UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES ACT OF 1934
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[ ] Preliminary Proxy Statement
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[ ] Soliciting Material Under Rule 14a-12
W. P. CAREY & CO. LLC
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(Name of Registrant as Specified In Its Charter)
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(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11: (Set forth the amount on which the
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[WPCAREY LOGO]
April 30, 2003
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, JUNE 10, 2003
Dear W. P. Carey & Co. LLC Shareholder:
The 2003 Annual Meeting of Shareholders of W. P. Carey & Co. LLC will be
held at The Waldorf-Astoria Hotel, 301 Park Avenue, New York, New York on
Tuesday, June 10, 2003 at 10:30 a.m. for the following purposes:
- To elect four Class III directors, each to hold office for a three-year
term and until their respective successors are elected and qualified.
- To transact such other business as may properly come before the meeting.
Only shareholders who owned stock at the close of business on April 10,
2003 are entitled to vote at the meeting. W. P. Carey & Co. LLC mailed this
Proxy Statement, proxy and its Annual Report to shareholders on or about April
30, 2003.
By Order of the Board of Directors
/s/ Susan C. Hyde
SUSAN C. HYDE
Executive Director and Secretary
WHETHER OR NOT YOU ATTEND THE ANNUAL MEETING, IT IS IMPORTANT THAT YOUR SHARES
BE REPRESENTED AND VOTED AT THE MEETING. YOU CAN VOTE YOUR SHARES BY USING THE
TELEPHONE OR THROUGH THE INTERNET. INSTRUCTIONS FOR USING THESE SERVICES ARE SET
FORTH ON THE ENCLOSED PROXY. YOU MAY ALSO VOTE YOUR SHARES BY MARKING YOUR VOTES
ON THE ENCLOSED PROXY, SIGNING AND DATING IT AND MAILING IT IN THE BUSINESS
REPLY ENVELOPE PROVIDED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY WITHDRAW YOUR
PROXY AND VOTE IN PERSON.
W. P. CAREY & CO. LLC
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PROXY STATEMENT
APRIL 30, 2003
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QUESTIONS & ANSWERS
WHO IS SOLICITING MY PROXY?
We, the directors of W. P. Carey & Co. LLC, are sending you this Proxy Statement
and enclosed proxy.
WHO IS ENTITLED TO VOTE?
W. P. Carey & Co. LLC's shareholders as of the close of business April 10, 2003
(the "Record Date") are entitled to vote at the Annual Meeting.
HOW DO I VOTE?
You may vote your shares either by attending the Annual Meeting, by telephone,
through the Internet, or by completing the enclosed proxy card. To vote by
telephone, call the specially designated telephone number set forth on the
enclosed proxy card. To vote through the Internet, use the Internet voting site
listed on the enclosed proxy card. To vote by proxy, sign and date the enclosed
proxy card and return it in the enclosed envelope. If you return your proxy but
fail to mark your voting preference, your shares will be voted FOR each of the
nominees. We suggest that you return a proxy even if you plan to attend the
meeting.
MAY I REVOKE MY PROXY?
Yes, you may revoke your proxy at any time before the meeting by voting in
person, notifying W. P. Carey & Co. LLC's Secretary, or submitting a new proxy.
The mailing address is 50 Rockefeller Plaza, New York, New York 10020. You
should mail your notice of revocation of proxy to that address.
HOW MANY SHARES MAY VOTE?
At the close of business on the Record Date, April 10, 2003, W. P. Carey & Co.
LLC had 36,432,017 listed shares outstanding and entitled to vote. Every
shareholder is entitled one vote for each share held.
WHAT IS A "QUORUM?"
A "quorum" is the presence, either in person or represented by proxy, of a
majority of the shares entitled to vote at the meeting. There must be a quorum
for the meeting to be held. A nominee must receive the affirmative vote of a
majority of the votes cast at the meeting to be elected to the Board.
HOW WILL VOTING ON SHAREHOLDER PROPOSALS BE CONDUCTED?
We do not know of other matters that are likely to be brought before the
meeting. However, in the event that any other matters properly come before the
Annual Meeting, your signed proxy gives authority to the persons named in the
enclosed proxy to vote your shares on such matters in accordance with their best
judgment.
WHO WILL PAY THE COST FOR THIS PROXY SOLICITATION AND HOW MUCH WILL IT COST?
W. P. Carey & Co. LLC will pay the cost of preparing, assembling and mailing
this Proxy Statement, the Notice of Meeting and the enclosed proxy. In addition
to the solicitation of proxies by mail, we may utilize some of the officers and
employees of our wholly-owned subsidiary, Carey Asset Management Corp. (who will
receive no compensation in addition to their regular salaries) to solicit
proxies personally and by telephone. Currently, we do not intend to retain a
solicitation firm to assist in the solicitation of proxies, but if sufficient
proxies are not returned to us, we may retain an outside firm to assist in proxy
solicitation for a fee estimated
not to exceed $7,500, plus out-of-pocket expenses. We may request banks, brokers
and other custodians, nominees and fiduciaries to forward copies of the proxy
statement to their principals and to request authority for the execution of
proxies, and will reimburse such persons for their expenses in so doing.
WHEN ARE SHAREHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING DUE?
We must receive any proposal that a shareholder intends to present at W. P.
Carey & Co. LLC's 2004 Annual Meeting of Shareholders no later than December 15,
2003 in order to be included in the Proxy Statement and form of proxy relating
to that meeting.
References in this Proxy Statement to W. P. Carey & Co. LLC refer to W. P. Carey
& Co. LLC and its subsidiaries.
