we are making.other recent
developments. You will also have the opportunity at this meeting to ask
questions and make comments. Enclosed with this Proxy Statementproxy statement are your votingproxy
card and the 2001 Annual Report.
I look forward to seeing you at the Annual Meeting.
/s/ Clay W. Hamlin, III
-------------------------
Clay W. Hamlin, III
Chief Executive Officer
[CORPORATE OFFICE PROPERTIES LOGO]
Corporate Office Properties Trust
8815 Centre Park Drive, Suite 400
Columbia, Maryland 21045-2272
Telephone 410-730-9092
Facsimile 410-740-1174
Website www.copt.com
March 30, 2001[LETTERHEAD]
April 2, 2002
Notice of Annual Meeting of Shareholders
Date: Thursday, May 17, 200116, 2002
Time: 10:00 a.m.
Place: The World Trade Center Baltimore
401 East Pratt Street, 21st Floor
Baltimore, MD
We will hold our Annual Meeting of Shareholders on May 17, 200116, 2002 at 10:00
a.m. at The World Trade Center Baltimore. During the Annual Meeting, we will
consider and take action on the following proposals:
1. To elect fourtwo Trustees Jay H. Shidler, Clay W. Hamlin, III, Edward A.
Crooke and Kenneth S. Sweet, Jr., each for a term of three years; and
2. To amend our 1998 Long Term Incentive Plan to increase the number of common
shares issuable under the plan.
3. To transact any other business properly brought before the Annual
Meeting.
You may vote at the meeting if you were a shareholder of record on March
23, 2001.29, 2002.
By order of the Board of Trustees
/s/ John H. Gurley
- ----------------------------------------------------
John H. Gurley
Senior Vice President, General Counsel and Secretary
PROXY STATEMENT
This Proxy Statementproxy statement and the accompanying proxy card are being mailed, beginning
on or about March 30, 2001,April 2, 2002, to owners of common shares of beneficial interest of
Corporate Office Properties Trust in connection with the solicitation of proxies
by the Board of Trustees for our 20012002 Annual Meeting of Shareholders. This proxy
procedure is necessarybeing used to permit all Corporate Office Properties Trust
shareholders to vote since many may be unable to attend the Annual Meeting. The
Board of Trustees encourages you to read this document thoroughly and to take
this opportunity to vote on the matters to be decided at the Annual Meeting.
CONTENTS
General Information 2
Proposal 1--Election1 -- Election of Trustees 5
Our Board of Trustees 65
Our Executive Officers 8
Proposal 2--Amendment to our 1998 Long Term Incentive Plan 9
Summary of the 1998 Long Term Incentive Plan 10
Report of the Compensation Committee 1410
Report of the Audit Committee 1512
Fees Billed for Services Rendered by Principal Accountant 1613
Common Shares Performance Graph 1713
Share Ownership of our Trustees, Executive Officers
and 5% Beneficial Owners 1814
Section 16(a) Beneficial Ownership Reporting Compliance 1915
Summary Compensation Table 1915
Employment Agreements 2016
Option Grant Table 21Grants in Last Fiscal Year 18
Year End Option Exercise Table 22Value 19
Certain Transactions 23
Requirements for Advance Notification of Nominations 2319
Independent Auditors 2419
Annual Report on Form 10-K 24
Exhibit A--Charter of the Audit Committee 2519
1
GENERAL INFORMATION
The questions and answers set forth below provide general information regarding
this proxy statementProxy Statement and our annual meetingAnnual Meeting of shareholders.Shareholders.
WHEN ARE OUR ANNUAL REPORT TO SHAREHOLDERS AND THIS PROXY STATEMENT FIRST BEING
SENT TO SHAREHOLDERS?
Our annual reportAnnual Report to shareholders and this proxy statementProxy Statement are being sent to
shareholders beginning on or about March 30, 2001.April 2, 2002.
WHAT AM I VOTING ON?
1. The election of fourtwo Trustees, each for a three-year term.
2. The amendment of our 1998 Long Term Incentive Plan to increase the
number of common shares issuable under the plan.
3. Any other business that properly comes before the meeting for a vote.
WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING AND HOW MANY VOTES DO THEY HAVE?
Common shareholders of record at the close of business on March 23, 200129, 2002 may
vote at the Annual Meeting. Each share has one vote. There were 20,426,43722,771,551
common shares outstanding on March 23, 2001.29, 2002.
HOW DO I VOTE?
You must be present, or represented by proxy, at the Annual Meeting in order to
vote your shares. Since many of our shareholders are unable to attend the Annual
Meeting in person, we send proxy cards to all of our shareholders to enable them
to vote.
WHAT IS A PROXY?
A proxy is a person you appoint to vote on your behalf. We are soliciting your
appointment of proxies so that your common shares may be voted at the Annual
Meeting without your attendance. If you complete and return the enclosed proxy
card, your shares will be voted by proxy.
BY COMPLETING AND RETURNING THIS PROXY CARD, WHO AM I DESIGNATING AS MY PROXY?
You will be designating Clay W. Hamlin, III, our Chief Executive Officer, and
Randall M. Griffin, our President and Chief Operating Officer, as your proxies.
They may act on your behalf together or individually and will have the authority
to appoint a substitute to act as proxy.
HOW WILL MY PROXY VOTE MY SHARES?
Your proxy will vote according to the instructions on your proxy card. IF YOU
COMPLETE AND RETURN YOUR PROXY CARD BUT DO NOT INDICATE YOUR VOTE ON BUSINESS
MATTERS, YOUR PROXY WILL VOTE "FOR" PROPOSALS 1 AND 2.PROPOSAL 1. We do not intend to bring any
other matter for a vote at the Annual
2
Meeting, and we do not know of anyone else
who intends to do so. However, your proxies are authorized to vote on your
behalf, using their best judgment, on any other business that properly comes
before the Annual Meeting.
2
HOW DO I VOTE USING MY PROXY CARD?
Other than attending the Annual Meeting and voting in person, you must vote by
mail. To vote by mail, simplySimply mark, sign and date the enclosed proxy card and return it in the
postage-paid envelope provided. If you hold your shares through a broker, bank
or other nominee, you will receive separate instructions from the nominee
describing how to vote your shares.
HOW DO I REVOKE MY PROXY?
You may revoke your proxy at any time before your shares are voted at the Annual
Meeting by:
o Notifying our Secretary, John H. Gurley, in writing at 8815 Centre
Park Drive, Suite 400, Columbia, Maryland 21045, that you are revoking
your proxy;
o Executing a later dated proxy card; or
o Attending and voting by ballot at the Annual Meeting.
IS MY VOTE CONFIDENTIAL?
Yes, only certain of our employees will have access to your card.
WHO WILL COUNT THE VOTES?
An officer of Corporate Office Properties Trust will act as the inspector of
election and will count the votes.
WHAT CONSTITUTES A QUORUM?
As of March 23 2001, 20,426,437 of our29, 2002, Corporate Office Properties Trust had 22,771,551 common
shares were issued and outstanding. A majority of the outstanding shares, present or represented
by proxy, constitutes a quorum. If you sign and return your proxy card, youyour
shares will be considered partcounted in determining the presence of thea quorum, even if you
withhold your vote. If a quorum is not present at the Annual Meeting, the
shareholders present in person or by proxy may adjourn the meeting to a date not
more than 120 days after March 23,
200129, 2002 until a quorum is present.
HOW WILL MY VOTE BE COUNTED?
With respect to Proposal 1, the election of Trustees, votes may be cast in favor
of or withheld from one or all nominees. Votes that are withheld will not be
included in the vote and will have no effect on the vote.
With respect to Proposal 2, the amendment to the 1998 Long Term Incentive Plan,
o you may abstain and your abstention will have the same effect as a
vote against the plan amendment; and
o we believe that if you hold your shares through a broker in "street"
name and you do not give instructions to your broker to vote your
shares with respect to the plan amendment, your broker
3
will not vote your shares with respect to the plan amendment. Your
broker's failure to vote your shares in this instance will have no
effect on the vote because broker non-votes are not considered present
at the meeting.
WHAT PERCENTAGE OF OUR COMMON SHARES DO THE TRUSTEES AND EXECUTIVE OFFICERS OWN?
Our Trustees and executive officers owned approximately 9.2%27.5% of our
beneficially owned common shares as of March 23, 2001.29, 2002. (See the discussion under
the heading "Share Ownership of our Trustees, Executive Officers and 5%
Beneficial Owners" for more details.)
WHAT VOTE IS REQUIRED TO ELECT TRUSTEES?
Trustees are elected by a plurality of the votes, which means that the nominees
with the most votes are elected.
3
WHAT VOTE IS REQUIRED ON OTHER MATTERS?
A majority of the votes cast at a meeting of shareholders is required to approve
any other matter unless a greater vote is required by law or by the Declaration
of Trust. An abstention on such matters will have the same effect as a vote
against. Where brokers are prohibited from exercising discretionary authority in
voting for beneficial owners who have not provided voting instructions (commonly
referred to as "broker non-votes"), these shares will not be included in the
votes cast but will be counted in determining if there is a quorum at the
meeting.
WHO IS SOLICITING MY PROXY, HOW IS IT BEING SOLICITED AND WHO PAYS THE COST?
Our Board of Trustees is soliciting your proxy. The solicitation process is
being conducted primarily by mail. However, proxies may also be solicited in
person, by telephone or facsimile. Wells Fargo Bank Minnesota, N.A., our
transfer agent, will be assisting us for a fee of approximately $1,000, plus
out-of-pocket expenses. Corporate Office Properties Trust pays the cost of
soliciting proxies. We will also reimburse stockbrokers and other custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses for
forwarding proxy and solicitation material to the owners of common shares.
WHO ISWHEN ARE SHAREHOLDER PROPOSALS AND TRUSTEE NOMINATIONS FOR OUR LARGEST PRINCIPAL SHAREHOLDER?
As of2003 ANNUAL
MEETING DUE?
