SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box: [ ] Confidential, For Use of the
[ ] Preliminary Proxy Statement Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
Commercial Net Lease Realty, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statements, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed under
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
COMMERCIAL NET LEASE REALTY, INC.
450 S. Orange Avenue, Suite 900
Orlando, Florida 32801
Tel: 407-265-7348
April 8, 2002
To Our Stockholders:
You are cordially invited to attend the annual meeting of stockholders of
Commercial Net Lease Realty, Inc. (the "Company") on June 7, 2002 at 9:30 a.m.,
at CNL Center, 450 South Orange Avenue, 9th Floor, Orlando, Florida 32801. The
directors and officers of the Company look forward to greeting you personally.
Enclosed for your review are the Proxy, Proxy Statement and Notice of Meeting
for the Annual Meeting of Stockholders, which describe the business to be
conducted at the meeting. We will also report on matters of current interest to
our stockholders.
Whether you own a few or many shares of stock of Commercial Net Lease
Realty, it is important that your shares be represented. If you cannot
personally attend the meeting, we encourage you to make certain you are
represented at the meeting by signing and dating the accompanying proxy card
and promptly returning it in the enclosed envelope. Returning your proxy card
will not prevent you from voting in person, but will assure that your vote will
be counted if you are unable to attend the meeting.
Sincerely,
/s/ James M. Seneff, Jr. /s/ Kevin B. Habicht
------------------------------------ -------------------------------------
James M. Seneff, Jr. Kevin B. Habicht
Chairman of the Board and Chief Executive Vice President, Chief
Executive Officer Financial Officer and
Secretary/Treasurer
COMMERCIAL NET LEASE REALTY, INC.
450 S. Orange Avenue, Suite 900
Orlando, Florida 32801
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be Held June 7, 2002
-------------------------------
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of
Commercial Net Lease Realty, Inc. will be held at 9:30 a.m. local time, on June
7, 2002, at CNL Center, 450 South Orange Avenue, 9th Floor, Orlando, Florida
32801, for the following purposes:
1. To elect nine directors.
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on April 3, 2002, will be
entitled to notice of and to vote at the annual meeting or at any adjournment
thereof.
Stockholders are cordially invited to attend the meeting in person.
WHETHER OR NOT YOU NOW PLAN TO ATTEND THE MEETING, YOU ARE ASKED TO COMPLETE,
DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY CARD FOR WHICH A POSTAGE PAID
RETURN ENVELOPE IS PROVIDED. If you decide to attend the meeting you may revoke
your Proxy and vote your shares in person. It is important that your shares be
voted.
By Order of the Board of Directors,
/s/ Kevin B. Habicht
-------------------------------
Kevin B. Habicht
Secretary
April 8, 2002
Orlando, Florida
COMMERCIAL NET LEASE REALTY, INC.
450 S. Orange Avenue, Suite 900
Orlando, Florida 32801
TEL: 407-265-7348
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PROXY STATEMENT
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This Proxy Statement is furnished by the Board of Directors of Commercial
Net Lease Realty, Inc. (the "Company") in connection with the solicitation by
the Board of Directors of proxies to be voted at the annual meeting of
stockholders to be held on June 7, 2002, and at any adjournment thereof, for
the purposes set forth in the accompanying notice of such meeting. All
stockholders of record at the close of business on April 3, 2002 (the "Record
Date"), will be entitled to vote.
Any proxy, if received in time, properly signed and not revoked, will be
voted at such meeting in accordance with the directions of the stockholder. If
no directions are specified, the proxy will be voted FOR the election of
directors. Any stockholder giving a proxy has the power to revoke it at any
time before it is exercised. A proxy may be revoked (1) by delivery of a
written statement to the Secretary of the Company stating that the proxy is
revoked, (2) by presentation at the annual meeting of a subsequent proxy
executed by the person executing the prior proxy, or (3) by attendance at the
annual meeting and voting in person.
Votes cast in person or by proxy at the annual meeting will be tabulated
and a determination will be made as to whether or not a quorum is present. The
Company will treat abstentions as shares that are present and entitled to vote
for purposes of determining the presence or absence of a quorum, but as unvoted
for purposes of determining the approval of any matter submitted to the
stockholders. If a broker submits a proxy indicating that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with
respect to such matter.
Solicitation of proxies will be primarily by mail. However, directors and
officers of the Company may also solicit proxies by telephone or telegram or in
person. All of the expenses of preparing, assembling, printing and mailing the
materials used in the solicitation of proxies will be paid by the Company.
Arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to forward soliciting materials, at the expense of the Company,
to the beneficial owners of shares held of record by such persons. It is
anticipated that this Proxy Statement and the enclosed Proxy will be mailed to
stockholders on or about April 10, 2002.
As of the Record Date 40,651,053 shares of the common stock of the Company
(the "Common Stock") were outstanding. Each share of Common Stock entitles the
holder thereof to one vote on each of the matters to be voted upon at the
annual meeting. As of the Record Date, executive officers and directors of the
Company had the power to vote approximately 8% of the outstanding shares of
Common Stock.
TABLE OF CONTENTS
Page
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PROPOSAL I: ELECTION OF DIRECTORS ................................. 3
Nominees ....................................................... 3
Compensation of Directors ...................................... 7
Committees of the Board of Directors ........................... 7
Executive Officers ............................................. 8
AUDIT COMMITTEE REPORT ........................................... 11
AUDIT COMMITTEE DISCLOSURE ....................................... 11
EXECUTIVE COMPENSATION ........................................... 12
Executive Compensation Tables .................................. 12
Employment Agreements .......................................... 13
COMPENSATION COMMITTEE REPORT .................................... 13
PERFORMANCE GRAPH ................................................ 15
SECURITY OWNERSHIP ................................................ 16
Section 16(a) Beneficial Ownership Reporting Compliance .......... 17
CERTAIN TRANSACTIONS .............................................. 17
INDEPENDENT AUDITORS .............................................. 18
OTHER MATTERS ..................................................... 19
PROPOSALS FOR NEXT ANNUAL MEETING ................................. 19
2
PROPOSAL I
ELECTION OF DIRECTORS
Nominees
The persons named below have been nominated by the Board of Directors of
the Company (the "Board of Directors") for election as directors to serve until
the next annual meeting of stockholders or until their successors shall have
been elected and qualified. Mr. Lanier became a director in 1988. Messrs.
Bourne and Seneff became directors in 1992. Mr. Hinkle became a director in
1993. Messrs. Habicht, Jennings and Ralston became directors in 2000. Messrs.
Legler and Martinez are being nominated for the first time. The table sets
forth each nominee's name, age, principal occupation or employment during at
least the last five years, and directorships in other public corporations.
The Company's officers and directors have advised the Company that they
intend to vote their shares of Common Stock for the election of each of the
nominees. Proxies will be voted FOR the election of the nominees below unless
authority is withheld. Stockholders may withhold authority to vote for any
nominee, in lieu of voting for the entire slate of directors, by lining through
or striking out the name of any nominee listed below the pertinent instruction
on the proxy card.