W. P. CAREY & CO. LLC WILL PROVIDE SHAREHOLDERS, WITHOUT CHARGE, A COPY OF
W. P. CAREY & CO. LLC'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 2002, INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES ATTACHED THERETO, UPON WRITTEN REQUEST TO MS.
SUSAN C. HYDE, DIRECTOR OF INVESTOR RELATIONS, AT W. P. CAREY & CO. LLC, 50
ROCKEFELLER PLAZA, NEW YORK, NEW YORK 10020.
ELECTION OF DIRECTORS
W. P. Carey & Co. LLC has a classified Board of Directors currently
consisting of two Class I directors, three Class II directors and four Class III
directors, who will serve until the Annual Meetings of Shareholders to be held
in 2004, 2005 and 2003, respectively, and until their respective successors are
duly elected and qualified. Directors in a class are elected for a term of three
years to succeed the directors in such class whose terms expire at such Annual
Meeting.
Nominees for election as Class III directors are Wm. Polk Carey, Dr.
Lawrence R. Klein, Nathaniel S. Coolidge and Charles C. Townsend, Jr. If
elected, the nominees will serve as directors until the Annual Meeting of W. P.
Carey & Co. LLC in 2006, and until their successors are elected and qualified.
Unless otherwise specified, proxies will be voted for the election of the named
nominees. If a nominee is unavailable for election, the Board may reduce its
size or designate a substitute. If a substitute is designated, proxies voting on
the original nominee will be cast for the substituted nominee. No circumstances
are presently known that would render the nominees unavailable. Each of the
nominees are now members of the Board of Directors.
Detailed information on each member of the Board of Directors, including
each Class III nominee to be elected at the meeting, is provided below.
CLASS III DIRECTOR NOMINEES TO SERVE UNTIL THE YEAR 2006
WM. POLK CAREY
AGE: 72
Mr. Carey, Chairman of the Board of Directors and Co-Chief Executive
Officer of W. P. Carey & Co. LLC, has been active in lease financing since 1959
and a specialist in net leasing of corporate real estate property since 1964.
Before founding W. P. Carey & Co., Inc. in 1973, he served as Chairman of the
Executive Committee of Hubbard, Westervelt & Mottelay (now Merrill Lynch
Hubbard), head of Real Estate and Equipment Financing at Loeb Rhoades & Co. (now
Lehman Brothers), head of Real Estate and Private Placements, director of
Corporate Finance and Vice Chairman of the Investment Banking Board of duPont
Glore Forgan Inc. A graduate of the University of Pennsylvania's Wharton School,
Mr. Carey also received his Sc.D. honoris causa from Arizona State University
and is a Trustee of The John Hopkins University and of other educational and
philanthropic institutions. He serves as Chairman of the Penn Institute for
Economic Research (PIER). Mr. Carey also serves as Chairman of the Board and
Chief Executive Officer of CIP(R), CPA(R):12, CPA(R):14, CPA(R):15 and W. P.
Carey International LLC, and was Chairman of the Board and Chief Executive
Officer of CPA(R):10 prior to its merger with CIP(R). Mr. Carey is the brother
of Francis J. Carey.
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DR. LAWRENCE R. KLEIN
AGE: 82
Dr. Klein was elected to the Board of Directors of W. P. Carey & Co. LLC in
1998. He is the Benjamin Franklin Professor Emeritus of Economics and Finance at
the University of Pennsylvania and its Wharton School, having joined the faculty
of the University in 1958. He is a holder of earned degrees from the University
of California at Berkeley, the Massachusetts Institute of Technology and Oxford
University, and has been awarded the Alfred Nobel Memorial Prize in Economic
Sciences, as well as a number of honorary degrees. Founder of Wharton
Econometric Forecasting Associates, Inc., Dr. Klein has been counselor to
various corporations, governments and government agencies, including
WealthEffect.com, the Federal Reserve Board and the President's Council of
Economic Advisers. Dr. Klein joined W. P. Carey & Co., Inc. in 1984 as Chairman
of the Economic Policy Committee and as a director. He also serves as a Trustee
of the W. P. Carey Foundation.
NATHANIEL S. COOLIDGE
AGE: 64
Mr. Coolidge joined the Board of Directors of W. P. Carey & Co. LLC in 2002
and serves as Chairman of its Audit Committee. He is a former Senior Vice
President of John Hancock Mutual Life Insurance Company and retired in 1996
after 23 years of service. From 1986 to 1996, Mr. Coolidge headed the Bond and
Corporate Finance Department, which was responsible for managing its entire
fixed income investments portfolio. Prior to 1986, Mr. Coolidge served as Second
Vice President and Vice President. Mr. Coolidge is a graduate of Harvard
University and served as a U.S. naval officer.
CHARLES C. TOWNSEND, JR.
AGE: 75
Mr. Townsend was elected to the Board of Directors of W. P. Carey & Co. LLC
in 1998 and currently serves as Chairman of its Compensation Committee and as a
member of its Audit Committee. Mr. Townsend is an Advisory Director of Morgan
Stanley & Co., having held such position since 1979. He is also Chairman of the
Board of HTI VoiceSolutions Inc., and a director of Cass County Iron Co. Mr.
Townsend was a Partner and a Managing Director of Morgan Stanley & Co. from 1963
to 1978 and served as Chairman of Morgan Stanley Realty Corporation from 1977 to
1982. Mr. Townsend holds a B.S.E.E. from Princeton University and an M.B.A. from
Harvard University. Mr. Townsend served as a director of CIP(R) and CPA(R):14
until 2000.
CLASS I DIRECTORS CONTINUING TO SERVE UNTIL THE YEAR 2004
GORDON F. DUGAN
AGE: 36
Mr. DuGan, President and Co-CEO of W. P. Carey & Co. LLC, joined W. P.