In accordance with our bylaws, notice relating to nominations for Trustees or
proposed business to be considered at the 2003 Annual Meeting must be given no
earlier than February 14, 2003 and no later than March 23, 2001, Constellation Real Estate, Inc.16, 2003. These
requirements do not affect the deadline for submitting shareholder proposals for
inclusion in the proxy statement, nor do they apply to questions a shareholder
may wish to ask at the meeting (discussed in the question and its affiliates, 111
Market Place, Baltimore, Maryland 21202, owned 8,876,171, or approximately 43%,
of our common shares and our only Series A Convertible Preferred Shares.
Constellation Real Estate, Inc. is a wholly-owned indirect subsidiary of
Constellation Energy Group, Inc. ("Constellation Energy")answer below).
WHEN ARE SHAREHOLDER PROPOSALS INTENDED TO BE INCLUDED IN THE PROXY STATEMENT
FOR THE YEAR 20022003 ANNUAL MEETING DUE?
Shareholders who wish to include proposals in the Proxy Statement must submit
such proposals in accordance with regulations adopted by the Securities and
Exchange Commission. Shareholder proposals to be presented atfor the 20022003 Annual Meeting must be
submitted in writing by March 18,December 2, 2002 to John H. Gurley, Senior Vice
President, General Counsel and Secretary, at 8815 Centre Park Drive, Suite 400,
Columbia, Maryland 21045. You should submit any proposal by a method that
permits you to prove the date of delivery to us.
(See the discussion under the heading
"Requirements for Advance Notification of Nominations" for information regarding
certain procedures with respect to shareholder proposals and nominations of
Trustees.)
4
PROPOSAL 1 -- ELECTION OF TRUSTEES
The terms of our fourtwo Class IIII Trustees expire upon the election of their
successors at the Annual Meeting. Corporate Office Properties Trust, through ourthe
Nominating Committee of the Board of Trustees, proposed the renomination of Jay
H. Shidler, Clay W. Hamlin, III, Edward A. Crookehas nominated Betsy Z. Cohen and
Kenneth S. Sweet, Jr.Robert L. Denton for election as Class IIII Trustees at the Annual Meeting. Each of
these nominees has agreed to serve a three-year term if elected.
BETSY Z. COHEN, age 60, has been one of our Trustees since May 1999. Mrs. Cohen
has been Chairman, Chief Executive Officer and Trustee of RAIT Investment Trust,
a real estate investment trust, since August 1997. She has also served as Chief
Executive Officer of TheBancorp.com, Inc. since July 2000 and as a Director of
The Maine Merchant Bank, LLC and of Aetna, Inc. From December 1999 to March
2000, Mrs. Cohen also served as a Director of Hudson United Bancorp, a holding
company that was the successor to JeffBanks, Inc., where she had been Chairman
and Chief Executive Officer since its inception in 1981, and she was formerly
Director of First Union Corp. of Virginia and its predecessor, Dominion
Bankshares, Inc.
ROBERT L. DENTON, age 49, has been one of our Trustees since May 1999. Mr.
Denton joined The Shidler Group in 1994 and is currently a Managing Partner and
the resident principal in the New York office. From 1991 to 1994, Mr. Denton was
a Managing Director with Providence Capital, Inc., an investment-banking firm
that he co-founded.
If any nominee is unable to stand for election, which we do not presently
contemplate, the Board may provide for a lesser number of Trustees or designate
a substitute. In the latter event, shares represented by proxies will be voted
for a substitute nominee.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" EACH OF THE LISTED NOMINEES IN
PROPOSAL 1.
OUR BOARD OF TRUSTEES
HOW IS THE BOARD OF TRUSTEES CLASSIFIED?
Our Declaration of Trust provides for three classes of Trustees. You will elect
successors to our Class I Trustees at the 2002 Annual Meeting of Shareholders.
Our shareholders will elect successors to our Class II Trustees in 2003 and
Class III Trustees in 2004. All Trustees will be elected for three-year terms.
BESIDES THE TWO NOMINEES FOR ELECTION, WHO ARE THE OTHER MEMBERS OF OUR BOARD OF
TRUSTEES?
NAME AGE OFFICE CLASS
---- --- ------ -----
Jay H. Shidler......................... 55 Chairman of the Board of Trustees III
Clay W. Hamlin, III.................... 57 Chief Executive Officer and Trustee III
Thomas F. Brady........................ 52 Trustee II
Steven D. Kesler....................... 50 Trustee II
Kenneth S. Sweet, Jr................... 69 Trustee III
Kenneth D. Wethe....................... 60 Trustee II
JAY H. SHIDLER age 55, has been Chairman of our Board of Trustees since October 1997.
Mr. Shidler is the founder and Managing Partner of The Shidler Group, a
nationally recognized real estate investment
5
company. Mr. Shidler has over 27 years of experience in real estate investment
and has been directly involved in the acquisition and management of over 1,000
properties in 40 states and Canada totaling over $4 billion in aggregate value.
Mr. Shidler is a founder and current Chairman of the Board of Directors of First
Industrial Realty Trust, Inc. Mr. Shidler is alsoand was a founder, former Director and Chairmanco-Chairman
of the BoardTriNet Corporate Realty Trust, Inc. (now a subsidiary of CGA Group, Ltd., a
holding company whose subsidiary is a AA rated financial guarantor.iStar Financial,
Inc.).
CLAY W. HAMLIN, III age 56, has been one of our Trustees and our Chief Executive Officer
since October 1997. He was our President from October 1997 until September 1998.
From May 1989 until joining us, Mr. Hamlin was the Managing Partner of The
Shidler Group's Mid-Atlantic region, where he acquired,
managedsupervised the acquisition,
management and leasedleasing of over four million square feet of commercial property.
He has been active in the real estate business for 28 years. Mr. Hamlin is also
a founding shareholder of First Industrial Realty Trust, Inc.
EDWARD A. CROOKE, age 62,THOMAS F. BRADY has been one of our Trustees since January 2002. Mr. Brady has
been Vice President-Corporate Strategy & Development at Constellation Energy
Group, Inc. ("CEG") since 1999. In this role, Mr. Brady is responsible for
setting corporate strategy and managing the development of enabling options to
assure delivery of CEG's strategic objectives. Mr. Brady serves as a director of
Baltimore Gas and Electric Company and other subsidiaries of CEG. He is Chairman
of CEG's two retail energy service companies (BGE Home Products & Services, Inc.
and Constellation Energy Source, Inc.), its investment and real estate
subsidiaries, as well as its international division. Mr. Brady also serves on
the Board of Governors of The National Aquarium in Baltimore and as a Director
of Baltimore County Leadership and Villa Julie College.
STEVEN D. KESLER has been one of our Trustees since September 1998. Mr. Crooke servedKesler
is the Chief Executive Officer and President of Constellation Investments, Inc.,
Constellation Real Estate Group, Inc. and Constellation Real Estate, Inc.,
wholly-owned indirect subsidiaries of CEG. In this role, Mr. Kesler manages a
corporate investment entity, CEG's pension plan, CEG's nuclear decommissioning
trust, a portfolio of real estate assets and a portfolio of assisted living
assets. He also serves as Vice Chairman, for Constellation Energy Group, Inc.
from April 1999 to January 1, 2000, when he took early retirement. He was
re-elected to the position of Vice Chairman for Constellation Energy Group, Inc.
effective November 1, 2000. He also served as President and Chief Operating
Officer of Baltimore Gas and Electric Company, a regulated utility and
wholly-owned direct subsidiary of Constellation Energy Group, Inc., from 1992 to
1999 and as a Director from 1988 to April 1999. On January 1, 2000, he retired
as a Director, Chairman of the Board, President and Chief Executive Officer and President
of Constellation Enterprises, Inc., the parent company of most of Constellation
Energy Group, Inc.'s unregulated subsidiaries. Mr. Crooke serves as a Director
of Constellation Energy Group, Inc., Allfirst Financial, Inc., Allfirst Bank,
AEGIS InsuranceHealth Services, Inc., Baltimore Equitable Insurancea wholly-owned indirect subsidiary of
CEG. Prior to joining CEG in 1984, Mr. Kesler was Controller of
Westinghouse-Hittman Nuclear, Inc. and Orion Power
Holdings, Inc.Manager of Budgets, Planning and Analysis
with Maryland National Corporation.
KENNETH S. SWEET, JR., age 68, has been one of our Trustees since October 1997. Mr. Sweet
is Chairman of GSA Management, LLC and Managing Director of GS Capital, L.P.,LP, a
venture capital and real estate partnership that he founded in 1991. In 1971,
Mr. Sweet founded K.S. Sweet Associates, which specialized in real estate and
venture capital investments. From 1957 to 1971 he was with The Fidelity Mutual
Life Insurance Company. Mr. Sweet serves as a Director, Chairman of the Real
Estate Committee and a member of the Finance Committee of Main Line Health and
is a Board member of the Philadelphia Chapter of the Nature Conservancy. He also serves as Chairman
of Bryn Mawr Hospital Foundation and is on the Advisory Committee of the Arthur
Ashe Youth Tennis Center.
If a quorum is present at the Annual Meeting, then a plurality of all votes cast
at the meeting will be sufficient to elect a Trustee. There is no cumulative
voting in the election of Trustees.
5
If any nominee is unable to stand for election, which we do not presently
contemplate, the Board may provide for a lesser number of Trustees or designate
a substitute. In the latter event, shares represented by proxies may be voted
for a substitute nominee.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" EACH OF THE LISTED NOMINEES IN
PROPOSAL 1.
OUR BOARD OF TRUSTEES
HOW WOULD YOU DESCRIBE THE CLASSES OF THE BOARD OF TRUSTEES?
Our Declaration of Trust provides for three classes of Trustees who manage our
business affairs. You will elect successors to our Class III Trustees in this
election. Our shareholders will elect successors to our Class I Trustees in 2002
and Class II Trustees in 2003. All Trustees will be elected for three-year
terms.
Constellation Real Estate, Inc. is entitled to elect two Trustees because
of its Series A convertible preferred share ownership. Its elected Trustees are
Edward A. Crooke (Class III Trustee) and Steven D. Kesler (Class II Trustee).
BESIDES THE THREE NOMINEES FOR ELECTION, WHO ARE THE OTHER MEMBERS OF OUR BOARD
OF TRUSTEES?