Name and Age Background
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Robert A. Bourne, 54........ Mr. Bourne has served as Vice Chairman of the
Board since February 1996. Previously, Mr. Bourne
served as Secretary and Treasurer of the Company
from February 1996 through December 31, 1997 and
as President of the Company from July 1992 until
February 1996. Mr. Bourne also served as Vice
Chairman of the Board, Secretary and Treasurer of
CNL Realty Advisors, Inc. (the external advisor
of the Company from July 1992 through December 31
1997, the "Advisor") from February 1996 until
December 1997 and as President and a director of
the Advisor from 1991 until February 1996. On
January 1, 1998, the Advisor merged into a
wholly-owned subsidiary of the Company which
resulted in the Company becoming a
self-administered and self-managed real estate
investment trust. See "Certain Transactions." Mr.
Bourne has served as a director of CNL American
Properties Fund, Inc., a public, unlisted real
estate investment trust, since May 1994. He also
served as President of CNL American Properties
Fund, Inc. from May 1994 to February 1999 and as
Treasurer from February 1999 through August 1999
and from May 1994 through December 1994. Mr.
Bourne has also served as President, Vice
Chairman of the Board and as a director of CNL
Hospitality Properties, Inc. since June 1996, and
as President and a director of CNL Retirement
Properties, Inc. since December 1997, both of
which are public, unlisted real estate investment
trusts. Mr. Bourne also serves as President and
Treasurer of CNL Financial Group, Inc. ("CNL
Group"), a privately held, diversified real
estate company engaged in the principal business
of real estate finance. In addition, Mr. Bourne
is President, Treasurer, a director and a
registered principal of CNL Securities Corp.,
President, Treasurer and a director of CNL
Investment Company, President of CNL Realty Corp.
and Chief Investment Officer, Treasurer, director
and, until July 1997, also served as President,
of CNL Institutional Advisors, Inc., a
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registered investment advisor. All of the
entities discussed in the preceding sentence are
engaged in the principal business of real estate
finance as affiliates of CNL Group. Mr. Bourne
also serves as a director of CNL Bank, a Florida
state-chartered community bank. Since joining
CNL Group in 1979, Mr. Bourne has been active in
the acquisition, development and management of
real estate projects throughout the United
States. Mr. Bourne formerly was a Certified
Public Accountant with Coopers & Lybrand.
Kevin B. Habicht, 43........ Mr. Habicht has been Executive Vice President
and Chief Financial Officer of the Company since
December 1993 and has been Secretary and
Treasurer of the Company since January 1998.
Since May 1999, Mr. Habicht has served as a
director of Commercial Net Lease Realty Services,
Inc. ("Services"), a 98.7% owned, non-controlled
taxable subsidiary of the Company. Mr. Habicht
previously served as Assistant Secretary of the
Company from December 1993 through December 1997,
as Vice President of the Company from July 1992
through December 1993, as Assistant Secretary of
the Advisor from December 1993 through December
1997, and as Vice President of the Advisor from
its inception in 1991 through December 1993. From
1990 through December 1997, Mr. Habicht served as
Senior Vice President of CNL Institutional
Advisors, Inc. and from 1992 through 1997, Mr.
Habicht served as Treasurer of CNL Investment
Company, Senior Vice President of CNL Management
Company and Treasurer of CNL Securities Corp.
Prior to 1983, Mr. Habicht, a Certified Public
Accountant and a Chartered Financial Analyst, was
employed by Coopers & Lybrand, Certified Public
Accountants. Mr. Habicht is the brother-in-law of
James M. Seneff, Jr., a director, Chief Executive
Officer and Chairman of the Board of the Company.
Clifford R. Hinkle, 53...... Since 1991, Mr. Hinkle has been a founder,
director and executive officer of the Flagler
companies and related companies, including
Flagler Capital Corporation (1991-1998), and
Flagler Holdings, Inc., a merchant banking
company, of which Mr. Hinkle has been the
Chairman and Chief Executive Officer since 1996.
He has been a director of Century Capital
Markets, LLC, a private financial consulting
company, since 1999. Since 2000, Mr. Hinkle has
been a Vice President and Director of Murphy
Investment Management Company, a registered
investment advisor. From 1996 to 2000, Mr. Hinkle
was a director of Integrated Orthopaedics, Inc.,
an American Stock Exchange company, which owned
orthopaedic physician practices and related
facilities and was a director of Prime
Succession, Inc., a private funeral services
company. Additionally, Mr. Hinkle was a director
of MHI Group, Inc., a New York Stock Exchange
company, which owned and operated funeral homes
and cemeteries from November 1993 until November
1995, and was the Chief Executive Officer of MHI
Group, Inc. from April 1995 until November 1995
when it was acquired by a subsidiary of The
Loewen Group. From 1987 to
4
1991, Mr. Hinkle was the Executive Director and
Chief Investment Officer of the State Board of
Administration of Florida and managed over $40
billion in various trust funds.
Richard B. Jennings, 58..... Mr. Jennings currently serves as President of
Realty Capital International, LLC, a real estate
investment banking firm, which he founded in
1991, and as President of Jennings Securities
LLC, a National Association of Securities
Dealers, Inc. ("NASD") member securities firm,
which he founded in 1995. From 1990 to 1991, Mr.
Jennings served as Senior Vice President of
Landauer Real Estate Counselors, and from 1986 to
1989, Mr. Jennings served as Managing
Director--Real Estate Finance at Drexel Burnham
Lambert Incorporated. From 1969 to 1986, Mr.
Jennings oversaw the REIT investment banking
business at Goldman, Sachs & Co. During his
tenure at Goldman, Sachs & Co., Mr. Jennings
founded and managed the Mortgage Finance Group
from 1979 to 1986. Mr. Jennings also serves as an
outside Director of Alexandria Real Estate
Equities, Inc. and MBOP Liquidating Trust. He is
a licensed NASD Principal and a New York Real
Estate Broker.
Ted B. Lanier, 67........... Mr. Lanier was the Chief Executive Officer of
the Triangle Bank and Trust Company, Raleigh,
North Carolina ("Triangle"), from January 1988
until March 1991. Mr. Lanier also was the
Chairman of Triangle from January 1989 until
March 1991 and its President from January 1988
until January 1989. Since his retirement in 1991
as Chairman and Chief Executive Officer of
Triangle, Mr. Lanier has managed his personal
investments and managed investment accounts for
various individuals and trusts.
Robert C. Legler, 59........ Mr. Legler currently serves as a director of
Ligonier Ministries of Lake Mary, Florida and
B.G. Balmer & Company, a Philadelphia based
regional insurance company. From October 1999
through October 2001, he served as director of
the Indian River Hospital Foundation of Vero
Beach, Florida. From 1973 until 1990, Mr. Legler
was the founder and chairman of privately-held
First Marketing Corporation, Americas largest
publisher of newsletters serving nearly 500
clients in the commercial banking, brokerage,
health care, cable television, travel and retail
industries. Upon the sale of the company to Reed
(now Reed Elsiever) in 1990, Mr. Legler served as
non-executive Chairman of the Board of First
Marketing until his retirement in September 2000.