Carey & Co. as Assistant to the Chairman in 1988 and in 1995 was elevated to
Senior Vice President in the Acquisitions Department. From October 1995 until
February 1997 he was chief financial officer of a Colorado-based wireless
communications equipment manufacturer. Mr. DuGan rejoined W. P. Carey & Co. as
Deputy Head of Acquisitions in February 1997, and was elected to Executive Vice
President and Managing Director in June 1997, and was elevated to President in
1999. Mr. DuGan serves as Vice Chairman of CIP(R), CPA(R):12, CPA(R):14 and
CPA(R):15 and as Trustee of the W. P. Carey Foundation. He also serves on the
Boards of the New York Pops and the Hewitt School and is a member of the Young
Presidents Organization. Mr. DuGan received his B.S. in Economics from the
Wharton School at the University of Pennsylvania.
REGINALD WINSSINGER
AGE: 60
Mr. Winssinger was elected to the Board of Directors of W. P. Carey & Co.
LLC in 1998. Mr. Winssinger is founder and Chairman of National Portfolio, Inc.
(NPI), an Arizona-based firm involved in acquisition, financing, management and
construction of commercial, multi-family, industrial and land development real
estate projects. He represents the third generation of a respected real estate
family in Belgium, which is well known in Europe for its real estate appraisal,
construction and management
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capabilities. He spent ten years at the Winssinger family real estate company in
Belgium before coming to the United States in 1979 to expand their investment
activity. Over a 20-year period he created and managed a $500 million portfolio
of U.S. real estate investment for U.S. and European investors. He later formed
Horizon Real Estate Group, Inc., doing business as NAI Horizon in Phoenix,
Arizona, a full service real estate firm providing brokerage, property
management, construction management and real estate consulting services. That
group has now expanded its activity to the Las Vegas market. Mr. Winssinger
currently manages multiple companies with real estate investments primarily in
Arizona, California and Texas. He also serves as a director of Pierce-Eislen,
Inc., and is the Honorary Consul of Belgium to Arizona. He attended the Sorbonne
and is an alumnus of the University of California at Berkeley.
CLASS II DIRECTORS CONTINUING TO SERVE UNTIL THE YEAR 2005
FRANCIS J. CAREY
AGE: 77
Mr. Carey was elected in 2000 as Vice Chairman of the Board of Directors
and Chairman of the Executive Committee of the Board of Directors of W. P. Carey
& Co. LLC. Mr. Carey served as Chairman, Chief Executive Officer and a director
of Carey Diversified LLC from 1997 to 2000. From 1987 to 1997, Mr. Carey held
various positions with affiliates of W. P. Carey & Co., Inc., including
President of W. P. Carey & Co., Inc., and President and director of CPA(R):10,
CIP(R) and CPA(R):12. Mr. Carey also served as director of W. P. Carey & Co.,
Inc. from its founding in 1973 until 1997. Prior to 1987, he was senior partner
in Philadelphia, head of the real estate department nationally and a member of
the Executive Committee of Reed Smith LLP, counsel for W. P. Carey & Co. LLC. He
served as a member of the Executive Committee and Board of Managers of the
Western Savings Bank of Philadelphia from 1972 until its takeover by another
bank in 1982, and is a former chairman of the Real Property, Probate and Trust
Section of the Pennsylvania Bar Association. He is currently President and
director of Livho Corporation, served as a member of the Board of Overseers of
the School of Arts and Sciences at the University of Pennsylvania from 1983 to
1990. He has also served as a member of the Board of Trustees and Executive
Committee of the Investment Program Association from 1990 to 2000, and as its
Chairman from 1998 to 2000, and has served on the Business Advisory Council of
the Business Council for the United Nations since 1994. He holds A.B. and J.D.
degrees from the University of Pennsylvania and completed executive programs in
corporate finance and accounting at Stanford University Graduate School of
Business and the Wharton School of the University of Pennsylvania. Mr. Carey is
the brother of Wm. Polk Carey.
EBERHARD FABER, IV
AGE: 66
Mr. Faber was elected to the Board of Directors of W. P. Carey & Co. LLC in
1998 and is currently Chairman of the Board of Kings College. Mr. Faber held
various posts with Eberhard Faber Inc., serving as Chairman and CEO from 1973
until 1987, when the company merged into Faber-Castell Corporation. He served as
a director of the Federal Reserve Bank of Philadelphia from 1980 to 1986,
chairing its Budget and Operations Committee, and was Chairman of the Board of
Citizen's Voice Newspaper from 1992 to 2002. Currently, he is a member of the
Northeast Pennsylvania Advisory Board of PNC Bank, N.A., where he served as a
director from 1994 to 1998, Trustee of the Geisinger Wyoming Valley Hospital and
the Eberhard L. Faber Foundation, and a Borough Councilman of Bear Creek
Village. In addition to graduating from Princeton University magna cum laude, he
was a member of Phi Beta Kappa while serving as Chairman of The Daily
Princetonian, and was a Fulbright Scholar and teaching fellow at the University
of Caen in France.
GEORGE E. STODDARD
AGE: 86
Mr. Stoddard was appointed to the Board of Directors of W. P. Carey & Co.
LLC in 2000 and serves as Chairman of the Investment Committee. From 1979 to
2000, Mr. Stoddard was Chairman of the Investment Committee of W. P. Carey &
Co., Inc. Mr. Stoddard was until 1979 officer-in-charge of the Direct Placement
Department of The Equitable Life Assurance Society of the United States
("Equitable"), with responsibility for all activities related to Equitable's
portfolio of corporate investments acquired through direct negotiation.