NAME AGE OFFICE CLASS
---- --- ------ -----
Betsy Z. Cohen........... 59 Trustee I
Robert L. Denton......... 48 Trustee I
Steven D. Kesler......... 49 Trustee II
Kenneth D. Wethe......... 59 Trustee II
BETSY Z. COHEN has been one of our Trustees since May 1999. Mrs. Cohen is
Chairman, Chief Executive Officer and Trustee of RAIT Investment Trust, a real
estate investment trust. She also serves as Chief Executive Officer of
TheBancorp.com, Inc., Chairman of FinancialMuse.com, Inc. and as a Director of
The Maine Merchant Bank, LLC and Aetna, Inc. From 1999 to 2000, Mrs. Cohen also
served as a Director of Hudson United Bancorp, a holding company, the successor
to JeffBanks, Inc. where she had been Chairman and Chief Executive Officer since
its inception in 1981, and was formerly Director of First Union Corp. of
Virginia and its predecessor, Dominion Bankshares, Inc.
ROBERT L. DENTON has been one of our Trustees since May 1999. Mr. Denton
joined The Shidler Group in 1994 and is currently a Managing Partner and the
resident principal in the New York office. From 1991 to 1994, Mr. Denton was
with Providence Capital, Inc., an investment-banking firm which he co-founded.
Mr. Denton is also a Trustee of CGA Group, Ltd.
STEVEN D. KESLER has been one of our Trustees since September 1998. Mr.
Kesler is the Chief Executive Officer and President of Constellation
Investments, Inc., Constellation Real Estate Group, Inc. and Constellation Real
Estate, Inc., wholly-owned indirect subsidiaries of Constellation Energy Group,
Inc. In this role, Mr. Kesler manages a corporate investment entity,
Constellation Energy Group Inc.'s pension plan, Constellation Energy's Group,
Inc.'s nuclear decommissioning trust, a portfolio of real estate assets and a
portfolio of assisted living assets. Prior to joining Constellation
6
Energy Group, Inc. in 1986, Mr. Kesler was Controller of
Westinghouse-Hittman Nuclear, Inc. and Manager of Budgets, Planning and Analysis
with Maryland National Corporation.
KENNETH D. WETHE has been one of our Trustees since January 1990. Since 1990,
Mr. Wethe has been the owner and principal officer of Wethe & Associates, a
Dallas-based firm providing independent risk management, insurance and employee
benefit services to school districts and governmental agencies. Mr. Wethe has
over 25 years experience in the group insurance and employee benefits area.
6
HOW ARE THE TRUSTEES COMPENSATED?
o Employee Trustees receive no compensation, other than their normal salary,
for serving on the Board of Trustees or its committees.
o Non-employee Trustees receive:
-receive the following:
* $15,000 annual fee;
-* $1,000 per quarterly meeting;
-* $500 per other meeting;
-* Reimbursement for out-of-pocket expenses;
-* Eligibility to participate in our 1998 Long Term Incentive Plan; and
-* Annual grants of options to purchase 5,000 common shares exercisable atwith an
exercise price equal to the fair market value of the common shares on
the date of grant. These options are exercisable beginning one year
from the date of grant and expire ten years after the date of grant.
HOW ARE OUR TRUSTEES NOMINATED?
The nominating committee of the Board of Trustees is responsible for presenting
nominations to the Board of Trustees and shareholders. (See the discussion under
the heading "Requirements for Advance NotificationIn addition, our bylaws
include procedures regarding shareholder nomination of Nominations" concerning
information about procedures for shareholder nominations for Trustees.)
7
Trustees, as previously
described in this proxy statement.
WHAT ARE THE CURRENT COMMITTEES OF OUR BOARD OF TRUSTEES?
The Board of Trustees currently has four committees. The committees on which
Trustees serve and the number of meetings held during 20002001 are identifiedset forth below.
- ---------------------------------------------------------------------------------------------------------------
BOARD MEMBER AUDIT INVESTMENT COMPENSATION NOMINATING
- ------------ ----- ---------- ------------ -------------------------------------------------------------------------------------------------------------------------
Jay H. Shidler X X|X| |X|
- ---------------------------------------------------------------------------------------------------------------
Betsy Z. Cohen X
Edward A. Crooke X X|X|
- ---------------------------------------------------------------------------------------------------------------
Thomas F. Brady |X| |X|
- ---------------------------------------------------------------------------------------------------------------
Robert L. Denton X|X|
- ---------------------------------------------------------------------------------------------------------------
Steven D. Kesler X|X|
- ---------------------------------------------------------------------------------------------------------------
Kenneth S. Sweet, Jr. X X X|X| |X| |X|
- ---------------------------------------------------------------------------------------------------------------
Kenneth D. Wethe X X|X| |X|
- ---------------------------------------------------------------------------------------------------------------
Meetings Held in 20002001 7 8 7 4 1
- ---------------------------------------------------------------------------------------------------------------
During 2000,2001, the Board of Trustees had four meetings. All of the Trustees
attended a minimum of 75% of the total of the Board of Trustees' meetings and
their committee meetings except for Betsy Z. Cohen.
AUDIT COMMITTEE - This committee reviews our accounting, financial reporting and
internal control functions and recommends the annual appointment of our
independent accountants and reviews their services. All members are independent
non-employee Trustees.
7
INVESTMENT COMMITTEE - This committee approves all of our real estate
investments and acquisitions. Investments of greater than $25 million must also
be approved by the full Board of Trustees.
COMPENSATION COMMITTEE - This committee administers executive compensation
programs, policies and practices. The committee also acts in an advisory role onrecommends senior
management compensation to the Board of Trustees and administers our executive
incentive plans. All members are independent non-employee Trustees.
NOMINATING COMMITTEE - This committee considers and recommends nominees for
election as Trustees and officers. All members are independent non-employee
Trustees.
OUR EXECUTIVE OFFICERS
Below is information with respect to our executive officers who are not
Trustees.
RANDALL M. GRIFFIN, age 56,57, has been our President and Chief Operating Officer
since September 1998. Mr. Griffin previously served as President of
Constellation Real Estate Group, Inc. and Constellation Real Estate, Inc. sincefrom
June 1993.1993 until September 1998. From 1990 through March 1993, Mr. Griffin worked
as Vice President-Development for EuroDisney Development in Paris, France. From
1976 to 1990, Mr. Griffin served for Linclay Corporation, a St. Louis based real
estate development, management and investment company, most recently as
Executive Vice President and Chief Operating Officer. He serves onas Chairman of
the Board of DirectorsGovernors of The National Aquarium as its Vice
8
Chairman and is on the Board of the Columbia Festival of the Arts.in Baltimore. He is Vice
Chairman of the Maryland Economic Development Commission, and serves on its
Executive Committee. He also serves on the Board of Trustees of the Greater
Washington Initiative.
ROGER A. WAESCHE, JR., age 47,48, has been our Senior Vice President since
September 1998 and our Chief Financial Officer since March 1999. Prior to
joining us, Mr. Waesche was responsible for all financial operations of
Constellation Real Estate, Inc., including treasury, accounting, budgeting and
financial planning. Mr. Waesche also had primary responsibility for
Constellation Real Estate, Inc.'s asset investment and disposition activities.
Prior to joining Constellation Real Estate, Inc. in 1984, Mr. Waesche was a
practicing Certified Public Accountant with Coopers & Lybrand L.L.P.Lybrand.
JOHN H. GURLEY, age 62,63, has been our Secretary, Senior Vice President and
General Counsel since September 1998. Prior to joining us, Mr. Gurley served as
Vice President and General Counsel of Constellation Real Estate, Inc. Prior to
joining Constellation Real Estate, Inc. in 1987, Mr. Gurley spent 17 years with
The Rouse Company where he worked eight years as Assistant General Counsel.
Before that he worked in private practice for five years with Semmes, Bowen &
Semmes where he provided a broad spectrum of real estate related services to
various clients.
MICHAEL D. KAISER, age 49,50, has been President of Corporate Realty Management,
LLC ("CRM") since April 1996 and President of Corporate Management Services,
LLC, an indirect subsidiary, since January 2000. Prior to joining CRM, Mr.
Kaiser served as Vice President of Asset Management of Constellation Real Estate, Inc.Realty
Management, LLC. He has more than 24 years of real estate experience, including
a background in development, leasing and management of real estate projects in
the Baltimore-Washington area. He serves on the Board of Directors of the
Baltimore Chapter of the Building Owners and Managers Association.
8
DWIGHT S. TAYLOR, age 56,57, has been President of Corporate Development Services,
LLC ("CDS") since September 1999, previously serving as Senior Vice President
since joining CDS in September 1998. Mr. Taylor has more than 25 years of real
estate experience, including 14 years with Constellation Real Estate, Inc. prior
to joining CDS and four years with The Rouse Company. From 1977 to 1981, Mr.
Taylor was Senior Vice President of the Baltimore Economic Development
Corporation. He currently serves as President of the Maryland Chapter and is on
the national Boardboard of the National Association of Industrial and Office
Properties and is on the Board of
Directors of Micros Systems, Inc.Properties. He also served as Chairman of the Associated Black Charities from 1989 to
1991. PROPOSAL 2 -- AMENDMENT TO OUR 1998 LONG TERM INCENTIVE PLAN
We have outlined inHe also serves on the table below the proposed change to our 1998 Long Term
Incentive Plan (the "Plan"):
EXISTING PLAN PROPOSED CHANGE
------------- ---------------
Authorizes the issuance of Awards under the Plan Increases the authorized Awards issuable under the
of up to 10% of the total of (i) our common Plan by increasing the percentage to be used in the
shares outstanding at the time an Award is calculation of common shares under the Plan from 10%
granted plus (ii) the number of shares which to 13%. As of March 23, 2001, this proposed change
would be outstanding upon redemption of all would increase the issuable Awards remaining under the
units in Corporate Office Properties, L.P. or Plan by 990,592 common shares, from 45,054 to
other securities which are convertible into our 1,035,646 common shares.
common shares at the time the Award is granted
and which have not yet been redeemed.
9
BOARD RECOMMENDATION
The Board of Trustees has determined that it is in the shareholders' best
interests to approve the amendment to the Plan. The Board believes that the
amendment will enable us to continue to attract and retain senior and middle
management by increasing the Awards available.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" PROPOSAL 2.