Robert Martinez, 67......... From 1987 until 1991, Mr. Martinez served as
the fortieth governor of the state of Florida and
from 1979 until 1986 served as the mayor of
Tampa, Florida. Since 1993, he has been the
principal of Bob Martinez & Co., a Tampa, FL
based government consulting firm and since 1999,
he has also served as a managing director for
Carlton Fields Government Consulting, providing
state and local executive branch and legislative
branch government lobbying services throughout
the state of Florida. Mr. Martinez also has
served on the Management Advisory Committee of
Koning Restaurants International, an operator of
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Pizza Hut restaurants, since 2001. From 1997 to
2001, Mr. Martinez served as a director of
PRIMEX Technologies, Inc., a manufacturer of
ordinances and aerospace products for the United
States Department of Defense and commercial
enterprises. From 1996 through 1999, he was a
co-founder, president, and director of Pro-Tech
Monitoring, Inc., producer of a global
positioning technology system for criminal
justice agencies. In addition, Mr. Martinez
served as a director of Circle K, a national
convenience store chain, from 1995 to 1996.
Gary M. Ralston, 51......... Mr. Ralston has served as President and Chief
Operating Officer of the Company since February
1996. Since May 1999, Mr. Ralston has served as a
director of Services. From February 1996 until
December 1997 he served as President of the
Advisor. From December 1993 until February 1996
he served as Executive Vice President and Chief
Operating Officer of the Company. Mr. Ralston
previously served as Vice President of the
Company from July 1992 through December 1993 and
as Vice President of the Advisor from its
inception in 1991 through December 1993. From
1988 to 1992, he also served as a Senior Vice
President of CNL Properties, Inc., a real estate
investment and asset/property management company
affiliated with CNL Group, Inc. From 1983 until
1988, Mr. Ralston was Vice President of ENCO, a
real estate investment and asset/property
management firm located in Lakeland, Florida. Mr.
Ralston holds the Certified Commercial Investment
Member, Society of Industrial and Office
Realtors, Specialist in Real Estate Securities,
Certified Property Manager and Counselor of Real
Estate designations and is also a Florida
licensed Real Estate Broker, Mortgage Broker and
Certified Building Contractor. Mr. Ralston is a
member of the International Council of Shopping
Centers, a full member of the Urban Land
Institute, a former member of the Board of
Governors of the National Association of Real
Estate Investment Trusts, a member of the
Governing Council of the CCIM Institute and a
member of the Steering Committee of the Capital
Consortium.
James M. Seneff, Jr., 55.... Mr. Seneff has been Chief Executive Officer of
the Company since July 1992 and Chairman of the
Board of the Company since June 1992. Mr. Seneff
has served as Chairman of the Board, Chief
Executive Officer, director, and principal
stockholder of CNL Group since its formation in
1973. From 1991 to December 1997, Mr. Seneff
served as Chief Executive Officer and Chairman of
the Board of the Advisor. Mr. Seneff has served
as Chairman of the Board, Chief Executive Officer
and a director of CNL Hospitality Properties,
Inc. and CNL Retirement Properties, Inc. since
1996 and 1997, respectively. He has served as a
director of CNL American Properties Fund, Inc.
since its inception in 1994, as its Chairman of
the Board from 1994 to 2000, as its Chief
Executive Officer from 1994 through August 1999
and as Co-Chief Executive Officer since December
2000. Mr. Seneff has been Chairman of the Board
of Directors, director, and Chief Executive
Officer of CNL Securities Corp. since its
formation in 1979. Mr. Seneff also has
6
held the position of Chairman of the Board of
Directors,Chief Executive Officer, President and
director of CNL Management Company, a registered
investment advisor, since its formation in 1976,
has served as Chief Executive Officer, Chairman
of the Board and a director of CNL Investment
Company since 1990 and has held the position of
Chief Executive Officer, Chairman of the Board
and a director of CNL Institutional Advisors,
Inc., a registered investment advisor, since its
inception in December 1990. Mr. Seneff serves as
Chairman of the Board of CNL Bank and previously
served as a member of the board of directors of
First Union National Bank of Florida and as a
member of the Orlando Advisory Board of First
Union. From 1986 to 1994, Mr. Seneff served on
the Florida Investment Advisory Council (the
"Council"), which oversees the $40 billion
Florida state retirement plan, and was Chairman
of the Council from 1991 to 1992. Since 1971,
Mr. Seneff has been active in the acquisition,
development and management of real estate
projects throughout the United States. Mr.
Seneff is the brother-in-law of Kevin B.
Habicht, a director, Executive Vice President,
Secretary, Treasurer and Chief Financial Officer
of the Company.
In the event that any nominee(s) should be unable to accept the office of
director, which is not anticipated, it is intended that the persons named in
the Proxy will vote FOR the election of such other person in the place of such
nominee(s) for the office of director as the Board of Directors may recommend.
The affirmative vote of a plurality of the shares of Common Stock present in
person or represented by proxy and entitled to vote is required for the
election of directors. Any director that does not receive an affirmative vote
of a plurality of the shares of Common Stock will not be elected.
A majority of the Company's directors are required to be independent, as
that term is defined in the Company's Bylaws, as amended (the "Bylaws").
Messrs. Bourne, Hinkle, Jennings, Lanier, Legler and Martinez qualify as
independent directors (the "Independent Directors"). Independent Directors are
those persons who are not affiliated, directly or indirectly, with any person,
corporation, association, company, trust, partnership (general or limited) or
other organization to whom the Board of Directors has delegated management
duties. In addition, an Independent Director cannot perform any services for
the Company other than as a director.
Compensation of Directors
During the year ended December 31, 2001, the Company paid each director
who was a director for the entire year $18,000 for serving on the Board of
Directors. Each director received $1,000 per Board of Directors meeting
attended and $1,000 per committee meeting attended. Additionally, the Company
awarded each Independent Director 1,000 shares of restricted stock which vests
over two years. Messrs. Habicht, Ralston and Seneff have waived all of their
director compensation. The Board of Directors believes this compensation level
has been comparable to that provided by many other companies in the real estate
investment trust ("REIT") industry.
The Board of Directors met seven times during the year ended December 31,
2001. Each nominated member attended at least 86% of the total meetings of the
Board of Directors and of any committee on which he served.
Committees of the Board of Directors
The Company has a standing Audit Committee, the members of which are
selected by the full Board of Directors each year. The current members of the
Audit Committee are Messrs. Edward Clark and Lanier, who have served since June
1992, and Mr. Hinkle, who has served since June 1998. The Audit Committee makes
recommendations to the Board of Directors as to the independent accountants of
the
7
Company and reviews with such accounting firm the scope of the audit and the
results of the audit upon its completion. Additionally, the Audit Committee
reviews the adequacy of the Company's internal accounting controls. The Audit
Committee met four times during the year ended December 31, 2001.
The Company has a standing Compensation Committee, the members of which
are selected by the full Board of Directors each year. The current members of
the Compensation Committee are Messrs. Bourne, Hinkle and Jennings. The
Compensation Committee is responsible for establishing and administering
executive compensation programs including administration of the 2000 Commercial
Net Lease Realty, Inc. Performance Incentive Plan (the "2000 Plan") as well as
approval of changes in directors' fees. The Compensation Committee met two
times during the year ended December 31, 2001.
The Company has a standing Nominating Committee. The current members of
the Nominating Committee are Messrs. Bourne, Clark, Jennings and Lanier. The
Nominating Committee's primary responsibility is to consider potential new
directors for the Company and recommend candidates to the Board. The Nominating
Committee met once during the year ended December 31, 2001.
