DEF 14A 1 0001.txt DEF 14A 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 (Amendment No. _) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 BRANDYWINE REALTY TRUST -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, 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)(4) and 0-11. (1) Title of each class of securities to which transaction applies: -------------------------------------------------------------------------------- Common Shares of Beneficial Interest (2) Aggregate number of securities to which transaction applies: -------------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): -------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: -------------------------------------------------------------------------------- (5) Total fee paid: -------------------------------------------------------------------------------- [ ] 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 pervious filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: -------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: -------------------------------------------------------------------------------- (3) Filing Party: Brandywine Realty Trust -------------------------------------------------------------------------------- (4) Date Filed: April 11, 2001 -------------------------------------------------------------------------------- -2- BRANDYWINE REALTY TRUST 14 Campus Boulevard Newtown Square, PA 19073 (610) 325-5600 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Be Held May 7, 2001 Dear Shareholder: You are cordially invited to attend the Annual Meeting of Shareholders of Brandywine Realty Trust, a Maryland real estate investment trust, to be held at The Four Seasons Hotel, One Logan Square, Philadelphia, Pennsylvania on Monday, May 7, 2001, at 9:30 a.m., local time, to consider and take action on: 1. The election of seven Trustees to serve, together with an additional Trustee separately elected by the holder of a class of the company's preferred shares, as members of the Board of Trustees until the next annual meeting of shareholders and until their successors are elected and qualify. 2. The transaction of such other business as may properly come before the Meeting or any postponement or adjournment of the Meeting. The Board of Trustees has fixed the close of business on March 31, 2001 as the record date for determination of the shareholders entitled to notice of, and to vote at, the Meeting and any postponement or adjournment of the Meeting. Sincerely, Brad A. Molotsky, Secretary April 11, 2001 WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE ACT PROMPTLY TO VOTE YOUR SHARES WITH RESPECT TO THE PROPOSALS DESCRIBED ABOVE. YOU MAY VOTE YOUR SHARES BY MARKING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE PAID ENVELOPE PROVIDED. YOU MAY ALSO VOTE YOUR SHARES BY TELEPHONE OR THROUGH THE INTERNET BY FOLLOWING THE INSTRUCTIONS SET FORTH ON THE PROXY CARD. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON, EVEN IF YOU HAVE PREVIOUSLY SUBMITTED A PROXY IN WRITING, BY TELEPHONE OR THROUGH THE INTERNET. Brandywine Realty Trust 14 Campus Boulevard Newtown Square, PA 19073 (610) 325-5600 PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS To be held on May 7, 2001 Introduction The enclosed proxy is solicited by and on behalf of the Board of Trustees (the "Board of Trustees" or the "Board") of Brandywine Realty Trust (the "Company") for use at the Annual Meeting of Shareholders to be held on Monday, May 7, 2001 at 9:30 a.m., local time, and at any postponement or adjournment thereof (the "Meeting"). This Proxy Statement and the enclosed form of proxy are first being mailed to shareholders of the Company on or about April 11, 2001. At the Meeting, the shareholders will be asked to consider and take action on: 1. The election of seven Trustees to serve, together with an additional Trustee separately elected by the holder of a class of the Company's preferred shares, as members of the Board of Trustees until the next annual meeting of shareholders and until their successors are elected and qualify. 2. The transaction of such other business as may properly come before the Meeting or any postponement or adjournment of the Meeting. The Board of Trustees knows of no business that will be presented for consideration at the Meeting other than the matters described in this Proxy Statement. If any other matter should be presented at the Meeting for action, the persons named in the accompanying proxy card will vote the proxy in accordance with their best judgment on such matter. The delivery of this Proxy Statement shall not create any implication that the information contained herein is correct after the date hereof, April 11, 2001. How You Can Vote You may attend the Meeting and vote your shares in person. You also may choose to submit your proxies by any of the following methods: o Voting by Mail. If you choose to vote by mail, simply complete the enclosed proxy card, date and sign it, and return it in the postage-paid envelope provided. If you sign your proxy card and return it without marking any voting instructions, your shares will be voted in favor of each of the proposals presented at the Meeting. o Voting by Telephone. You may vote your shares by telephone by calling the toll-free telephone number provided on the proxy card. Telephone voting is available 24 hours a day, and the procedures are designed to authenticate votes cast by using a personal identification number located on the proxy card. The procedures allow you to appoint a proxy to vote your shares and to confirm that your instructions have been properly recorded. If you vote by telephone, you should not return your proxy card. o Voting by Internet. You may also vote through the Internet by signing on to the web site identified on the proxy card