SUMMARY OF THE 1998 LONG TERM INCENTIVE PLAN
The material featuresDirectors of the current 1998 Long Term Incentive Plan are set forth
below.
Types of Plan awards The Plan provides for the grant of:
("Awards")
o options to employees to acquire common
shares intended to qualify as incentive
stock options under Section 422 of the
Internal Revenue Code;
o options to acquire common shares not
intended to qualify as incentive stock
options under Section 422 of the Internal
Revenue Code ("nonqualified stock options");
o dividend equivalents which may be granted
alone or in conjunction with another Award.
Dividend equivalents are rights to receive
cash, common shares or other property equal
in value to dividends paid with respect to a
specified number of common shares; and
o shares that are subject to restrictions at
the time of the award. Such shares could be
issued subject to forfeiture if the
recipients terminate employment or service
with us for any reason or if certain
performance goals are not met. While
restrictions are in place, such shares may
not be sold or transferred but holders are
entitled to receive dividends and other
ownership attributes of the shares,
including the right to vote.
Available common shares The Plan currently authorizes the issuance of up
to 10% of the total of (i) our common shares
outstanding at the time an Award is granted plus
(ii) the number of Shares which would be
outstanding upon redemption of all units in
Corporate Office Properties, L.P. or other
securities which are convertible into Shares at
the time the Award is granted and which have not
yet been redeemed. This amount is subject to
adjustment to prevent dilution or enlargement of
the rights of Plan participants. No more than
300,000 shares in the aggregate are available
for incentive stock option awards under the Plan
and no more than 30% of the total number of
shares reserved for issuance under the Plan
shall be cumulatively available for Awards of
restricted shares. If a participant forfeits or
does not exercise options under the Plan, those
allocated common shares will again become
available for grant.
Eligible Participants Our employees and trustees, and employees and
trustees of our subsidiaries and affiliates. As
of March 23, 2001, 140 employees (including one
who is also a trustee) and six non-employee
trustees were
10
eligible to participate in the Plan.
Administration The Compensation Committee of the Board of
Trustees administers the Plan ("Administrator")
including:
o Granting awards,
o Determining affiliated entities eligible
to participate, and
o Determining the terms and conditions of
Awards such as exercise price, grant price,
vesting periods, waivers and method of
exercising. The closing sale price per
common share as reported on the New York
Stock Exchange on March 23, 2001 was $9.25.
Maximum grants to a Plan The Plan allows grants of up to 300,000 options
participant in one year and 300,000 restricted shares per participant
annually, subject to adjustment to prevent
dilution or enlargement of the rights of Plan
participants.
Plan life The Plan allows Award grants until March 12,
2008, the tenth anniversary of the Plan.
Awards transferability and Unless otherwise agreed to by the Administrator,
rights as a shareholder Awards are not transferable except by will or the
laws of descent and distribution. A holder of an
option will have no rights as a shareholder with
respect to common shares subject to his or her
option until the option is exercised.
Payment for option Participants may make payments for options
exercise price granted under the Plan in cash or, if permitted
by the Administrator, by exchanging common
shares having a fair market value equal to the
option exercise price.
Vesting upon change of All outstanding Awards will become fully
control exercisable upon a change of control of
Corporate Office Properties Trust (as defined in
the Plan) unless otherwise provided by the
Administrator.
Amendments The Board of Trustees may amend, alter, suspend,
to the Plan discontinue or terminate the Plan without
shareholder approval unless such approval is
required under Section 422 of the Internal
Revenue Code. However, the consent of an
affected participant in the Plan is required if
an amendment would materially and adversely
affect the participant's rights under an
outstanding Award.
Certain Plan benefits Because grants of Awards are to be made from
time to time by the Administrator to eligible
persons whom the Administrator determines in its
discretion should receive grants, the benefits
and amounts that may be awarded in the future to
persons eligible to participate in the Plan are
not presently determinable. Option grants to
purchase the following number of common shares
have been made under the Plan from its inception
through March 23, 2001: Clay W. Hamlin,
III--425,000; Randall M. Griffin--605,000; Roger
A. Waesche, Jr.--237,500; John H.
Gurley--110,152; Michael D. Kaiser--47,500;
Dwight S. Taylor--47,500; current executive
officers as a group--1,472,652; current
non-employee trustees as a group--85,000; and
all other employees as a group--842,848.
Restricted share grants made under the Plan from
its inception total 484,375 shares, all of which
were made to executive officers. As of March 23,
2001, the Plan had options outstanding to
purchase 2,743,476 common shares, 484,375
restricted shares outstanding and Awards
available for issuance of 45,054 shares.
11
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
The following discussion summarizes the principal federal income tax
consequences of the Plan based on the current Internal Revenue Code and its
regulations, and administrative and judicial interpretations. The summary does
not address any foreign, state or local tax consequences of participation in the
Plan.
SHARE OPTIONS. In general, the grant of an option will not be a taxable event to
the recipient and it will not result in a deduction to us. The tax consequences
associated with the exercise of an option and the subsequent disposition of
common shares acquired on the exercise of such option depend on whether the
option is an incentive stock option or a nonqualified stock option.
Upon the exercise of a nonqualified stock option, the recipient will recognize
ordinary taxable income equal to the excess of the fair market value of the
common shares received upon exercise over the exercise price. We will generally
be able to claim a deduction in an equivalent amount.
Any gain or loss upon a subsequent sale or exchange of the common shares will be
subject to capital gain or loss. The capital gain tax rate will depend on the
length of time that a recipient holds the shares and other factors.
Upon the exercise of an incentive stock option, a recipient will generally not
recognize ordinary taxable income at the time of exercise and no deduction will
be available to us, provided the recipient exercises the option as an employee
or within three months following termination of employment (longer, in the case
of termination of employment by reason of disability or death) ("Termination
Period").
If an incentive stock option granted under the Plan is exercised after the
Termination Period, the exercise will be treated for federal income tax purposes
as the exercise of a nonqualified stock option. Also, an incentive stock option
granted under the Plan will be treated as a nonqualified stock option to the
extent it (together with any other incentive stock options granted under our
plans and plans of our subsidiaries) first becomes exercisable in any calendar
year for common shares having a fair market value, determined as of the date of
grant, in excess of $100,000.
If common shares acquired upon exercise of an incentive stock option are sold or
exchanged more than one year after the date of exercise and more than two years
after the date of grant of the option, any gain or loss will be long-term
capital gain or loss. If common shares acquired upon exercise of an incentive
stock option are disposed of prior to the expiration of these one-year or
two-year holding periods (a "Disqualifying Disposition"), the recipient will
recognize ordinary income at the time of disposition, and we will generally be
able to claim a deduction, in an amount equal to the excess of the fair market
value of the common shares at the date of exercise over the exercise price. Any
additional gain will be treated as capital gain, and the rate will depend on how
long the common shares have been held. Where common shares are sold or exchanged
in a Disqualifying Disposition (other than certain related party transactions)
for an amount less than their fair market value at the date of exercise, any
ordinary income recognized in connection with the Disqualifying Disposition will
be limited to the amount of gain, if any, recognized in the sale or exchange,
and any loss will be a long-term or short-term capital loss, depending on how
long the common shares have been held.
Although the exercise of an incentive stock option as described above would not
produce ordinary taxable income to the recipient, it would result in an increase
in the recipient's alternative minimum taxable income and may result in an
alternative minimum tax liability.
12
DIVIDEND EQUIVALENT RIGHTS. With respect to dividend equivalent rights under the
Plan, generally, when a recipient receives payment with respect to the dividend
equivalent right, the amount of cash and the fair market value of any other
property received will be ordinary income to such recipient and will be allowed
as a deduction for federal income tax purposes to us.
RESTRICTED SHARES. In general, the grant of restricted shares will not be a
taxable event to a recipient and it will not result in a deduction to us, until
such shares are transferable by the recipient or no longer subject to a
substantial risk of forfeiture for federal tax purposes, whichever occurs
earlier. When the shares are either transferable or are no longer subject to a
substantial risk of forfeiture, the recipient will recognize ordinary taxable
income equal to the fair market value of the common shares (less any amounts
paid for such shares) at that time. We will generally be able to claim a
deduction in an equivalent amount. However, a recipient may elect to recognize
ordinary taxable income in the year the restricted share grant is awarded equal
to the fair market value of the common shares subject to the restricted share
grant (less any amounts paid for such shares) at that time, determined without
regard to the restrictions on transfer. In such circumstances, we will generally
be able to claim a deduction in an equivalent amount in the same year. Any gain
or loss recognized by the recipient upon the subsequent disposition of the
shares will be capital gain or loss. If, after making the election, any shares
subject to a restricted share grant are forfeited, or if the market value
declines during the restriction period, the recipient will not be entitled to
any tax deduction or tax refund.
PAYMENT OF WITHHOLDING TAXES. We may withhold, or require a recipient to remit
to us, an amount sufficient to satisfy any federal, state or local withholding
tax requirements associated with awards under the Plan.
SPECIAL RULES. Special rules may apply to a recipient who is subject to Section
16(b) of the Securities Exchange Act of 1934 as in effect from time to time
(generally Trustees, officers and 10% shareholders). Certain additional special
rules apply if the exercise price for an option is paid in shares previously
owned by the recipient rather than in cash.
LIMITATION ON DEDUCTIBILITY. Section 162(m) of the Internal Revenue Code
generally limits the deductible amount of annual compensation paid (including,
unless an exception applies, compensation otherwise deductible in connection
with options and other awards granted under the Plan) by a public company to a
"covered employee" (our chief executive officer and four other most highly
compensated executive officers) to no more than $1 million. We currently intend
to structure options and other awards granted under the Plan to comply with an
exception to nondeductibility under Section 162(m) of the Internal Revenue Code.
13Micros Systems, Inc.
9
REPORT OF THE COMPENSATION COMMITTEE
WHAT IS OUR COMPENSATION PHILOSOPHY?
Our philosophy is to provide competitive compensation levels for senior
management and to align compensation levels with the long-term interests of our
shareholders. We have designed the compensation of the senior management team to
motivate management to focus on our operating results and sustained shareholder
value by:
o Establishing a plan that attracts, retains and motivates key management
through competitive compensation within the REIT industry.industry;
o Linking a portion of senior management compensation with the returns
realized by shareholders.shareholders; and
o Building a pay-for-performance system whichthat encourages and rewards
successful initiatives within a team environment based on company, business
unit and individual objectives.