Executive Officers
The executive officers of the Company are listed below. Mr. Tracy is an
executive officer of Services.
Name Position
------------------------------- ---------------------------------------------------------------------------
James M. Seneff, Jr. .......... Chief Executive Officer and Chairman of the Board
Gary M. Ralston ............... President and Chief Operating Officer
Kevin B. Habicht .............. Executive Vice President, Chief Financial Officer, Secretary and Treasurer
Dennis E. Tracy ............... Executive Vice President and Chief Development Officer of Services
The background of Messrs. Seneff, Ralston and Habicht are described at
"PROPOSAL I--ELECTION OF DIRECTORS--Nominees."
Dennis E. Tracy, age 52, has served as Executive Vice President and Chief
Development Officer of Services since January 2002. From August 2000 to
December 2001, he served as Senior Vice President and Chief Development Officer
of Services, and from May 1999 to July 2000 as Senior Vice President of
Development for Services. He served in that same capacity for the Company from
January 1998 to April 1999 and for the Advisor from January 1996 to December
1997. From January 1994 to December 1995, Mr. Tracy served as Vice President of
Development for the Advisor and from June 1992 to December 1993, Project
Manager for the Advisor. From November 1990 to June 1992, he served as Project
Manager for CNL Group. Prior to joining CNL Group, Mr. Tracy founded Tracy
Homes, Inc., a luxury custom home building company and served as its president
and owner. Mr. Tracy holds the Certified Commercial Investment Member
professional designation and is a past member of the Advisory Board of the
Retail Contractors Association.
The Company also employs certain other officers listed below:
Mez R. Birdie, age 52, has served as Senior Vice President of Asset
Management of the Company since April 1998. From January 1998 to April 1998,
Mr. Birdie served as Vice President of Asset Management of the Company. From
December 1993 to December 1997, Mr. Birdie served as Vice President of Asset
Management of the Advisor. From June 1992 to November 1993, Mr. Birdie served
as Director of Retail Management of the Advisor and from 1987 to 1992, Mr.
Birdie served as Director of Property Management for Charles Wayne Properties,
Inc. Mr. Birdie has been awarded the Certified Commercial Investment Member,
Certified Property Manager and Senior Certified Shopping Center Manager
professional designations, and has a total of 20 years experience in the field
of commercial asset management. Mr. Birdie is a member of the faculty and has
served on the Executive Committee of the Institute of Real Estate Management.
Courtney S. Hubbard, age 38, has served as Director of Due Diligence and
Research of the Company since January 1, 1998. From February 1995 to December
1997, Ms. Hubbard served as Director of Due Diligence and Research of the
Advisor. From 1991 to 1995, Ms. Hubbard was a senior associate at Clayton,
Roper & Marshall, a real estate appraisal and consulting firm, and from 1989 to
1991 she was a
8
senior associate with Kampe Appraisals, Inc. She earned a Master of Arts Degree
in Real Estate from the University of Florida. Ms. Hubbard holds the MAI
(Member, Appraisal Institute) and CCIM (Certified Commercial Investment Member)
designations, and serves on the Steering Committee for the University of
Florida Real Estate Alumni Network.
Dawn A. Peterson, age 38, has served as Vice President and Controller of
the Company since 1999. Ms. Peterson served as Director of Accounting and
Financial Reporting of the Company from January 1, 1998 until December 1999 and
of the Advisor from July 1994 until December 1997. From 1991 to 1994, Ms.
Peterson was employed by Coopers & Lybrand as a Certified Public Accountant
(CPA). Ms. Peterson earned a Bachelor of Science degree in Business
Administration and a Master of Science Degree in Accountancy from the
University of Central Florida. She is a member of the American Institute of
Certified Public Accountants.
Commercial Net Lease Realty Services, Inc. is a 98.7% owned,
non-controlled taxable subsidiary of the Company. Services provides development
and leasing services to the Company and third parties and employs the following
senior officers:
David F. Ballew, age 48, has served as Senior Vice President of Services
since August 2001 and is responsible for business development and establishing
developer affiliate relationships. From 1999 to 2001, Mr. Ballew was President
and CEO of BVT Equity Holdings, Inc. in Atlanta, Georgia. He was a Regional
Director of Acquisitions and Development for Weingarten Realty Investors from
1998 to 1999. He also served as Vice President of Acquisitions and Retail for
Insignia/ESG & Paragon Group, Inc. from 1994 to 1998. Mr. Ballew received an
A.B. from Bowdoin College in Brunswick, Maine. He received a J.D. from Suffolk
University Law School. He holds broker's licenses in Florida, Massachusetts,
Maine and Georgia. He is a member of the International Council of Shopping
Centers, the Urban Land Institute, the Massachusetts Bar Association and is
admitted to practice before the U.S. Supreme Court.
Jay Bastian, age 51, has served as Senior Vice President of Acquisitions
of Services since May 1, 1999 and previously held the same position at the
Company, serving with the Company and its affiliate CNL Investment Company from
1989 to 1992. He is responsible for developing new acquisitions for the
Company. Prior to 1989, he was Director of Real Estate for a number of firms
including Rite Aid, Quaker State Minit Lube, Wendy's International, and a
Holiday Inn franchisee for a total corporate real estate career of 26 years. He
is a member of the National Association of Corporate Executives, the
International Council of Shopping Centers, and the Turnaround Management
Association.
Joseph A. Ciardiello, age 54, has served as Senior Vice President of
Corporate Acquisitions of Services since May 1, 1999 and held the same position
at the Company from January 1, 1998 until May 1, 1999. From May 1996 through
December 1997, Mr. Ciardiello served as Senior Vice President of Corporate
Acquisitions of the Advisor. From 1992 to 1996, he served as Vice President of
Real Estate and Development at Color Tile, Inc. Prior to that he served as Vice
President of Real Estate Price Club East Coast and Vice President of
Development at Marriott Corporation. Mr. Ciardiello also served as National
Director of Real Estate at McDonald's Corporation where he developed their
first joint venture real estate projects. Mr. Ciardiello holds the Certified
Commercial Investment Member designation and is a member of the National
Association of Corporate Real Estate Executives (NACORE). Mr. Ciardiello has
over 20 years of retail real estate experience.
Fred J. Hohnadel, Jr., age 59, has served as Senior Vice President of Real
Estate of Services since June 2001. Mr. Hohnadel is responsible for developing
and maintaining tenant relationships. Additionally, Mr. Hohnadel assists each
of the regional business units with implementing their development plans. Prior
to joining the Company, Mr. Hohnadel served from 1990 to 2000 as a consultant
and exclusive broker in representing Wal-Mart Stores, Inc. in the Northeast
United States. From 1974 to 1990, Mr. Hohnadel was the Owner and Chief
Executive Officer of Community Shopping Centers, a shopping center development
company based in Orlando, Florida, that developed approximately 4,000,000
square feet consisting of 32 shopping centers in the southeast. Mr. Hohnadel
has been a member of the International Council of Shopping Centers since 1974
and is a licensed Florida Real Estate Broker.