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Mr. Stoddard was associated with Equitable for over 30 years. He holds an A.B.
degree from Brigham Young University, an M.B.A. from Harvard Business School and
an LL.B. from Fordham University Law School. Mr. Stoddard is also a director of
CIP(R), CPA(R):12, CPA(R):14 and CPA(R):15, and was a director of CPA(R):10
prior to its merger with CIP(R).
EXECUTIVE OFFICERS OF W. P. CAREY & CO. LLC
W. P. Carey & Co. LLC's executive officers are elected annually by the
Board of Directors. Detailed information regarding the executive officer who is
not a director is set forth below.
JOHN J. PARK
AGE: 38
Mr. Park is a Managing Director and Chief Financial Officer of W. P. Carey
& Co. LLC. Mr. Park joined W. P. Carey & Co., Inc. as an Investment Analyst in
December 1987 and became a Vice President in July 1991. Mr. Park became a First
Vice President of W. P. Carey & Co. in April 1993 and a Senior Vice President in
October 1995. Mr. Park received a B.S. in Chemistry from Massachusetts Institute
of Technology in 1986 and an M.B.A. in Finance from the Stern School of New York
University in 1991. Mr. Park is also Managing Director and Chief Financial
Officer of CIP(R), CPA(R):12, CPA(R):14 and CPA(R):15.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of shares as of the April 10, 2003 record date by each of W. P. Carey
& Co. LLC's directors, Chief Executive Officer and the executive officers named
in the summary compensation table below. The business address of the individuals
listed is 50 Rockefeller Plaza, New York, NY 10020. Wm. Polk Carey beneficially
owns 35.44% of the shares, Gordon F. DuGan beneficially owns 1.67% of the
shares, and Francis J. Carey owns 1.28%, respectively, of W. P. Carey & Co. LLC.
No other director or officer beneficially owns more than 1% of the shares of W.
P. Carey & Co LLC. The directors and all executive officers as a group own
approximately 39.70% of the shares.
AMOUNT OF SHARES
NAME BENEFICIALLY OWNED(1) PERCENTAGE
---- --------------------- ----------
Wm. Polk Carey(2)........................................... 12,912,061 35.44%
Gordon F. DuGan(3).......................................... 607,857 1.67%
Francis J. Carey(4)......................................... 466,896 1.28%
Eberhard Faber, IV(5)(6).................................... 21,298 *
Lawrence R. Klein(6)........................................ 5,806 *
Nathaniel S. Coolidge(6).................................... 5,250 *
Charles C. Townsend, Jr.(6)(9).............................. 15,438 *
Reginald Winssinger(6)...................................... 17,623 *
George E. Stoddard(7)....................................... 98,710 *
John J. Park(8)............................................. 312,968 *
All Directors and Executive Officers as a Group (10
individuals).............................................. 14,463,907 39.70%
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* Less than 1%
(1) Beneficial ownership has been determined in accordance with the rules of the
Securities and Exchange Commission. Except as noted, and except for any
community property interest owned by spouses, the listed individuals have
sole investment power and sole voting power as to all shares which they are
identified as being the beneficial owners.
(2) Includes 5,542,519 shares held by W. P. Carey & Co., Inc. and 492,811 shares
held by W. P. Carey International LLC for which Mr. Carey is deemed to be
the beneficial owner. This amount also includes
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160,908 shares which Mr. Carey has the right to acquire through the exercise
of stock options within 60 days after April 10, 2003 under the 1997 Listed
Share Incentive Plan. This amount also includes 3,060,750 shares which W. P.
Carey & Co., Inc. has the right to acquire through the exercise of stock
options. See "Certain Transactions."
(3) 84,741 of these shares are held pursuant to a compensation arrangement with
W. P. Carey & Co. LLC and are subject to the restrictions connected
therewith. Includes 74,845 shares which Mr. DuGan has the right to acquire
through the exercise of stock options within 60 days after April 10, 2003
under the 1997 Listed Share Incentive Plan.
(4) The amounts shown include 313,500 shares which Mr. Carey has the right to
acquire through the exercise of stock options within 60 days after April 10,
2003 under the 1997 Listed Share Incentive Plan.
(5) Includes 4,675 shares held by the Faber Family Trust, of which Mr. Faber is
a trustee and a beneficiary. Does not include 1,090 shares held by the Faber
Foundation.
(6) The amount shown includes 4,000 shares which each of these directors has the
right to acquire pursuant to stock options exercisable within 60 days of
April 10, 2003 under the W. P. Carey & Co. LLC Non-Employee Director Plan.
(7) The amounts shown include 25,000 shares which Mr. Stoddard has the right to
acquire through the exercise of stock options within 60 days after April 10,
2003 under the 1997 Listed Share Incentive Plan.
(8) The amounts shown include 32,291 shares which Mr. Park has the right to
acquire through the exercise of stock options within 60 days after April 10,
2003 under the 1997 Listed Share Incentive Plan. The amounts also include
12,168 shares held by his wife, with respect to which Mr. Park disclaims
beneficial ownership.
(9) The amount shown includes 1,800 shares held in trust for the benefit of Mr.
Townsend's children and grandchildren, with respect to which Mr. Townsend
disclaims beneficial ownership.
COMMITTEES OF THE BOARD OF DIRECTORS
Members of the Board of Directors have been appointed to serve on various
committees of the Board of Directors. The Board of Directors has currently
established three committees: (i) the Executive Committee; (ii) the Compensation
Committee; and (iii) the Audit Committee.
- EXECUTIVE COMMITTEE. The Executive Committee may authorize the execution
of contracts and agreements, including those related to the borrowing of
money by W. P. Carey & Co. LLC. The Executive Committee will exercise,
during intervals between meetings of the Board of Directors and subject
to certain limitations, all of the powers of the full Board of Directors
and will monitor and advise the Board of Directors on strategic business
planning for W. P. Carey & Co. LLC. There were five Executive Committee
meetings held during 2002.