WHAT IS THE STRUCTURE OF OUR EXECUTIVE COMPENSATION?
The elements of our executive compensation program are:
o base salary,
o annual incentive awards,
o long-term incentives, and
o special awards in recognition of superior achievements.
Our compensation plan has been structured to provide incentives for senior
management performance that promote continuing improvements in our financial
results and share price over both the short and long-term.
HOW DO WE DETERMINE BASE SALARIES?
We determine base salaries by each individual's experience and comparisons to
similar base salaries in other REITs and the real estate industry. Base salaries
generally approximate the median of the salaries shown in our REIT peer group
comparison. Special factors considered in determining the compensation of our
CEO are discussed below. Changes in salaries will depend upon such factors as
individual performance, compensation levels within the industry and the economic
conditions affecting our business.
HOW DO WE DETERMINE ANNUAL INCENTIVE AWARDS?
We establish annual incentive award targets for the senior management team at
the beginning of each fiscal year. The annual incentive award, which may be a
combination of cash bonus and share option grants, is based on the individual's
success in achieving those targets.
We base the amount of the award on a combination of the following segments:
otwo criteria: COPT's overall
performance oand business unit performance, and
o individual performance.
14
The relative importance of each segmentthese
criteria is determined by the senior manager's position within our organization.
The CEO and President and COO awards are based on operating results and
shareholder return. The awards to other senior managers are based on theoperating
results and shareholder return as well as other strategic accomplishments and
performance
10
of their business units. The overall operating objectives are based on
two measurements related to our funds from operations, and adjusted funds from
operations.operations and total shareholder return. The bonus plan provides that no bonus
will be paid unless a threshold level of performance, as approved by the
Compensation Committee, is achieved. The Compensation Committee has the option
to recommend to the Board of Trustees the increase of awards to members of the
senior management team who have shown exemplary performance and far exceeded all
objectives.
HOW DO WE DETERMINE THE COMPENSATION OF OUR CHIEF EXECUTIVE OFFICER?
Mr. Hamlin served as our Chief Executive Officer during 2000.2001. The compensation
awarded to Mr. Hamlin consisted primarily of base salary and an annual incentive
award.salary. Mr. Hamlin's base
salary and annual incentive award areis significantly below comparable REIT Chief Executive Officers. Mr.
Hamlin's base salary was set at this level as a result of his substantial equity
interest in Corporate Office Properties Trust as shown in the section entitled
"Share Ownership of our Trustees, Executive Officers and 5% Beneficial Owners."
COMPENSATION COMMITTEE
Edward A. Crooke
Kenneth S. Sweet, Jr.
Thomas F. Brady
11
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of Corporate Office Properties Trust's Board of Trustees
(the "Audit Committee") is comprised of three Trustees. Each of these Trustees
meets the independence and experience requirements of the New York Stock
Exchange. The Audit Committee adopted and, in May 2000, the Board of Trustees
approved a written charter outlining the Audit Committee's practices. A copy ofThe
Committee re-affirmed the charter is attached to this proxy statement as Exhibit A.in May 2001.
Management is responsible for the Company's financial statements, financial
reporting process and internal financial controls. The independent auditors are
responsible for performing an independent audit in accordance with generally
accepted auditing standards and for issuing an opinion as to the conformity of
the Company's annual financial statements to generally accepted accounting
principles. The role of the Audit Committee is to assist the Board of Trustees
in overseeing these activities.
The Audit Committee met quarterly with the Company's accounting and financial
management team, general counsel and independent auditors. The Audit Committee
also met with the Company's accounting and financial management team and
independent auditors to review the Company's annual reporting on Form 10-K,
including the Company'sand quarterly consolidated
financial statements and quarterly
reporting on Form 10-Q prior to the Company's filing of these reportssuch financial statements
with the Securities and Exchange Commission. In addition, the independent auditors met
telephonically with the Chairman of the Audit Committee prior to the Company's
release of annual and quarterly earnings.
15
Management has represented to the Audit Committee that the Company's
consolidated financial statements for the year ended December 31, 20002001 were
prepared in accordance with generally accepted accounting principles. The Audit
Committee discussed with the independent auditors the matters required to be
discussed under Statement on Auditing Standards No. 61, which addresses
communication between audit committees and independent auditors. The Audit
Committee received from the independent auditors the written disclosures and
letter required by Independence Standards Board Standard No. 1, which addresses
independence discussions between auditors and audit committees. The Audit
Committee also held discussions with the independent auditors regarding their
independence from the Company and its management and considered whether the
independent auditor's provision of non-audit services provided to the Company
during 20002001 is compatible with maintaining the auditor's independence.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Trustees and the Board of Trustees has
approved that the Company's audited
consolidated financial statements be included in the Company's 20002001 Annual
Report to Shareholders and Annual Report on Form 10-K for the year ended
December 31, 20002001 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Kenneth D. Wethe, Chairman
Betsy Z. Cohen
Robert L. Denton
12
FEES BILLED FOR SERVICES RENDERED BY PRINCIPAL ACCOUNTANT
For the year ended December 31, 2000,2001, PricewaterhouseCoopers LLP, our
independent auditors and principal accountant, billed the approximate fees set
forth below:
Fees for audit of consolidated financial statements and reviews
of quarterly consolidated financial statements $114,600$121,805
Fees for services to provide comfort on filings associated
with Preferred Offerings 133,040
Fees for tax compliance and consulting services 51,615
Fees for other services $ 85,99051,882
16
COMMON SHARES PERFORMANCE GRAPH
The following graph and the table set forth below assumes $100 was invested on December
31, 19951996 in the common shares of the predecessor corporation to Corporate Office
Properties Trust and continued to be invested in Corporate Office Properties
Trust after its reformation as a Maryland trust in March 1998. ThisThe graph comparesand the
table compare the cumulative return (assuming reinvestment of dividends) of this
investment with a similar$100 investment at that time in the S&P 500 Index or the
Equity Index of the National Association of Real Estate Investment Trusts
("NAREIT").
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
[In the printed versiondocument there appears a graphicgraph with the following plot points
depicted]
1995 1996 1997 1998 1999 2000 ---- ---- ---- ---- ---- ----2001
------- ------- ------- ------- ------- -------
Corporate Office Properties Trust (NYSE symbol "OFC") 100.00 115.74 248.15 188.34 217.61 301.20$100.00 $205.99 $158.25 $187.06 $265.44 $342.37
S&P 500 100.00 122.96 163.99 210.86 255.20 231.96133.36 171.48 207.56 188.66 166.24
NAREIT Equity 100.00 135.27 162.67 134.20 128.00 161.75120.26 99.21 94.63 119.58 136.24
1713
SHARE OWNERSHIP OF OUR TRUSTEES,
EXECUTIVE OFFICERS AND 5% BENEFICIAL OWNERS
The following table shows certain information as of March 23, 200122, 2002 regarding the
beneficial ownership (as defined under the regulations of the Securities and
Exchange Commission) of our common shares and units in our operating partnership by each Trustee, each nominee for
election as Trustee, each executive officer, all Trustees and executive officers
as a group and each person known to us to be the beneficial owner of more than
five percent of our outstanding common shares. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and means voting or investment power with respect to securities. Each
person named in the table below has sale, voting and investment power with
respect to the securities listed opposite such person's name, except as
otherwise noted.
COMMON PREFERRED
PARTNERSHIP PARTNERSHIP PERCENT OF OPTIONS
ALL COMMON EXERCISABLE
COMMON SHARES PERCENT OF UNITS UNITS ALL COMMON
BENEFICIALLY ALL COMMONSHARES WITHIN 60 DAYS
BENEFICIALLY BENEFICIALLY SHARES ANDOF MARCH 22,
OWNED(1) SHARES(1) OWNED OWNED UNITS(2)OWNED(2) 2002
------------- ---------- ------------ ------------ -------------------------
Constellation Real Estate, Inc. and affiliates(3) . 8,876,171 43.5% -- -- 27.5%
United Properties Group, Inc.(4) ..................(3)............... 2,420,672 9.6 --
Barony Trust Limited (4)....................... 2,049,345 8.6 -- -- 1,016,662 7.5
Jay H. Shidler(5) ................................. 317,500 1.6 3,448,317 -- 11.7Shidler (5)............................. 3,770,817 14.4 22,500
Clay W. Hamlin, III(6) ............................ 666,433 3.2 3,954,710 -- 14.2III (6)........................ 4,681,010 17.3 427,500
Betsy Z. Cohen .................................... 12,000Cohen................................. 17,000 * -- -- *
Edward A. Crooke .................................. 15,000 * -- -- *
Robert L. Denton .................................. 10,000 * 434,910 -- 1.4(7)........................... 449,910 1.9 15,000
Steven D. Kesler .................................. 10,468Kesler............................... 15,468 * -- -- *15,000
Kenneth S. Sweet, Jr. ............................. 38,875Jr.......................... 43,875 * -- -- *22,500
Kenneth D. Wethe .................................. 25,310Wethe............................... 27,835 * -- -- *27,500
Randall M. Griffin ................................ 519,067 2.5 -- -- 1.6Griffin............................. 760,093 3.3 443,068
Roger A. Waesche, Jr. ............................. 156,125Jr........................... 214,125 * -- -- *105,000
John H. Gurley .................................... 42,121Gurley................................. 85,076 * -- -- *85,076
Michael D. Kaiser ................................. 78,333Kaiser.............................. 92,500 * -- -- *42,500
Dwight S. Taylor .................................. 72,683Taylor............................... 86,850 * -- -- *42,500
All Trustees and Executive Officers as a Group
(13(12 persons) .................................. 1,963,916 9.2% 7,837,937 -- 29.6%............................... 10,244,559 27.5% 1,263,144
- -------------------------------------
* Represents less than one percent.