Edwin B. Hopkins, age 61, has served as Regional Vice President of Real
Estate of Services since May 1999 and held the same position at the Company
from May 1997 until May 1999. He is responsible
9
for the management and development of the Eckerd build-to-suit program in North
Texas, Oklahoma, Kansas, and North Louisiana. Prior to joining the Company, Mr.
Hopkins was a managing agent with the FDIC/RTC responsible for oversight of
approximately $1.5 billion of real estate assets in the southwest region. Prior
to that, he served as president and CEO of Southern Federal Savings Bank and as
group vice president and manager of the commercial real estate development
division of Hunt Properties, Inc., a Dallas-based real estate development
company. He is a Board member of the North Texas Commercial Association of
Realtors, a member of the Dallas Forty, a Certified Commercial Investment
Member (CCIM), a member of International Council of Shopping Center (ICSC) and
holds a Texas Real Estate Broker's license.
Diane L. McCarey, age 47, has served as Vice President of Build to Suit,
is responsible for the management of Service's and the Company's build to suit
program for numerous retailers in the state of Florida. She joined Services in
May 1999, as Director of Build to Suit, and held the same position at the
Company from March 1995 until that time. Prior to joining the Company, Ms.
McCarey was co-owner of McCarey Builders, a custom home building company from
1987 to 1995 and senior associate for Matonis, MacDermott & Company,
specializing in commercial property and eminent domain appraisals from 1985 to
1991. She has 20 years of real estate experience encompassing a broad range of
development, construction and consulting disciplines. Ms. McCarey graduated
from the University of Florida with a Bachelor of Science degree in Real
Estate. She is a licensed real estate salesman, holds the Certified Commercial
Investment Member (CCIM) professional designation, is a member of the
International Council of Shopping Centers, serves on the Steering Committee for
the University of Florida Real Estate Alumni Network and serves on the board of
directors for CCIM Central District, co-chairing the Education Committee.
Cynthia C. Shelton, age 48, has served as Vice President of Corporate
Acquisitions of Services since May 1999 and held the same position at the
Company from January 1998 until May 1999. From May 1996 to December 1997, Ms.
Shelton served as Director of Acquisitions of the Advisor. Ms. Shelton served
from 1995 to 1996 as Vice President of the Ross Realty Group, a real estate
brokerage and property management company that specializes in retail
properties, and from 1985 to 1995 as the Real Estate Manager for KinderCare
Learning Centers, Inc., the largest child care company in the United States.
Ms. Shelton has 26 years of experience in commercial brokerage and site
selection and she holds the Certified Commercial Investment Member (CCIM)
designation and is a Florida licensed Real Estate Broker. Ms. Shelton is the
2002 President of The CCIM Institute and serves on the board of directors for
the Florida Association of Realtors, the National Association of Realtors and
the Florida CCIM Chapter.
Mary E. Wilkes, age 47, has served as In-House Counsel for Services since
May 1999 and held the same position at the Company from November 1997 until
that time. From 1994 to November 1997 Ms. Wilkes was an attorney with a law
firm that represented the Company in its build to suit development program.
Prior to 1994 she was an associate with the Winderweedle, Haines, Ward &
Woodman, P.A. Law Firm in Winter Park, Florida for six years specializing in
commercial real estate transactions and a claims attorney for Commonwealth Land
Title Insurance Company for two years. Ms. Wilkes received a Bachelor of
Science in Finance, a Master's in Business Administration, and a Juris
Doctorate in Law from the University of Florida and is a member of the Florida
Bar.
Thomas L. Yeager, age 60, has served as Vice President of BTS Program
Business of Services since May 1999 and held the same position at the Company
from May 1998 until May 1999. Mr. Yeager is responsible for managing BTS
program business in the Midwest and Southeast regions. Prior to joining the
Company in 1998, he accumulated 28 years of corporate real estate experience
with such firms as Extended Stay of America Inc., Long John Silver's Inc.,
Speed Muffler King, Inc., Dunkin' Donuts of America, Inc. and Shell Oil
Corporation. He is currently a member of the International Council of Shopping
Centers.
10
AUDIT COMMITTEE REPORT
The information contained in this report shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission (the "Commission"), nor shall such information be incorporated by
reference into any previous or future filings under the Securities Act of 1933,
as amended or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company incorporated it by specific reference.
The Audit Committee of the Commercial Net Lease Realty Board of Directors
(the "Committee") is composed of three independent directors and operates under
a written charter adopted by the Board of Directors. The members of the
Committee are Ted B. Lanier (Chair), Edward Clark and Clifford R. Hinkle. The
Committee held four meetings during 2001.
Management is responsible for the Company's financial statements, internal
controls and financial reporting process. The independent accountants are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with auditing standards generally accepted
in the United States of America and to issue a report thereon. The Committee's
responsibility is to monitor and oversee these processes.
In this context, the Committee has met and held discussions with
management and the independent accountants. Management represented to the
Committee that the Company's consolidated financial statements were prepared in
accordance with accounting principles generally accepted in the United States
of America, and the Committee has reviewed and discussed the consolidated
financial statements with management and the independent accountants. The
Committee discussed with the independent accountants matters required to be
discussed by Statement on Auditing Standards No. 61 (Codification of Statements
on Auditing Standards, AU Section 380).
The Company's independent accountants also provided to the Committee the
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee discussed
with the independent accountants that firm's independence. The Audit Committee
has considered the payments made under the heading "All Other Fees" below to be
compatible with maintaining the independent accountants' independence.
Based on the review and discussions referred to above, the Committee
recommended that the Board of Directors include the audited consolidated
financial statements in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001 filed with the Securities and Exchange Commission.
Ted B. Lanier, Chairman
Edward Clark
Clifford R. Hinkle
AUDIT COMMITTEE DISCLOSURE
Fees billed to the Company for the year ended December 31, 2001 by the
independent accountants were as follows:
- Audit Fees: $84,050 for services rendered in connection with the annual
audit and the quarterly reviews of the financial statements of the
Company and its affiliates.
- Financial Information Systems Design and Implementation Fees: None
- All Other Fees: $55,400 for tax services of the Company and its
affiliates; $51,550 for consents and comfort letters in connection with
securities registrations and offerings; $70,000 in connection with the
acquisition of Captec Net Lease Realty, Inc.
11
EXECUTIVE COMPENSATION
Executive Compensation Tables
The following table shows the annual and long-term compensation paid by
the Company to the Chief Executive Officer and the three other executive
officers of the Company for services rendered in all capacities to the Company
during the fiscal years ended December 31, 2001, 2000 and 1999.