- COMPENSATION COMMITTEE. The Compensation Committee is responsible for
assuring that the officers and key management personnel of W. P. Carey &
Co. LLC are effectively compensated in terms of salaries, supplemental
compensation and benefits which are internally equitable and externally
competitive. The Compensation Committee reviews annually the compensation
and allowances for directors as recommended by management, reviews and
approves distribution of incentive compensation or bonuses and the design
of any new supplemental compensation program and reviews and approves the
number of shares, price per share and period of duration for stock grants
under any approved share incentive plan. There were two Compensation
Committee meetings held during 2002.
- AUDIT COMMITTEE. The Audit Committee has been established to engage
independent public accountants, review with the independent public
accountants the plans and results of the audit engagement, approve
professional services provided by the independent public accountants,
review the independence of the independent public accountants, consider
the range of audit and non-audit fees and review the adequacy of W. P.
Carey & Co. LLC's internal accounting controls. There were nine Audit
Committee meetings held during 2002.
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- NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. Formed in December 2002,
the Nominating and Corporate Governance Committee is responsible for
developing and implementing policies and practices relating to corporate
governance, including monitoring implementation of W. P. Carey & Co.
LLC's corporate governance policies. In addition, the Committee develops
and reviews background information for candidates for the Board of
Directors, including those recommended by shareholders, and makes
recommendations to the Board regarding such candidates. The Nominating
and Corporate Governance Committee met one time during fiscal 2002.
BOARD MEETINGS AND DIRECTORS' ATTENDANCE
There were four Board meetings held in 2002. No incumbent director attended
less than 75% of the total number of Board meetings held in 2002, other than
Nathaniel S. Coolidge, who was appointed to the Board in December 2002 after the
retirement of Donald E. Nickelson.
BOARD COMMITTEE MEMBERSHIP ROSTER
NOMINATING AND
NAME EXECUTIVE COMPENSATION AUDIT CORPORATE GOVERNANCE
---- --------- ------------ ----- --------------------
Wm. Polk Carey............................ X
Francis J. Carey.......................... X*
Gordon F. DuGan........................... X
Charles C. Townsend, Jr................... X* X
Eberhard Faber, IV........................ X X X*
Nathaniel S. Coolidge..................... X*
Reginald Winssinger....................... X X
Lawrence R. Klein......................... X
---------------
* Chairman of Committee
COMPENSATION OF THE BOARD OF DIRECTORS
W. P. Carey & Co. LLC pays its directors who are not its officers fees for
their services as directors. Such directors receive annual compensation of
$50,000, and $1,250 in cash for attending each quarterly meeting. The annual
compensation is paid with a retainer of $20,000 payable in cash, and $7,500
payable quarterly in the form of restricted shares or options to purchase
shares. Messrs. Townsend, Coolidge and Faber each receive an additional $10,000
for serving as the Chairman of the Compensation, Audit and Nominating and
Corporate Governance Committees, respectively. Officers or employees of W. P.
Carey & Co. LLC or its subsidiaries who are directors are not paid any director
fees.
The Non-Employee Directors' Plan authorizes the issuance of up to 300,000
shares. Each independent director is eligible to receive quarterly an award of
options to purchase shares or restricted shares. Awards may be made on each
April 1, July 1, October 1 and January 1 (each date, a "Quarterly Award Date")
during the term of the Non-Employee Directors' Plan. As part of the compensation
described above, each independent director may receive in lieu of restricted
shares, on each Quarterly Award Date on which he is a member of the Board of
Directors, the number of options to purchase shares or restricted shares having
a fair market value on that date that as nearly as possible equals, but does not
exceed $7,500.
EXECUTIVE COMPENSATION
All management functions of W. P. Carey & Co. LLC are provided by its
wholly-owned subsidiary, Carey Asset Management Corp. All policy-making
functions are carried out by executive officers of Carey Asset Management Corp.
who hold the same titles as officers of W. P. Carey & Co. LLC. The following
tables set forth the compensation earned by and option information relating to
Mr. Wm. Polk Carey, W. P. Carey &
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Co. LLC's Chief Executive Officer during 2002 and the four next highest paid
executive officers who performed policy-making functions for W. P. Carey & Co.
LLC during 2002.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION SECURITIES
------------------------------ RESTRICTED STOCK UNDERLYING
YEAR SALARY BONUS AWARDS(1) OPTIONS(#)
---- -------- ---------- ---------------- ----------
Wm. Polk Carey.................... 2002 $250,000 $1,000,000 -- --
Chairman & Co-CEO (1) 2001 250,000 250,000 -- 182,725
2000 125,000 -- $ 202,000 150,000
Francis J. Carey.................. 2002 212,500 300,000 -- --
Vice Chairman and Former Chief 2001 250,000 165,000 460,000 --
Executive Officer 2000 275,000 172,300 254,700 150,000
Gordon F. DuGan................... 2002 237,500 1,237,500 -- --
President and Co-CEO(1) 2001 200,000 793,600 -- 75,000
2000 87,500 538,500 1,261,676 99,689
George E. Stoddard................ 2002 250,000 300,000 -- --
Chief Investment Officer(1) 2001 250,000 300,000 230,000 --
2000 100,000 125,000 1,012,500 25,000
John J. Park...................... 2002 200,000 450,000 -- --
Managing Director and Chief 2001 200,000 300,000 69,000 37,000
Financial Officer(1) 2000 100,000 125,000 -- 59,873
---------------
(1) Salary and bonus amounts for 2000 have been prorated for the six months
after which the Company acquired the advisory operations of Carey Management
LLC.