(1) Includes the following common shares issuable under options exercisable
within 60 days of March 23, 2001: 17,500--Shidler; 360,833--Hamlin;
10,000--Cohen; 10,000--Crooke; 10,000--Denton; 10,000--Kesler;
17,500--Sweet; 25,000--Wethe; 201,667--Griffin; 70,000--Waesche;
42,121--Gurley; 28,333--Kaiser; 28,333--Taylor; and 831,288--all
Trustees and executive officers as a group.
(2) Assumes that all units of our operating partnership are exchanged for
common shares and assumes we elect to issue common shares rather than pay
cash upon exchange of partnership units. (3) Constellation Real Estate, Inc. and its affiliatesAlso assumes the conversion of
preferred shares that are located at 111
Market Place, Baltimore, Maryland 21202. In addition to theconvertible into our common shares and includes
common shares issuable under options exercisable within 60 days of March
22, 2002.
(2) Common shares issuable upon the conversion of units in our operating
partnership and the table, Constellation also owns one Series A convertible preferred
share which is convertible into two common shares.
(4)exercise of stock options exercisable currently or
within 60 days of March 22, 2002 are deemed outstanding and to be
beneficially owned by the person holding such units or options for purposes
of computing such person's percentage ownership, but are not deemed
outstanding for the purpose of computing the percentage ownership of any
other person.
(3) United Properties Group, Inc. is located at 305 West Grand Street, Suite
100, Montvale, New Jersey 07645. United Properties Group, Inc.'s common
shares beneficially owned include preferred units in our operating
partnership that are convertible into 2,420,672 common units in our
operating partnership.
(4) Barony Trust Limited is located at 7 Athol Street, Douglas, Isle of Mann,
British Isles IM 1 1LD. Barony Trust Limited's common shares beneficially
owned include preferred shares that are convertible into 1,196,800 common
shares.
(5) Jay Shidler's address is 810 Richards Street, Suite 1000, Honolulu, Hawaii
96813. Mr. Shidler's common shares beneficially owned include 3,448,317
common units in our operating partnership exchangeable for common shares.
(6) Clay Hamlin's address is 401 City Avenue, Suite 615, Bala Cynwyd,
Pennsylvania 19004. 18Mr. Hamlin's common shares beneficially owned include
3,947,910 common units in our operating partnership exchangeable for common
shares.
(7) Robert Denton's common shares beneficially owned include 434,910 common
units in our operating partnership exchangeable for common shares.
14
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the Securities and Exchange Commission require that we disclose
late filings of initial reports of share ownership (andand reports of changes in
share ownership)ownership by our Trustees, officers and greater than 10% shareholders. Our
Trustees, officers and greater than 10% shareholders are required by those rules
to furnish us with copies of the reports of share ownership (and changes in
share ownership) they file with the Securities and Exchange Commission. Based
solely on our review of the copies of such reports received by us and other
information provided by this person, we believe that during the year ended
December 31, 2000, all filings applicable to2001, our Trustees, officers and greater than 10% shareholders
were filed all required reports on a timely basis.
SUMMARY COMPENSATION TABLE
The table below provides information about the annual compensation of our Chief
Executive Officer and our other four most highly compensated executive officers
who were executive officers as of December 31, 2000.during 2001.
LONG TERM COMPENSATION
--------------------------
ANNUAL COMPENSATION($) COMPENSATION AWARDS
----------------------------------------- ------------------------------------------------------------ --------------------------
RESTRICTED
SHARE SECURITIES OTHER
OTHER ANNUAL AWARDS SHAREUNDERLYING COMPENSATION
NAME AND POSITION YEAR SALARY(1) BONUS(1) COMPENSATION(2)SALARY BONUS (1) COMPENSATION (2) ($)(3) OPTIONS(4)OPTIONS (4) ($)(5)
- ----------------- ---- --------- -------- --------------- ----------- ---------- -----------------------------------------------------------------------------------------------------------------------------------
Clay W. Hamlin, III 2001 $100,000 $ -- $ 13,108 -- -- $ 6,373
Chief Executive Officer 2000 103,462 -- $ 25,64328,776 -- 225,000 12,014
Chief Executive Officer7,643
1999 90,000 -- 6,765-- -- 200,000 1,216
1998 88,503 38,500 571 -- -- --6,765
- -----------------------------------------------------------------------------------------------------------------------
Randall M. Griffin 2001 366,353 240,000 182,399 -- 50,000 10,142
President and Chief 2000 350,190 131,438 106,412103,653 97,565 105,000 14,960
President and Chief9,291
Operating Officer 1999 311,585 170,000 16,7957,962 2,212,500 300,000 11,828
Operating Officer 1998 62,308 38,500 3,000 -- 200,000 2,05912,838
- -----------------------------------------------------------------------------------------------------------------------
Roger A. Waesche, Jr. 2000 186,547 58,203 33,3672001 218,462 160,781 48,021 233,450 -- 155,000 7,6287,363
Senior Vice President and 2000 186,547 58,203 27,914 -- 155,000 5,452
Chief Financial 1999 170,993 80,000 20,51313,257 576,172 -- 6,851
Chief Financial7,256
Officer
1998 40,385 15,000 2,019 -- 82,500 2,154- -----------------------------------------------------------------------------------------------------------------------
Michael D. Kaiser 2000 141,235 19,550 45,8152001 147,677 55,200 29,823 -- 20,000 8,428-- 5,017
President of Corporate 2000 141,235 44,550 16,897 -- 20,000 3,919
Realty 1999 134,774 37,000 8,1805,762 368,750 -- 7,823
Realty2,418
Management, LLC
1998 30,462 26,400 445 -- 27,500 1,998- -----------------------------------------------------------------------------------------------------------------------
Dwight S. Taylor 2001 174,240 63,338 27,948 -- 75,000 5,250
President of Corporate 2000 156,923 40,994 23,20517,003 -- 20,000 1,825
President of Corporate6,202
Development 1999 139,820 50,000 13,2429,000 322,656 -- 1,760
Development4,242
Services, LLC
1998 29,344 6,500 1,642 -- 27,500 443- -----------------------------------------------------------------------------------------------------------------------
- -------------------------
(1) Messrs. Griffin, Waesche, Kaiser and Taylor became officers of Corporate
Office Properties Trust on September 28, 1998. Cash bonuses paid for 2001 and 2000 were reduced by the amount of dividends
paid on unvested restricted Common
Shares. The reduction of cash bonuses in 2000 was a one time event and is
not anticipated to be ongoing. Dividends paid on unvestedcertain common shares for
2000 were as follows: Mr. Griffin: $231,563; Mr. Waesche: $57,891; Mr.
Kaiser: $37,050; and Mr. Taylor: $32,419. These dividend payments are not
included in the amounts reported in the above table.subject to forfeiture restrictions.
(2) Includes auto allowances, Company matching of officers' 401(k)
contributions, income tax payments associated with the vestinglapsing of restrictedforfeiture
restrictions on common share grants as follows: Mr. Griffin: $173,584 in
2001 and cash$93,164 in 2000; Mr. Waesche: $43,396 in 2001, $23,290 in 2000 and
$9,002 in 1999; Mr. Kaiser: $27,773 in 2001, $14,906 in 2000 and $5,762 in
1999; and Mr. Taylor: $24,304 in 2001, $13,043 in 2000 and $5,040 in 1999.
Also includes taxable auto allowances and personal financial and tax
preparation fees paid in lieuby the Company on behalf of receiving share option
grants.the officers.
(3) Represents the value of grants of restrictedcommon shares that were made under our
1998 Long Term Incentive Plan based on the closing market price of our
common shares on the date of grant. These sharesThe 2000 and 1999 share grants are
subject to forfeiture restrictions that lapse annually through 2004 uponas the Company's attainment ofemployee
remains employed by us and the Company attains defined earnings or
shareholder return growth targets. These shares may not be sold, transferred or encumbered whileThe lapsing of the forfeiture
restrictions areon the 2000 and 1999 share grants as a percentage of the
number of shares granted follows: for Mr. Griffin-15% in place.2000, 15% in 2001,
15% in 2002, 25% in 2003 and 30% in 2004; for Mr. Waesche, Mr. Kaiser and
Mr. Taylor-5% in 1999, 10% in 2000,
15
15% in 2001, 15% in 2002, 25% in 2003 and 30% in 2004. The 2001 share
grants lapse annually in 25% increments through 2005 as the employee
remains employed by us. Holders of these shares have the right to vote and
receive dividends on the shares. As of December 31, 2000,2001, the total
holdings of common shares granted and the market value
19
of such holdings
(based on the closing price per common share as reported on the New York
Stock Exchange of $9.9375)$11.87) were as follows: Mr. Griffin: 312,500 shares
($3,105,469)3,709,375); Mr. Waesche: 78,125101,125 shares ($776,367)1,200,354); Mr. Kaiser: 50,000
shares ($496,875)593,500); and Mr. Taylor: 43,750 shares ($434,766)519,313).
Restricted shares vesting totaled 15,625(4) Share options are reported based on the calendar year the grants of such
options took place, although certain option grants occurring in 2000 and 8,593 in 1999.
(4) Does not reflect options granted during 2001 that werea reporting
year are attributable to 2000. A summary of these options by the named officers follows: Mr. Hamlin:
193,500 options; Mr. Griffin: 50,000 options; and Mr. Taylor: 75,000
options. Mr. Kaiser was paid $25,000 in cash for 2000 in lieu of receiving
25,000 share options; this payment is included in other annual compensation
for 2000.prior reporting year.
(5) Includes medical expenses, health insurance, life insurance and personal
financial and tax preparation fees paid by the Company on behalfmatching of the
officers.officers' 401(k) contributions.
EMPLOYMENT AGREEMENTS
We have an employment agreement with Clay W. Hamlin, III for a basic term of
July 1, 1999currently in effect
through December 31, 20002002 with continuous and self-renewing one-year terms
unless terminated by either party on one day's prior notice. Under the
agreement, Mr. Hamlin's current base salary is $100,000 per year and he receives
additional allowances for an automobile, personal financial planning and income
tax preparation totaling $20,500$22,900 per year. His incentive compensation is set by
the Board of Trustees upon the Compensation Committee's recommendation. The
Compensation Committee may take action in future years to increase his base
salary. The employment agreement provides for certainthe following severance paymentspackage in
the event of his disability or termination by us without cause or by Mr. Hamlin based upon
constructive termination: (1) payment equal to his base annual salary multiplied
by two; (2) payment equal to the average of his two most recent annual incentive
awards multiplied by two; and (3) perquisites and benefits for 12 to 24 months
following termination. The agreement also provides for certain payments to be madethe following in the
event of a change of control of Corporate Office Properties Trust.Trust: (1) payment
equal to his base annual salary multiplied by three; (2) payment equal to the
average of his three most recent annual incentive awards multiplied by three;
(3) perquisites and benefits for 12 to 24 months following termination; and (4)
reimbursement for any parachute excise taxes. He is required to devote his full
business time to our affairs and is prohibited from competing directly or
indirectly with us during the term of the agreement and for a period thereafter.