Summary Compensation Table
Annual Long Term
Compensation Compensation
----------------------- ------------------------------------
Restricted Stock Option All Other
Name and Principal Position Year Salary Bonus Stock Awards (1) Awards (Shares) Compensation (2)
------------------------------ ------ ----------- ----------- ------------------ ----------------- -----------------
James M. Seneff, Jr. ......... 2001 $140,000 $ 0 $ 534,000 0 $ 0
Chief Executive Officer & 2000 $135,000 $ 0 $ 0 23,000 $ 0
Chairman of the Board 1999 $130,000 $111,150 $ 0 0 $ 0
Gary M. Ralston .............. 2001 $297,000 $ 60,000 $1,335,000 0 $5,100
President and Chief 2000 $286,000 $ 0 $ 0 46,000 $4,800
Operating Officer 1999 $275,000 $235,125 $ 0 0 $4,800
Kevin B. Habicht ............. 2001 $200,000 $ 40,000 $ 720,900 0 $5,100
Executive Vice President, 2000 $182,000 $ 0 $ 0 23,000 $4,800
Chief Financial Officer, 1999 $175,000 $149,625 $ 0 0 $4,800
Secretary and Treasurer
Dennis E. Tracy .............. 2001 $175,000 $ 35,000 $ 534,000 0 $5,100
Executive Vice President and 2000 $150,000 $ 30,000 $ 0 11,500 $4,800
Chief Development Officer 1999 $115,000 $ 25,000 $ 0 0 $4,800
of Services
----------
(1) Messrs. Seneff, Ralston, Habicht and Tracy were awarded 40,000, 100,000,
54,000 and 40,000 shares, respectively, of restricted stock in 2001 which
had a value of $520,000, $1,300,000, $702,000 and $520,000 respectively,
based on the closing share price of $13.00 on the New York Stock Exchange
on December 31, 2001. The restricted shares awarded begin vesting in 2002
and are subject to forfeiture. The share awards vest 15% in 2002, 15% in
2003, 15% in 2004, 25% in 2005 and 30% in 2006 and recipients are
eligible to receive dividends paid on unvested shares.
(2) Represents Company contributions to the Company's 401(k) Plan.
The Company did not grant any stock options to named executive officers
for the year ended December 31, 2001. The Company has not granted any SARs.
The following table sets forth certain information with respect to
unexercised stock options held by the named executive officers of the Company
at December 31, 2001. The named executive officers did not exercise any stock
options during the fiscal year ended December 31, 2001.
Option Values at December 31, 2001
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
December 31, 2001 December 31, 2001 (1)
------------------------------- ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
------------------------------ ------------- --------------- ------------- --------------
James M. Seneff, Jr. ......... 341,167 15,334 $56,519 $36,418
Gary M. Ralston .............. 256,332 30,668 $54,538 $72,837
Kevin B. Habicht ............. 171,666 15,334 $34,082 $36,418
Dennis E. Tracy .............. 50,333 7,667 $10,791 $18,209
----------
(1) Based on the closing price of $13.00 on the New York Stock Exchange on
December 31, 2001.
12
Under the 2000 Plan, directors, officers, and other key employees and key
persons associated with the Company are eligible to receive options under this
plan. Additionally, the Company has adopted a defined contribution savings plan
(the "401(k) Plan") which covers all employees, including executive officers,
who have completed 12 months of service. Participants can contribute up to 15%
of annual compensation on a pre-tax basis. The Company provides a 50% matching
contribution up to 3% of annual compensation, with a maximum of $5,100. All
participant contributions are fully vested as soon as they are made. Company
contributions are subject to a vesting schedule and are 100% vested after six
years of service.
Employment Agreements
The Company has entered into employment agreements with each of Messrs.
Seneff, Ralston and Habicht. Each agreement will expire on December 31, 2002,
but is subject to automatic one-year renewals. Each agreement contains a
non-compete provision applicable during the term and provides for a salary,
bonus and options to purchase shares of Common Stock. Each agreement also
contains severance provisions that call for payment to the executive of either
twice the executive's annual salary (in the cases of Messrs. Ralston and
Habicht) or the executive's annual salary (in the case of Mr. Seneff) in the
event that the executive is terminated without cause or the executive resigns
for good reason (including material reduction of responsibilities or reduction
in salary, failure of a successor to the Company to assume the agreement or the
Company's material and willful breach of the agreement), in addition to the
continuation of certain fringe benefits and the immediate vesting of options.
The following section of this Proxy Statement shall not be deemed to be
incorporated into any filing by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, including any such incorporation by reference
of any other portions of this Proxy Statement.
COMPENSATION COMMITTEE REPORT
The Board of Directors appointed a Compensation Committee comprised of the
undersigned, Messrs. Bourne, Hinkle and Jennings. Members of the Compensation
Committee, all of whom must be independent directors of the Company, are
selected each year by the full Board of Directors. The Compensation Committee
is responsible for establishing and administering executive compensation
programs including administration of the 2000 Commercial Net Lease Realty, Inc.
Performance Incentive Plan (the "2000 Plan") as well as approval of changes in
directors' compensation.
The Compensation Committee believes the Company's degree of success is
largely attributable to the talent and dedication of its associates and to the
management and leadership efforts of its executive officers. The goal of the
Compensation Committee is to establish a compensation program that will attract
and retain talented corporate officers, motivate them to perform to their
fullest potential, as well as align their long-term interests with the
interests of the Company's stockholders. In evaluating performance, the
Compensation Committee considers quantitative and qualitative improvement in
the Company's Funds From Operations ("FFO"), capital structure, and individual
performance and contribution to corporate goals and objectives.
Historically, the key elements in the Company's executive compensation
program has consisted of salary, annual bonus and stock options. The Committee
completed a comprehensive evaluation of the Company's executive compensation
plan in order to assure such plan is competitive and to more effectively
utilize the compensation elements of the 2000 Plan. In making compensation
decisions, the Compensation Committee considers the compensation practices and
financial performance of other REIT industry participants and from time to time
receives assessments and advice regarding compensation practices from
independent compensation consultants. Additionally, the Compensation Committee
makes a subjective assessment of the general performance of the Company, the
officer's contribution to the Company's performance, the officer's anticipated
performance and contribution to the Company's achievement of its long-term
goals and the position, level, and scope of the officer's responsibility.
For 2001, Mr. Seneff received total cash payments of $140,000 in salary.
The Compensation Committee considered this level of payment appropriate in
light of Mr. Seneff's responsibilities and the
13
Company's performance. No bonus was paid to Mr. Seneff in 2001 in light of FFO
results below expectations. As a result of the compensation plan evaluation,
restricted stock awards vesting over a five year period were granted to
Executive Officers. Salary increases in 2001 for Executive Officers were based
on FFO per share targets, individual performance, position, tenure, experience,
leadership and competitive data in compensation surveys of comparable
companies.
COMPENSATION COMMITTEE
Clifford R. Hinkle -- Chairman
Robert A. Bourne
Richard B. Jennings
14
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on the Company's Common Stock, based on the market price of the Common
Stock and assuming reinvestment of dividends ("NNN"), with the National
Association of Real Estate Investment Trusts Equity Index ("NAREIT") and the
S&P 500 Index ("S&P 500") for the five-year period commencing January 1, 1997
and ending December 31, 2001. The graph assumes the investment of $100 on
January 1, 1997.