OPTIONS GRANTED IN FISCAL YEAR 2002
PERCENT OF POTENTIAL REALIZABLE VALUE
TOTAL OPTIONS AT ASSUMED ANNUAL RATE
GRANTED TO EXERCISE OF SHARE PRICE APPRECIATION
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------------------
GRANTED FISCAL YEAR SHARE DATE 5% 10%
------- ------------- --------- ------------- ------------ ------------
Wm. Polk Carey(1)...... 182,725 20.3% $23.00 April 1, 2012 $2,643,040 $6,697,982
Francis J. Carey....... -0-
Gordon F. DuGan(1)..... 75,000 8.3 23.00 April 1, 2012 1,084,843 2,749,205
George E. Stoddard..... -0-
John J. Park(1)........ 37,000 4.1 23.00 April 1, 2012 535,189 1,356,275
---------------
(1) The options are exercisable for one-third of the covered shares on each of
April 2003, April 2004 and April 2005.
8
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2002
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
---------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Wm. Polk Carey............................ 50,000 282,725 $ 324,500 $ 968,769
Francis J. Carey.......................... 213,500 150,000 1,276,125 1,061,500
Gordon F. DuGan(1)........................ 124,845 981,605
George E. Stoddard........................ 16,666 8,334 141,661 70,839
John J. Park(2)........................... 56,958 405,234
---------------
(1) Gordon F. DuGan exercised options to purchase 49,844 shares for a price of
$7.69 per share during fiscal year 2002.
(2) John J. Park exercised options to purchase 19,958 shares for a price of
$7.69 per share during fiscal year 2002.
EQUITY COMPENSATION PLAN INFORMATION
WEIGHTED-
AVERAGE EXERCISE
NUMBER OF SECURITIES PRICE OF
TO BE ISSUED UPON OUTSTANDING NUMBER OF SECURITIES
EXERCISE OF OPTIONS, REMAINING AVAILABLE FOR
OUTSTANDING OPTIONS, WARRANTS AND FUTURE ISSUANCE UNDER
PLAN CATEGORY WARRANTS AND RIGHTS RIGHTS EQUITY COMPENSATION PLANS
------------- -------------------- ----------------- -------------------------
Equity compensation plans approved
by security holders............... 1,961,509 $ 20.12 3,327,669
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is comprised entirely of non-employee directors
and is responsible for acting on behalf of the Board with respect to (i) general
compensation and benefit practices of W. P. Carey & Co. LLC, (ii) reviewing and
making recommendations to the Board of Directors of salaries and other
compensation actions for Wm. Polk Carey, Francis J. Carey, George E. Stoddard,
Gordon F. DuGan and John J. Park, and (iii) adopting, administering and
approving or recommending the approval by the Board of Directors of awards under
annual and long-term incentive compensation plans.
Compensation Philosophy
The Compensation Committee is committed to a compensation philosophy that
rewards employees on the basis of W. P. Carey & Co. LLC's success in attaining
corporate financial objectives as well as on the basis of the employees'
success in attaining individual financial and qualitative performance
objectives. W. P. Carey & Co. LLC's compensation program is designed to:
- Attract, motivate, reward and retain highly qualified executives.
- Align shareholder and employee interests.
- Reward long-term career contributions to W. P. Carey & Co. LLC.
- Emphasize the variable portion of total compensation (cash and stock) as
an individual's level of responsibility increases.
9
- Provide fully competitive compensation opportunities consistent with
performance.
- Encourage teamwork.
During 2002, the Compensation Committee conducted a review of W. P. Carey &
Co. LLC's executive compensation programs, assessing the effectiveness of the
programs and relative competitiveness versus identified companies of similar
size and business characteristics to W. P. Carey & Co. LLC. This comparable
group included companies from both the real estate investment trust and
diversified financial marketplace representing the most direct competitors for
executive talent.
Key Elements of Compensation
The key elements of W. P. Carey & Co. LLC's executive compensation program
are base salary, employee benefits, annual bonus and long-term stock incentives.
As an executive's level of responsibility increases, a greater portion of total
compensation is based on annual and long-term performance-based incentive
compensation and less on salary and employee benefits, creating the potential
for greater variability in the individual's compensation level from year to
year. The mix, level and structure of performance-based incentive elements is
intended to reflect industry practices as well as the executive's role and
relative impact on the business. The Compensation Committee believes that
company performance should be measured on the basis of both quantitative and
qualitative assessments. Quantitative measures include performance in areas such
as growth in funds from operations (FFO), net operating income growth, operating
margins, return on invested capital and market value. Qualitative measures
include performance in the areas such as asset quality, asset management, risk
management and tenant retention. These quantitative and qualitative measures are
not formally weighted for purposes of determining salaries or incentive awards.
Section 162(m) of the Internal Revenue Code denies a deduction for
compensation in excess of $1 million paid to certain executive officers, unless
certain performance, disclosure, and shareholder approval requirements are met.
Option and restricted stock grants under the W. P. Carey & Co. LLC 1997 Listed
Share Incentive Plan are intended to qualify as "performance-based" compensation
not subject to the Section 162(m) deduction limitation.
Submitted by the Compensation
Committee:
Charles C. Townsend, Jr., Chairman
Eberhard Faber, IV
Reginald Winssinger
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors reports as follows with
respect to the audit of W. P. Carey & Co. LLC's fiscal 2002 audited financial
statements.