We have an employment agreement with Randall M. Griffin for a five-year basic
term commencing July 1, 1999 with a continuous and self-renewing three-year term
after the third year of the basic term without further action unless terminated
by either party on one day's prior notice. Under the agreement, Mr. Griffin's
current base salary is $350,000$385,200 per year and he receives additional allowances
for an automobile, personal financial planning and income tax preparation
totaling $16,000 per year. His incentive compensation is set by the Board of
Trustees upon the Compensation Committee's recommendation. The Compensation
Committee may take action in future years to increase his base salary. The
employment agreement provides for certainthe following severance paymentspackage in the event
of his disability
or termination by us without cause or by Mr. Griffin based upon constructive
termination: (1) payment equal to his base annual salary multiplied by three;
(2) payment equal to the average of his three most recent annual incentive
awards multiplied by three; (3) perquisites and benefits for 12 to 24 months
following termination; and (4) full vesting of previously unvested share options
and restricted shares with the right to exercise options as far as 18 months
following termination. The agreement also provides for certain payments to be madethe following in the
event of a change of control of Corporate Office Properties Trust.Trust: (1) payment
equal to his base annual salary multiplied by the greater of the number of years
remaining in his contract or three years; (2) payment equal to the average of
his three most recent annual incentive awards multiplied by the greater of the
number of years remaining in his contract or three years; (3) perquisites and
benefits for 12 to 24 months following termination; (4) reimbursement for any
parachute excise taxes; and (5) full vesting
16
of previously unvested share options and restricted shares with the right to
exercise options as far as 18 months following termination. He is required to
devote his full business time to our affairs and is prohibited from competing
directly or indirectly with us during the term of the agreement and for a period
thereafter.
We have an employment agreement with Roger A. Waesche, Jr. for a three-year term
commencing July 1, 1999 with continuous and self-renewing three-year terms
unless terminated by either party on one day's prior notice. Under the
agreement, Mr. Waesche's current base salary is $200,000$240,000 per year and he
receives additional allowances for an additional automobile, allowancepersonal financial planning
and income tax preparation totaling $7,500$13,000 per year. His incentive compensation
is set by the Board of Trustees upon the Compensation Committee's
recommendation. The Compensation Committee may take action in future years to
increase his base salary. The employment agreement provides for certainthe following
severance paymentspackage in the event of his disability or termination by us without cause or by Mr.
Waesche based upon constructive termination: (1) payment equal to his base
annual salary multiplied by three; (2) payment equal to the average of his three
most recent annual incentive awards multiplied by three; (3) perquisites and
benefits for 12 to 24 months following termination; and (4) full vesting of
previously unvested share options and restricted shares with the right to
exercise options as far as 18 months following termination. The agreement also
provides for certain payments to be madethe following in the event of a change of control of Corporate
Office Properties Trust.Trust: (1) payment equal to his base annual salary multiplied
by three; (2) payment equal to the average of his three most recent annual
incentive awards multiplied by three; (3) perquisites and benefits for 12 to 24
months following termination; (4) reimbursement for any parachute excise taxes;
and (5) full vesting of previously unvested share options and restricted shares
with the right to exercise options as far as 18 months following termination. He
is required to devote his full business time to our affairs and
20
is prohibited
from competing directly or indirectly with us during the term of the agreement
and for a period thereafter.
We have an employment agreement with Dwight S. Taylor for a three-year term
commencing September 15, 1999 with continuous and self-renewing three-year terms
unless terminated by either party on one day's prior notice. Under the
agreement, Mr. Taylor's current base salary is $165,000$185,000 per year and he receives
additional allowances for an additional automobile, allowancepersonal financial planning and income
tax preparation totaling $9,000$14,200 per year. His incentive compensation is set by
the Board of Trustees upon the Compensation Committee's recommendation. The
Compensation Committee may take action in future years to increase his base
salary. The employment agreement provides for certainthe following severance paymentspackage in
the event of his disability or termination by us without cause or by Mr. Taylor based upon
constructive termination: (1) payment equal to his base annual salary multiplied
by three; (2) payment equal to the average of his three most recent annual
incentive awards multiplied by three; (3) perquisites and benefits for 12 to 24
months following termination; and (4) full vesting of previously unvested share
options and restricted shares with the right to exercise options as far as 18
months following termination. The agreement also provides for certain payments to be madethe following in
the event of a change of control of Corporate Office Properties Trust.Trust: (1)
payment equal to his base annual salary multiplied by three; (2) payment equal
to the average of his three most recent annual incentive awards multiplied by
three; (3) perquisites and benefits for 12 to 24 months following termination;
(4) reimbursement for any parachute excise taxes; and (5) full vesting of
previously unvested share options and restricted shares with the right to
exercise options as far as 18 months following termination. He is required to
devote his full business time to our affairs and is prohibited from competing
directly or indirectly with us during the term of the agreement and for a period
thereafter.
We have an employment agreement with Michael D. Kaiser for a three-year term
commencing September 15, 1999 with continuous and self-renewing three-year terms
unless terminated by either party on one day's prior notice. Under the
agreement, Mr. Kaiser's current base salary is $145,000$150,800
17
per year and he receives additional allowances for an additional automobile, allowancepersonal
financial planning and income tax preparation totaling $9,000$13,000 per year. His
incentive compensation is set by the Board of Trustees upon the Compensation
Committee's recommendation. The Compensation Committee may take action in future
years to increase his base salary. The employment agreement provides for certainthe
following severance paymentspackage in the event of his disability or termination by us
without cause or by Mr. Kaiser based upon constructive termination: (1) payment
equal to his base annual salary multiplied by three; (2) payment equal to the
average of his three most recent annual incentive awards multiplied by three;
(3) perquisites and benefits for 12 to 24 months; and (4) full vesting of
previously unvested share options and restricted shares with the right to
exercise options as far as 18 months following termination. The agreement also
provides for certain payments to be madethe following in the event of a change of control of Corporate
Office Properties Trust.Trust: (1) payment equal to his base annual salary multiplied
by three; (2) payment equal to the average of his three most recent annual
incentive awards multiplied by three; (3) perquisites and benefits for 12 to 24
months; (4) reimbursement for any parachute excise taxes; and (5) full vesting
of previously unvested share options and restricted shares with the right to
exercise options as far as 18 months following termination. He is required to
devote his full business time to our affairs and is prohibited from competing
directly or indirectly with us during the term of the agreement and for a period
thereafter.
OPTION GRANT TABLE
The table below provides information about grants of share options made during
2000 to the executive officers shown in our Summary Compensation Table.
21
GRANTS IN LAST FISCAL YEAR
Number of Percent of Weighted
Common Shares Total Average
Underlying Options Exercise
Options Granted Granted to Price per Grant Date
Name (1) Employees Common Share Expiration Date Present Value(2)Value (2)
- ---- --------------- ----------- ------------ --------------- ---------------------------------
Clay W. Hamlin, III 225,000 23.9 $7.63 1/1/10 $218,250-- -- -- -- --
Randall M. Griffin 105,000 11.1 $8.13 1/1/10-9/12/10 $104,90050,000 6.5 $9.90 3/8/11 $50,500
Roger A. Waesche, Jr 155,000 16.4 $9.34 1/3/10-9/12/10 $168,500
MichaelJr. -- -- -- -- --
Mike D. Kaiser 20,000 2.1 $7.63 1/3/10 $ 19,000-- -- -- -- --
Dwight S. Taylor 20,000 2.1 $7.63 1/75,000 9.8 $9.90 3/10 $ 19,0008/11 $75,750
- ------------------------------------------
(1) AllThe options granted to Mr. Griffin and Mr. Taylor in 2001 are granted at the fair market value of the common shares at
the date of grant. Options granted are for a term of ten years from the
date of grant and generally vest over a 3 to 5 year period after the grant
date, although all of Mr. Hamlin's 2000 option grants and 25,000 of Mr.
Griffin's 2000 option grants were fully vestedexercisable
beginning on the date of grant.March 8, 2005.
(2) We chose to use the Black-Scholes option pricingoption-pricing model to estimate the
grant date present value of the options set forth in this table. Our use of
this model should not be construed as an endorsement of its accuracy at
valuing options. All share option valuation models, including the
Black-Scholes model, require a prediction about the future movement of the
share price. The following assumptions were made for purposes of
calculating the grant date present value: an expected life range of 3.5 to
5.04.0 years,
volatility of 26%25.85%, a dividend yield of 8.2%8.06% and a risk-free interest
rate range of 5.99% to 6.74%4.71%. The real value of the options in this table depends upon the
actual performance of our common shares during the applicable period.
18
YEAR END OPTION EXERCISE TABLEVALUE
The table below provides information about the exercise of share options during
2000 and the value of share options
unexercised at the end of 20002001 for executive officers.officers listed in the Summary
Compensation Table previously set forth. Value is calculated using the
difference between the option exercise price and the year-end common share price
multiplied by the number of common shares underlying the options. None of the
executive officers on the table below exercised share options during 2001.