Comparison of Five-Year Cumulative Total Return
[GRAPHIC OMITTED]
Total Return Indexes
(December 31, 1997 = 100)
DATE S&P 500 NAREIT NNN
---- ------- ------ ---
Jan-97 100.00 100.00 100.00
Mar-97 104.96 100.70 94.80
Jun-97 113.15 105.70 100.35
Sep-97 120.47 118.20 106.41
Jan-98 128.51 120.26 121.35
Mar-98 141.70 119.70 121.69
Jun-98 147.87 114.21 113.90
Sep-98 130.23 102.19 105.09
Jan-99 158.92 99.21 97.44
Mar-99 169.67 94.43 84.55
Jun-99 178.96 103.95 99.65
Sep-99 182.09 95.59 84.63
Jan-00 192.13 94.63 81.62
Mar-00 189.57 96.89 88.28
Jun-00 197.71 107.10 91.56
Sep-00 211.80 115.29 93.03
Jan-01 184.02 119.58 94.18
Mar-01 174.02 120.05 112.00
Jun-01 176.84 133.27 138.24
Sep-01 160.15 129.77 131.59
Dec-01 161.53 136.24 132.24
15
SECURITY OWNERSHIP
The following table sets forth, as of March 31, 2002, the number and
percentage of outstanding shares beneficially owned by all persons known by the
Company to own beneficially more than five percent of the Company's Common
Stock, by each director and nominee, by each of the executive officers named in
"Executive Compensation," above, and by all officers and directors as a group,
based upon information furnished to the Company by such stockholders, officers
and directors. Unless otherwise noted below, the persons named in the table
have sole voting and sole investment power with respect to each of the shares
beneficially owned by such person.
Number of Shares Percent
Name and Address of Beneficial Owner Beneficially Owned of Shares
--------------------------------------------------------------------- -------------------------------------- ------------
Robert A. Bourne (1) ................................................ 678,014 (2)(3) 1.63%
450 South Orange Avenue, Suite 900
Orlando, Florida 32801
Edward Clark (1) .................................................... 22,710 (6) (4)
1636 Village Glen Drive
Raleigh, N.C. 27612
Kevin B. Habicht (5) ................................................ 295,791 (7) (4)
450 South Orange Avenue, Suite 900
Orlando, FL 32801
Clifford R. Hinkle (1) .............................................. 84,825 (8) (4)
111 South Monroe Street, Suite 2000B
Tallahassee, Florida 32301
Richard B. Jennings (1) ............................................. 1,833 (9) (4)
300 Park Avenue, 17th Floor
New York, NY 10022
Ted B. Lanier (1) ................................................... 41,275 (10) (4)
1818 Windmill Drive
Sanford, North Carolina 27330
Robert C. Legler .................................................... 0 (4)
10636 Eton Way
Vero Beach, FL 32763
Robert Martinez ..................................................... 0 (4)
777 S. Harbour Island Blvd.
Tampa, FL 33602
Gary M. Ralston (5) ................................................. 741,512 (11) 1.78%
450 South Orange Avenue, Suite 900
Orlando, FL 32801
James M. Seneff, Jr. (5) ............................................ 2,478,575 (2)(12) 5.94%
450 South Orange Avenue, Suite 900
Orlando, FL 32801
Dennis E. Tracy (14) ................................................ 166,238 (13) (4)
450 South Orange Avenue, Suite 900
Orlando, FL 32801
All directors and executive officers as a group (9 persons) ......... 4,255,077 (2)(3)(6) 10.20%
(7)(8)(9)(10)(11)
(12)(13)
----------
(1) A director of the Company.
(2) Of these shares, 255,696 shares are held by four limited partnerships, of
which Messrs. Bourne and Seneff are general partners. Messrs. Bourne and
Seneff disclaim beneficial ownership of these shares, except to the
extent of their respective percentage interests in each of these
entities.
16
(3) Includes 3,820 shares held by Mr. Bourne as custodian for his minor
children, 192,167 shares subject to currently exercisable options and 500
restricted shares for which Mr. Bourne holds sole voting power.
(4) Less than 1 percent.
(5) An executive officer and director of the Company.
(6) Includes 635 shares held by Mr. Clark's spouse, 20,755 shares subject to
currently exercisable options and 500 restricted shares for which Mr.
Clark holds sole voting power.
(7) Includes 171,667 shares subject to currently exercisable options and
54,000 restricted shares for which Mr. Habicht holds sole voting power.
(8) Includes 20,775 shares subject to currently exercisable options, 3,650
shares held by Mr. Hinkle's spouse, 50,000 shares held by Flagler
Holdings, Inc., in which Mr. Hinkle has a 27 percent interest and holds
sole voting and investment power over Company shares and 500 restricted
shares for which Mr. Hinkle holds sole voting power.
(9) Includes 833 shares subject to currently exercisable options and 500
restricted shares for which Mr. Jennings holds sole voting power.
(10) Includes 10,000 shares held by Mr. Lanier's spouse, 20,775 shares subject
to currently exercisable options, 5,000 shares held in a trust in which
Mr. Lanier is the sole Trustee and for which Mr. Lanier disclaims any
beneficial ownership and 500 restricted shares for which Mr. Lanier holds
shared voting power.
(11) Includes 256,333 shares subject to currently exercisable options and
100,000 restricted shares for which Mr. Ralston holds sole voting power.
(12) Includes 1,616,600 shares owned by CNL Financial Group, Inc. and CFG
Investments, which are wholly-owned subsidiaries of CNL Holdings, Inc.,
which Mr. Seneff and his spouse own 100% of the outstanding stock,
323,501 shares subject to currently exercisable options and 40,000
restricted shares for which Mr. Seneff holds shared voting power. In
addition, 4,700 of these shares are held by a trust, of which Mr. Seneff
serves as trustee and for which Mr. Seneff disclaims beneficial
ownership.
(13) Includes 50,333 shares subject to currently exercisable options and
40,000 restricted shares for which Mr. Tracy holds sole voting power.
(14) An executive officer of Services.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership on Forms 3, 4
and 5 with the Securities and Exchange Commission (the "SEC") and the New York
Stock Exchange. Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with copies of all Forms
3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received, written representations from certain reporting persons that they were
not required to file Forms 5 for the last fiscal year and other information
known to the Company, the Company believes that all its officers, directors,
and greater than ten percent beneficial owners complied with all filing
requirements applicable to them with respect to transactions during fiscal
2001, except for Robert A. Bourne, who failed to timely file one Form 4
reporting a purchase of 1,650 shares of the Company's common stock in a single
transaction.
CERTAIN TRANSACTIONS
On December 18, 1997, the Company's stockholders voted to approve an
agreement and plan of merger with CNL Realty Advisors, Inc. (the "Advisor"),
whereby the stockholders of the Advisor agreed to exchange 100% of the
outstanding shares of common stock of the Advisor for up to 2,200,000 shares
17
(the "Share Consideration") of the Company's Common Stock (the "Merger"). As a
result, the Company became a fully-integrated, self-administered real estate
investment trust effective January 1, 1998. Ten percent of the Share
Consideration (220,000 shares) was paid January 1, 1998, and the balance (the
"Share Balance") of the Share Consideration is to be paid over time based upon
the Company's completed property acquisitions and completed development
projects in accordance with the merger agreement. The market value of the
common shares issued on January 1, 1998 was $3,933,000. Pursuant to the
agreement and plan of merger, the Company is required to issue the shares
within 90 days after the shares become issuable. At the time of the Merger, the
Advisor was owned 76.8% by CNL Financial Group, Inc. (formerly CNL Group, Inc.)
which is wholly-owned by Mr. Seneff and his wife, 8.5% by Mr. Bourne, 8.5% by
Mr. Ralston and 3.1% by Mr. Habicht. The Share Consideration, to the extent
paid, is allocated to such persons in accordance with such percentages. As of
December 31, 2001, the Company has issued the entire Share Balance. The market
value of the Share Balance issued was $24,736,000, all of which was charged to
operations.