The audit functions of the Committee focus on the adequacy of W. P. Carey &
Co. LLC's internal controls and financial reporting procedures, the performance
of W. P. Carey & Co. LLC's internal audit functions and the independence and
performance of W. P. Carey & Co. LLC's independent auditors. The Committee meets
periodically with management to consider the adequacy of internal controls and
the objectivity of W. P. Carey & Co. LLC's financial reporting. The Committee
discusses these matters with appropriate internal financial personnel as well as
independent auditors. The Committee also meets privately with the independent
auditors. The Committee held five regularly scheduled quarterly meetings during
2002, and also met four additional times prior to each of W. P. Carey & Co.
LLC's four earnings releases.
Management has responsibility for W. P. Carey & Co. LLC's financial
statements and the overall reporting process, including W. P. Carey & Co. LLC's
system of internal controls. The independent auditors audit the annual financial
statements that are prepared by management, express an opinion on the conformity
of the audited financial statements with accounting principles generally
accepted in the United States of
10
America, and discuss with the Committee any issues they believe should be raised
with us. The Committee is responsible for the monitoring and oversight of these
processes, relying without independent verification on the information provided
to us and on the representations made by management and the independent
auditors.
The Committee has reviewed and discussed the audited financial statements
with the management of W. P. Carey & Co. LLC. The directors who serve on the
Audit Committee are all "independent" as defined in the New York Stock Exchange
listing standards. That is, the Board of Directors has determined that none of
us has a relationship to W. P. Carey & Co. LLC that may interfere with our
independence from W. P. Carey & Co. LLC and its management.
The Committee has discussed with the independent auditors,
PricewaterhouseCoopers LLP, the matters required to be discussed by Statement on
Auditing Standards No. 61. The Committee has received written disclosures and
the letter from the independent auditors required by Independence Standards
Board Standard No. 1 and has discussed with the auditors the auditors'
independence from W. P. Carey & Co. LLC and, based on review and discussions of
the audited financial statements of W. P. Carey & Co. LLC with management and
discussions with the independent auditors, the Audit Committee recommended to
the Board of Directors that the audited financial statements for the fiscal year
ended December 31, 2002 be included in the Annual Report on Form 10-K for filing
with the Securities and Exchange Commission. The Board of Directors has adopted
a formal written charter for the Audit Committee.
Submitted by the Audit Committee:
Nathaniel S. Coolidge, Chairman
Eberhard Faber, IV
Charles C. Townsend, Jr.
AUDIT FEES
The aggregate fees billed to W. P. Carey & Co. LLC by
PricewaterhouseCoopers LLP for: professional services rendered for the audit of
W. P. Carey & Co. LLC's fiscal 2002 and 2001 financial statements included in
the Annual Reports on Form 10-K, the review of the financial statements included
in the Quarterly Reports on Form 10-Q for 2002 and 2001, and other audit
services were $243,500 and $201,100, respectively. Other audit services include
statutory audits of foreign subsidiaries and SEC registration statement review
and the related issuance of comfort letters and consents.
AUDIT RELATED FEES
The aggregate fees billed to W. P. Carey & Co. LLC by
PricewaterhouseCoopers LLP for audit related services for the year ended
December 31, 2002 were $40,000. There were no audit related fees for 2001. Audit
related services include accounting consultations in connection with
transactions.
TAX SERVICES FEES
The aggregate fees billed to W. P. Carey & Co. LLC by
PricewaterhouseCoopers LLP for tax compliance and consultation services for the
years ended December 31, 2002 and 2001 were $799,500 and $964,000, respectively.
ALL OTHER FEES
No fees were billed for other services rendered by PricewaterhouseCoopers
LLP for the years ended December 31, 2002 and 2001, respectively.
The Audit Committee considered whether the provision of services described
above under "All Other Fees" is compatible with maintaining
PricewaterhouseCoopers LLP's independence.
11
PERFORMANCE GRAPH
The graph below provides an indicator of cumulative shareholder returns for
W. P. Carey & Co. LLC as compared with the S&P 500 Stock Index and the National
Association of Real Estate Investment Trusts (NAREIT) Index.
(PERFORMANCE GRAPH)
WPC S&P 500 NAREIT INDEX
--- ------- ------------
01/01/98 100.00 100.00 100.00
12/31/98 106.71 128.58 82.50
12/31/99 100.88 155.62 78.69
12/31/00 119.21 139.84 99.43
12/31/01 165.63 122.75 113.29
12/31/02 189.54 95.62 117.61
CERTAIN TRANSACTIONS
AMOUNTS PAID TO W. P. CAREY & CO. LLC FROM AFFILIATES
In connection with the acquisition of the operations of Carey Management
LLC in June 2000, the purchase agreement provides for a total of 2,000,000
shares to be issued over four years if certain performance criteria are
achieved. During 2003, 400,000 shares were issued in connection with W. P. Carey
& Co. LLC meeting the performance criteria for the applicable period ended
during 2002. To date, 1,400,000 of the 2,000,000 possible shares have been
earned and paid.
W. P. Carey & Co. LLC earns fees as the Advisor to the four affiliated
CPA(R) REITs, Carey Institutional Properties Incorporated, Corporate Property
Associates 12 Incorporated, Corporate Property Associates 14 Incorporated and
Corporate Property Associates 15 Incorporated (and Corporate Property Associates
10 prior to its merger with Carey Institutional Properties Incorporated). Under
the advisory agreements with the CPA(R) REITs, W. P. Carey & Co. LLC performs
services related to the day-to-day management of the CPA(R) REITs and
transaction-related services. In addition, W. P. Carey & Co. LLC's broker-dealer
subsidiary earns fees in connection with the on-going "best efforts" public
offering of CPA(R):15. W. P. Carey & Co. LLC earns an asset management fee of
1/2 of 1% per annum of Average Invested Assets, as defined in the Agreements,
for each CPA(R) REIT and, based upon certain performance criteria for each
CPA(R) REIT, may be entitled to receive a performance fee of 1/2 of 1% of
Average Invested Assets. W. P. Carey & Co. LLC is reimbursed for the cost of
personnel provided for the administration of the CPA(R) REITs. For the
twelve-month period ended December 31, 2002, asset-based fees and reimbursements
earned were $37,249,700. For the twelve-month period ended December 31, 2002, W.