No. of Shares Underlying Value of Unexercised
No. of Unexercised Options at in-the-money Options at
Shares December 31, 20002001 December 31, 2000
Acquired on Value ---------------------------- ----------------------------2001
--------------------------- -----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
Clay W. Hamlin, III 427,500 -- $1,489,825 $ -- 360,833 66,667 $617,848 $ 45,833
Randall M. Griffin -- -- 201,667 403,333 174,896 883,542275,000 380,000 756,750 1,569,350
Roger A. Waesche, Jr -- -- 70,000 167,500 72,500 77,031Jr. 105,000 237,500 311,663 296,838
Michael D. Kaiser -- -- 28,333 19,167 35,729 29,42742,500 5,000 135,725 21,225
Dwight S. Taylor -- -- 28,333 19,167 35,729 29,42742,500 80,000 135,725 21,225
22
CERTAIN TRANSACTIONS
During 2000,2001, we acquired threetwo parcels of land for $469,000 from Constellation
Real Estate, Inc. ("Constellation"), which at the time was our largest
shareholder for $6,441,000.and designated two of the eight members on our Board of Trustees.
Constellation sold its security holdings in Corporate Office Properties Trust on
March 5, 2002.
We recognized revenue of $712,000$103,000 in 20002001 on office space leased to
Constellation Real Estate, Inc.
During 2000, Corporate Office Management, Inc.
earned fees from a project consulting and management agreement with
Constellation Real Estate, Inc. of $150,000. During 2000, Corporate Realty
Management, LLC earned fees and expense reimbursements of $101,000 under a
property management agreement with Baltimore Gas and Electric Company, an
affiliate of Constellation Real Estate, Inc.
REQUIREMENTS FOR ADVANCE NOTIFICATION OF NOMINATIONS
Article II, Section 13 of our Bylaws provides that a shareholder may not
nominate a person for election as a Trustee or propose business to be considered
by the shareholders at an annual meeting unless (i) the shareholder is a holder
of record both at the time of giving the notice described in (iii) below and at
the time of the annual meeting, (ii) the shareholder is entitled to vote at the
annual meeting and (iii) the shareholder delivers written notice of such
shareholder's intent to make such nomination or proposal (containing the
relevant information described below) to our Secretary at our principal
executive offices not later than the close of business on the 60th day and not
earlier than the close of business on the 90th day prior to the first
anniversary of the preceding year's annual meeting. However, if the date of the
annual meeting is advanced by more than 30 days or delayed by more than 60 days
from such anniversary date, the shareholder must deliver such written notice not
earlier than the close of business on the 90th day prior to the annual meeting
and not later than the close of business on the later of the 60th day prior to
the annual meeting or the 10th day following the day on which we first make a
public announcement of the date of the meeting. The public announcement of a
postponement or adjournment of an annual meeting to a later date or time will
not commence a new time period for the giving of a shareholder's notice as
described above. If the number of Trustees to be elected to the Board of
Trustees is increased and we do not make a public announcement naming all of the
nominees for Trustee or specifying the size of the increased Board of Trustees
at least 70 days prior to the first anniversary of the preceding year's annual
meeting, a shareholder's written notice will also be considered timely, but only
with respect to nominees for any new positions created by such increase, if
delivered to our Secretary at our principal executive offices not later than the
close of business on the 10th day following the day on which we first make such
public announcement.
Article II, Section 13 of our Bylaws also provides that a shareholder may not
nominate a person for election as a Trustee at a special meeting of shareholders
at which Trustees are to be elected unless (i) the Board of Trustees has
determined that Trustees shall be elected at the special meeting, (ii) the
shareholder is a holder of record both at the time of giving the notice
described in (iv) below and at the time of the special meeting, (iii) the
shareholder is entitled to vote at the special meeting and (iv) the shareholder
delivers written notice of such shareholder's intent to make such nomination
(containing the relevant information described below) to our Secretary at our
principal executive offices not earlier than the close of business on the 90th
day prior to the special meeting and not later than the close of business on the
later of the 60th day prior to the special meeting or the 10th day following the
day on which we first make a public announcement of the date of the special
meeting and of the nominees proposed by the Board of Trustees to be elected at
the special meeting. The
23
public announcement of a postponement or adjournment of a special meeting to a
later date or time will not commence a new time period for the giving of a
shareholder's notice as described above.
The shareholder's notice must set forth, as relevant, (i) as to each person whom
the shareholder proposes to nominate for election or reelection as a Trustee all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of Trustees in an election contest or is
otherwise required pursuant to Regulation 14A under the Securities Exchange Act
of 1934 (including such person's written consent to being named in the proxy
statement as a nominee and to serving as a Trustee if elected); (ii) as to any
other business that the shareholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such shareholder and of the beneficial owner, if any, on whose
behalf the proposal is made; and (iii) as to the shareholder giving the notice
and the beneficial owner, if any, on whose behalf the nomination or proposal is
made, the name and address of such shareholder, as they appear on our books, and
of the beneficial owner, and the number of each class of our shares which are
owned beneficially and of record by the shareholder and beneficial owner.
For purposes of the procedures described above, our Bylaws define a "public
announcement" as disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable news service or in a document publicly
filed by us with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
A shareholder also must comply with all applicable requirements of state law and
of the Exchange Act and its rules and regulations with respect to nominations of
Trustees and proposals of business to be conducted at our shareholder meetings.
The chairman of a meeting may refuse to acknowledge the nomination of any person
by a shareholder or any shareholder proposal not made in compliance with the
procedures described above. Such procedures will not be deemed to affect any
rights of shareholders to request inclusion of proposals in our proxy statements
pursuant to Rule 14a-8 under the Exchange Act.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP performed customary auditing services for usaudited our financial statement for the year ended
December 31, 2000.2001. We have selected PricewaterhouseCoopers LLP as our auditors
for the next year.2002. We expect one of its representatives to be present at the Annual
Meeting whoMeeting. The representative will have an opportunity to make a statement, if
they desire to do so, and to answer questions.
ANNUAL REPORT ON FORM 10-K
We will provide without charge to each person solicited by this proxy statement
a copy of our Annual Report on Form 10-K for the year ended December 31, 20002001 as
filed with the Securities and Exchange Commission that includes all financial
statements and schedules. You must make this request in writing to the Vice
President-Investor Relations, at IR@COPT.COM or 8815 Centre Park Drive, Suite
400, Columbia, MD 21045.
24
EXHIBIT A
CORPORATE OFFICE PROPERTIES TRUST
CHARTER OF THE AUDIT COMMITTEE
SEPTEMBER 13, 1999
MISSION STATEMENT
To oversee the financial reporting process, the system of internal controls and
the audit process by external auditors.
To report and make recommendations to the Board of Directors.
SCOPE OF ACTIVITIES
o To recommend engagement or discharge of external auditors.
o To review external auditors' proposed audit scope and approach.
o To review the performance and fee arrangements of external auditors.
o To review the adequacy of the Company's internal control structure.
o To conduct a review of the financial statements, including
Management's Discussion and Analysis and audit findings. Suggest
improvements to management.
o To review interim unaudited financial reports.
o To review the policies and procedures in effect for the review of
officers' expenses and perquisites.
o To review significant accounting and reporting issues, including
recent professional and regulatory pronouncements, and understand
their impact on the financial statements.
o To review, with Company's counsel, any legal matters that could have a
significant impact on the Company's financial statements.
o To review the findings of any examination by regulatory agencies such
as the Securities and Exchange Commission.
o To review and confirm the independence of the external auditors by
reviewing nonaudit services provided and the auditors' assertion of
their independence in accordance with professional standards.
25
o To meet with external auditors on a quarterly basis, or as needed, to
review audit committee issues as determined by the Chairperson in
collaboration with other members of the Audit Committee or management.
COMMITTEE ORGANIZATION
Membership: The Audit Committee will consist of three independent
directors selected by the Board of Directors.
Current members include Betsy Cohen, Rob Denton and Ken
Wethe. Steve Kesler serves as a technical advisor to the
Audit Committee. The current Chairperson of the Audit
Committee is Kenneth D. Wethe.
Meetings: Meetings shall be held quarterly prior to the general Board
of Directors' Meeting and periodically as needed. Meetings
of the Audit Committee shall be called by the Chairperson in
collaboration with Management or the other members of the
Audit Committee. Meetings are open to all Board Members.
REPORTING RESPONSIBILITIES
Regularly update the Board of Directors about Audit Committee activities and
make appropriate recommendations.
2619
CORPORATE OFFICE PROPERTIES TRUST
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, MAY 17, 200116, 2002
10:00 A.M.
THE WORLD TRADE CENTER BALTIMORE
401 EAST PRATT STREET
BALTIMORE, MARYLAND
- ------------------------------------------------------------------------------
[LOGO]----------------------------------------------------------------------------
[LETTERHEAD] PROXY
- --------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES FOR USE AT THE ANNUAL MEETING
ON MAY 17, 2001.16, 2002.
The common shares you hold in your account or in a dividend reinvestment
account will be voted as you specify below.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2.ITEM 1.
By signing the proxy, you revoke all prior proxies and appoint Clay W. Hamlin,
III and Randall M. Griffin, and each of them, with full power of substitution,
to vote your shares on the matters shown on the reverse side and any other
matters which may come before the Annual Meeting and all adjournments.
SEE REVERSE FOR VOTING INSTRUCTIONS.
TO VOTE YOUR PROXY BY MAIL
Mark, sign and date your proxy card and return it in the enclosed postage-paid
envelope
we've provided or return it to Corporate Office Properties Trust, c/o Shareowner
Services(SM)Services(TM), P.O. Box 64873, St. Paul, MN 55164-0873.
PLEASE DETACH HERE
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR ITEMS 1 AND 2.ITEM 1.
1. Election of Trustees: 01 Jay H. Shidler / /Betsy Z. Cohen | | Vote FOR / /| | Vote WITHHELD
02 Clay W. Hamlin, III allRobert L. Denton both nominees from allboth nominees
03 Edward A. Crooke
(except as marked)
04 Kenneth S. Sweet, Jr.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
/___________________________________/
2. To amend the 1998 Long Term Incentive Plan. / / For / / Against / / Abstain_______________________________
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) _______________________________
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACHTHE PROPOSAL.
Address Change? Mark Box / /
Indicate changes below:
- -------------------------------------------------
Date _______________
- -------------------------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appear
Address Change? Mark Box | |
indicate changes below: Date: __________________
_______________________________
_______________________________
Signature(s) in Box
Please sign exactly as your name(s) appears on Proxy. If held
in joint tenancy, all persons must sign. Trustees,
administrators, etc., should include title and authority.
Corporations should provide full name of corporation and title
of authorized officer signing the proxy.