The Company leases its office space from an affiliate of Mr. Seneff. The
Company's lease expires in October 2014. During the year ended December 31,
2001, the Company incurred rental expenses in connection with the lease of
$601,000. The Company subleases a portion of its office space to affiliates of
Mr. Seneff. During the year ended December 31, 2001, the Company earned
$368,000 in rental income and recognized $74,000 in accrued rental income
related to these subleases.
As of December 31, 2001, the Company held four mortgages totaling
$8,514,000 with Messrs. Seneff and Bourne. The mortgages mature between March
2002 and April 2002 and bear interest at a weighted average interest rate of
8.8%.
In connection with the revolving credit facilities between the Company and
Services and the Company and wholly-owned subsidiaries of Services, the Company
received $6,999,000 in interest and fees during the year ended December 31,
2001. In addition, Services paid the Company $432,000 in expense reimbursements
for accounting services provided by the Company during the year ended December
31, 2001. Messrs. Seneff, Ralston and Habicht collectively own 100% of the
voting common stock of Services, which represents a 1.3% equity interest.
During the year ended December 31, 2001, an affiliate of Mr. Seneff
provided certain administrative, tax and technology services to the Company. In
connection therewith, the Company paid $427,000 in fees relating to these
services.
A wholly-owned subsidiary of Services provides a $6,000,000 loan and a
$25,000,000 line of credit with affiliates in which Messrs. Seneff, Ralston and
Habicht own an equity interest. The loan and line of credit are collateralized
by substantially all of the assets of the respective affiliate. As of December
31, 2001, $16,950,000 was outstanding and $8,050,000 was available for future
borrowings on the line of credit.
The Company has guaranteed bank loans made to Messrs. Seneff, Ralston and
Tracy totaling $3,746,000. Each of the loans is full recourse to the respective
officer and is collateralized by the common shares of the Company that were
purchased with the proceeds from the loans.
INDEPENDENT AUDITORS
Upon recommendation of and approval by the Audit Committee, KPMG LLP has
been selected to act as independent certified public accountants for the
Company during the current fiscal year.
A representative of KPMG LLP will be present at the annual meeting and
will be provided with the opportunity to make a statement if desired. Such
representative will also be available to respond to appropriate questions.
18
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
annual meeting other than those stated above. If any other business should come
before the annual meeting, the person(s) named in the enclosed Proxy will vote
thereon as he or they determine to be in the best interests of the Company.
PROPOSALS FOR NEXT ANNUAL MEETING
Any stockholder proposal to be considered for inclusion in the Company's
proxy statement and form of proxy for the annual meeting of stockholders to be
held in 2003 must be received at the Company's office at 450 South Orange
Avenue, Suite 900, Orlando, Florida 32801, no later than December 9, 2002.
Stockholders desiring to make nominations for directors and/or to bring a
proper subject before a meeting should do so by notice delivered to the
Secretary of the Company. The proxy for the 2002 annual meeting will grant
discretionary authority to vote with regard to nominations and proposals unless
(a) notice is received by February 24, 2002 and (b) the conditions set forth in
Rule 14a-4(c)(2)(i)-(iii) under the Exchange Act are met. The Company requests
that such stockholder notice set forth (a) as to each nominee for director, all
information relating to such nominee that is required to be disclosed in
solicitations of proxies for election of directors under the proxy rules of the
Securities and Exchange Commission; (b) as to any other business, 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 stockholder; and (c) as to the stockholder, (i) the
name and address of such stockholder, (ii) the class or series and number of
shares of stock of the Company which are owned beneficially and of record by
such stockholder, and (iii) the date(s) upon which the stockholder acquired
ownership of such shares.
By Order of the Board of Directors,
/s/ Kevin B. Habicht
-------------------------
Kevin B. Habicht
Secretary
April 8, 2002
Orlando, Florida
19
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
--------------------------------------------------------------------------------
PROXY
COMMERCIAL NET LEASE REALTY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints James M.Seneff, Jr.and Kevin B.Habicht, and
either of them, attorneys and proxies, with full power of substitution and
revocation, to vote, as designated on the reverse side of this card, all shares
of Common Stock that the undersigned is entitled to vote, with all powers that
the undersigned would possess if personally present at the annual meeting
(including all adjournments thereof)of stockholders of Commercial Net Lease
Realty, Inc.(the "Meeting")to be held on June 7, 2002, at 9:30 a.m.local time,
at CNL Center 450 S.Orange Avenue, 9 th Floor, Orlando, Florida 32801.
The shares represented by this Proxy, when properly executed, will be voted in
the manner directed herein by the undersigned stockholder. If no direction is
given, the shares represented by this Proxy will be voted FOR the Proposal. In
addition, the proxies may vote in their discretion on such other matters as may
properly come before the Meeting.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE PROXY STATEMENT OF COMMERCIAL
NET LEASE REALTY, INC.
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[COMMERCIAL NET LEASE REALTY, INC LOGO]
ATTN: CAROLE JONES VOTE BY INTERNET - www.proxyvote.com
450 S. ORANGE AVENUE, SUITE 900 Use the Internet to transmit your voting
ORLANDO, FL 32801 instructions and for electronic delivery
of information up until 11:59
P.M.Eastern Time the day before the
cut-off date or meeting date.Have your
proxy card in hand when you access the
web site.ou will be prompted to enter
your 12-digit Control Number which is
located below to obtain your records and
to create an electronic voting
instruction form.
VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to transmit
your voting instructions up until 11:59
P.M.Eastern Time the day before the
cut-off date or meeting date.Have your
proxy card in hand when you call.ou will
be prompted to enter your 12-digit
Control Number which is located below
and then follow the simple instructions
the Vote Voice provides you.
VOTE BY MAIL
Mark , sign, and date your proxy card
and return it in the postage-paid
envelope we have provided or return it
to Commercial Net Lease Realty, Inc.,
c/o ADP, 51 Mercedes Way, Edgewood, NY
11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE KEEP THIS PORTION
OR BLACK INK AS FOLLOWS: FOR YOUR RECORDS
CNETLR
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
COMMERCIAL NET LEASE REALTY, INC.
PROPOSAL 1.
To elect nine Directors to serve until For Withhold For All
the next annual meeting of stockholders All All Except:
or until their successors shall have
been elected or qualified.
[ ] [ ] [ ]
Nominees:
01) Robert A.Bourne 06) Robert C.Legler
02) Kevin B.Habicht 07) Robert Martinez
03) Clifford R.Hinkle 08) Gary M.Ralston
04) Richard B.Jennings 09) James M.Seneff, Jr.
05) Ted B.Lanier
To withhold authority to vote, mark "For All Except" and write the nominee's
number on the line below.
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee, custodian, guardian or
corporate officer, please give your full title as such. If a corporation, please
sign in full corporate name by authorized officer. If a partnership, please sign
in partnership name by authorized person. The proxies are authorized in their
discretion, to vote such shares upon any other business that may properly come
before the Meeting and all adjournments and postponements thereof.
PLEASE MARK, SIGN, ATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
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Signature [PLEASE SIGN WITHIN BOX] Date
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Signature (Joint Owners) Date