P. Carey & Co. LLC earned transaction fees of $47,005,384 in connection with
structuring and negotiating real estate acquisitions and mortgage financing for
the CPA(R) REITs.
12
LIVHO, INC. TRANSACTION
In connection with the consolidation of the nine CPA(R) partnerships, W. P.
Carey & Co. LLC obtained a hotel in Livonia, Michigan which was not subject to a
lease. W. P. Carey & Co. LLC would be taxed as a corporation if it received more
than a small percentage of its income from the operation of a hotel. In order to
avoid taxation as a corporation, W. P. Carey & Co. LLC leased the hotel to Livho
Inc., a corporation wholly-owned by Francis J. Carey, its chairman, pursuant to
a two-year lease. Livho Inc.'s rent for 2002 was $2,520,000. Livho, Inc.'s net
loss for 2002 was $502,647. Francis J. Carey, as sole shareholder, did not
receive a dividend payment from Livho, as excess cash flow was applied to rental
arrearages due to W. P. Carey & Co. LLC. It is not anticipated that Livho will
pay any dividends until such rental arrearage, which totaled $672,567 as of
December 31, 2002, is paid in full.
OTHER TRANSACTIONS
As of December 31, 2002, the Company owns a 10% interest in W. P. Carey
International LLC ("WPCI"), which structures net lease transactions outside of
the United States, the United Kingdom and France. The remaining 90% interest in
WPCI is owned by Wm. Polk Carey ("Carey"), Chairman of the Company. On March 19,
2003, the Company's Board of Directors approved a series of transactions which
will result in Carey giving up his interest in WPCI. As part of this
transaction, WPCI will distribute to Carey his capital contributions to WPCI of
492,881 shares of the Company as well as cash contributions of $1,472,000. In
connection with the transaction, the Company will contribute its share of fees
derived from the acquisition, management and disposition of properties outside
of the United States to WPCI as well as related costs. Two officers of WPCI will
be granted restricted minority ownership interests which vest ratably over five
years and options in WPCI pursuant to their employment agreements. The Company
expects to complete the transfer during the second quarter of 2003, however, the
terms of agreement provide for January 1, 2003 as the effective date.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of its records and written representations, W. P. Carey &
Co. LLC believes that during 2002, its officers and directors complied with the
beneficial ownership reporting requirements of the Securities Exchange Act.
INDEPENDENT PUBLIC ACCOUNTANTS
From our inception, we have engaged the firm of PricewaterhouseCoopers LLP
as our independent public accountants. We have selected PricewaterhouseCoopers
LLP as auditors for 2003. A representative of PricewaterhouseCoopers LLP will be
present at the Annual Meeting to make a statement if he or she so desires and to
respond to questions.
13
REVOCABLE PROXY
W. P. CAREY & CO. LLC
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
JUNE 10, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of W. P. Carey & Co. LLC appoints John J. Park
and Claude Fernandez, and each of them, with full power of substitution, as
proxy to vote all listed shares of the undersigned in W. P. Carey & Co. LLC at
the Annual Meeting of Shareholders to be held on June 10, 2003 and at any
adjournment thereof, with like effect and as if the undersigned were personally
present and voting, upon the matters set forth on the reverse side.
ADDRESS CHANGE/COMMENTS (MARK THE CORRESPONDING BOX ON THE REVERSE SIDE)
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE
VOTED "FOR" ALL DIRECTORS.
Please Mark Here for Address Change or Comments [ ]
SEE REVERSE SIDE
PROPOSAL ONE: Election of Class III FOR all
Directors for the nominees
Three-Year Term Expiring listed WITHHOLD
in 2006 below AUTHORITY
Nominees: (except as (to vote
marked to for all
01 Wm. Polk Carey the nominees
02 Dr. Lawrence R. Klein contrary listed
03 Nathaniel S. Coolidge below) below)
04 Charles C. Townsend, Jr. [ ] [ ]
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list above)
PROPOSAL TWO: Such other matters as may properly come before the meeting at the
discretion of the proxy holders.
By checking the box to the right, I consent to future delivery of annual
reports, proxy statements, prospectuses and other materials and shareholder
communications electronically via the Internet at a webpage which will be
disclosed to me. I understand that the Company may no longer distribute printed
materials to me from any future shareholder meeting until such consent is
revoked. I understand that I may revoke my consent at any time by contacting the
Company's transfer agent, Mellon Investor Services LLC, Ridgefield Park, NJ and
that costs normally associated with electronic delivery, such as usage and
telephone charges as well as any costs I may incur in printing documents, will
be my responsibility. [ ]
Signature Signature Date
NOTE: PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH.
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
INTERNET AND TELEPHONE VOTING IS AVAILABLE THROUGH 11PM EASTERN
TIME THE BUSINESS DAY PRIOR TO ANNUAL MEETING DAY.
YOUR INTERNET OR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR
SHARES IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
INTERNET
HTTP://WWW.EPROXY.COM/WPC
Use the Internet to vote your proxy. Have your proxy card in hand when you
access the web site. You will be prompted to enter your control number, located
in the box below, to create and submit an electronic ballot.
OR
TELEPHONE
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter your control number, located in the
box below, and then follow the directions given.
OR
MAIL
Mark, sign and date
your proxy card and
return it in the
enclosed postage-paid
envelope.
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.