and following the procedures described in the web site. Internet voting is available 24 hours a day, and the procedures are designed to authenticate votes cast by using a personal identification number located on the proxy card. The procedures allow you to appoint a proxy to vote your shares and to confirm that your instructions have been properly recorded. If you vote through the Internet, you should not return your proxy card. If you are a shareholder whose shares are held in "street name" (i.e., in the name of a broker, bank or other record holder) you must either direct the record holder of your shares how to vote your shares or obtain a proxy, executed in your favor, from the record holder to be able to vote at the Meeting. How You May Revoke or Change Your Vote You may revoke your proxy at any time before it is voted at the Meeting by any of the following methods: o Submitting a later-dated proxy by mail, over the telephone or through the Internet. o Sending a written notice, including by telegram or telecopy, to the Secretary of the Company. You must send any written notice of a revocation of a proxy so as to be delivered before the taking of the vote at the meeting to: Brandywine Realty Trust 14 Campus Boulevard Newtown Square, Pennsylvania 19073 Attention: Brad A. Molotsky, Secretary o Attending the Meeting and voting in person. Your attendance at the Meeting will not in and of itself revoke your proxy. You must also vote your shares at the Meeting. If your shares are held in the name of a bank, broker or other record holder, you must obtain a proxy, executed in your favor, from the record holder to be able to vote at the Meeting. Record Date, Quorum and Vote Required The record date for the determination of shareholders entitled to notice of and to vote at the Meeting is the close of business on March 31, 2001. The presence, in person or by proxy, of holders of the Company's Common Shares ("Common Shares") and the Company's 8.75% Series B Senior Cumulative Convertible Preferred Shares (the "Series B Preferred Shares") representing a majority of all votes entitled to be cast at the Meeting will constitute a quorum for the transaction of business at the Meeting. All valid proxies returned will be included in the determination of whether a quorum is present at the Meeting. As of the Record Date, 36,090,761 Common Shares were issued and outstanding and 4,375,000 Series B Preferred Shares were issued and outstanding. Each Common Share and Series B Preferred Share is entitled to one vote on each matter to be voted on at the Meeting, and all such shares will vote as a single class on matters presented at the Meeting. Shareholders have no cumulative voting rights. As used below, the term "Shares" means, collectively, the Common Shares and Series B Preferred Shares. Assuming that a quorum is present, election of a Trustee nominated for election at the Meeting requires a plurality of all votes cast on the matter. Shares represented by Proxies marked "For" such proposal will be counted in favor of all nominees, except to the extent the Proxy withholds authority to vote for, or indicates a vote against, a specified nominee. Shares represented by Proxies marked "Abstain" or withholding authority to vote will not be counted in favor of any nominee. Because Trustees elected by shareholders are elected by a plurality vote, abstentions will not affect the election of the candidates receiving the most votes. IN THE ABSENCE OF SPECIFIC DIRECTION, SHARES REPRESENTED BY A PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL NOMINEES. -2- ELECTION OF TRUSTEES The Board of Trustees has nominated the following individuals for election as Trustees at the Meeting: Anthony A. Nichols, Sr., Gerard H. Sweeney, Donald E. Axinn, Walter D'Alessio, Warren V. Musser, Charles P. Pizzi and Robert C. Larson. If elected and qualified, these individuals will serve as Trustees, together with D. Pike Aloian, who is separately elected as a Trustee by the holder of the Series B Preferred Shares. The Trustees have no reason to believe that any of the foregoing nominees will be unable or unwilling to be a candidate for election at the time of the Meeting. If any nominee is unable or unwilling to serve, the persons named in the proxy will use their best judgment in selecting and voting for a substitute candidate. Each individual elected as a Trustee at the Meeting will serve until the next Annual Meeting of Shareholders and until his successor is duly elected and qualified. THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF EACH OF THE NOMINEES AS TRUSTEES. Trustees of the Company The following table sets forth certain information with respect to the Trustees of the Company. Name Age Position ---- --- -------- Anthony A. Nichols, Sr. 61 Chairman of the Board and Trustee Gerard H. Sweeney 44 President, Chief Executive Officer and Trustee D. Pike Aloian 46 Trustee Donald E. Axinn 71 Trustee Walter D'Alessio 67 Trustee Robert C. Larson 66 Trustee Warren V. Musser 74 Trustee Charles P. Pizzi 50 Trustee The following are biographical summaries of the Trustees: Anthony A. Nichols, Sr., Chairman of the Board and Trustee. Mr. Nichols was first elected Chairman of the Board on August 22, 1996. Mr. Nichols founded The Nichols Company, a private real estate development company, through a corporate joint venture with Safeguard Scientifics, Inc. and was President and Chief Executive Officer from 1982 through August 22, 1996. From 1968 to 1982, Mr. Nichols was Senior Vice President of Colonial Mortgage Service Company (now GMAC Mortgage Corporation). Mr. Nichols has been a member of the National Association of Real Estate Investment Trusts ("NAREIT"), a member of the Board of Governors of the Mortgage Banking Association and Chairman of the Income Loan Committee of the regional Mortgage Bankers Association. Mr. Nichols also serves on the Board of Directors of CenterCore Inc. and is a member of the National Association of Industrial and Office Parks ("NAIOP"), the Philadelphia Board of Realtors and the Urban Land Institute ("ULI"). Mr. Nichols is the father of Anthony A. Nichols, Jr., the Company's Senior Vice President - Development & New Business. Gerard H. Sweeney, President, Chief Executive Officer and Trustee. Mr. Sweeney has served as President and Chief Executive Officer of the Company since August 8, 1994 and as President since November 9, 1988. Mr. Sweeney was elected a Trustee on February 9, 1994. Mr. Sweeney has overseen the growth of the Company from four properties and a total market capitalization of $10 million to over 300 properties and a total market capitalization of $1.8 billion. Prior to August 1988, in addition to serving as President of the Company, Mr. Sweeney -3- also served as Vice President of LCOR, Incorporated ("LCOR"), a real estate development firm. Mr. Sweeney was employed by the Linpro Company (a predecessor of LCOR) from 1983 to 1994 and served in several capacities, including Financial Vice President and General Partner. During this time, Mr. Sweeney was responsible for the marketing, management, construction, asset management and financial oversight of a diversified portfolio consisting of urban high-rise, midrise, flex, warehouse and distribution facilities, retail and apartment complexes. Mr. Sweeney is a member of NAREIT, the ULI, the American Institute of Certified Public Accountants ("AICPA") and the Pennsylvania Institute of Certified Public Accountants ("PICPA"). Mr. Sweeney is also a Board Member of U.S. RealTel, Inc., The Foundation for Architecture, The Pennsylvania Academy of the Fine Arts and the Independence Seaport Museum. D. Pike Aloian, Trustee. Mr. Aloian was first elected a Trustee on April 19, 1999. Mr. Aloian joined Rothchild, Inc. in 1988 and is responsible for the origination, economic analysis, closing and on-going review of Rothschild's real estate investments. Between 1980 and 1988, Mr. Aloian was a Vice President at The Harlan Company, where he was responsible for property acquisition, development and financing. Mr. Aloian is a Director of EastGroup Properties, Koger Equity, Inc., Merritt Properties, Morningstar Storage Centers and Angeles Corporation. He currently is an adjunct professor of the Columbia University Graduate School of Business. Mr. Aloian graduated from Harvard College in 1976 and received an M.B.A. from Columbia University in 1980. Mr. Aloian was initially elected to the Board of Trustees in April 1999 in connection with the Company's issuance of its Series B Preferred Shares to Five Arrows Realty Securities III L.L.C. ("Five Arrows"). Holders of Series B Preferred Shares have the right to elect a Trustee to the Board for so long as Five Arrows or its affiliates own at least fifty percent of the outstanding Series B Preferred Shares. Donald Everett Axinn, Trustee. Mr. Axinn was first elected a Trustee on October 6, 1998. Mr. Axinn is the founder and chairman of the Donald E. Axinn Companies, an investment firm and developer of office and industrial parks throughout the New York metropolitan area. He has published two novels and six books of poetry, serves on the board of The American Academy of Poets, the advisory board for the Poet Laureate, and was recently Chairman of The Nature Conservancy, Long Island Chapter. A graduate of Middlebury College and holder of a master's degree in Humanities, he has also been awarded four honorary doctorates. Mr. Axinn has also served as an Associate Dean of Arts and Sciences at Hofstra University. In 1983, he founded with others the Interfaith Nutrition Network, shelters and kitchens for the homeless and hungry on Long Island. Walter D'Alessio, Trustee. Mr. D'Alessio was first elected a Trustee on August 22, 1996. He has served as Chairman, President and Chief Executive Officer of Legg Mason Real Estate Services, Inc., a mortgage banking firm headquartered in Philadelphia, Pennsylvania since 1982. Previously, Mr. D'Alessio served as Executive Vice President of the Philadelphia Industrial Development Corporation and Executive Director of the Philadelphia Redevelopment Authority. He also serves on the Board of Directors of Exelon, Highmark, Inc., Independence Blue Cross, Legg Mason Wood Walker, Inc., Point Five Technologies, Inc. and the Greater Philadelphia Chamber of Commerce. Robert C. Larson, Trustee. Mr. Larson was first elected a Trustee on December 2, 1999. Mr. Larson is a Managing Director of Lazard and Chairman of Lazard Freres Real Estate Investors L.L.C. ("LFREI"), the group responsible for Lazard's principal investing activities in real estate. He also is the Chairman of Larson Realty Group, a privately owned, Detroit based company engaged in real estate investments, development, management, leasing and consulting. Mr. Larson joined The Taubman Company as Senior Vice President in 1974, was elected President and Chief Operating Officer in 1978, Chief Executive Officer in 1988 and Vice Chairman of Taubman Centers, Inc. and Chairman of the Taubman Realty Group in 1990. He retired from active management responsibilities at Taubman in December 1998 and as Vice Chairman and Director in May 2000. Taubman is a publicly traded real estate investment trust specializing in the development, management and ownership of regional retail centers. Mr. Larson serves as a Director of Bass PLC, the London based international group operating in hotel, leisure retailing and branded drinks, and represents funds managed by LFREI as a director of American Apartment Communities III, Inc. and Destination Europe Limited. Mr. Larson also serves as a Director and Chairman of the Boards of United Dominion Realty Trust, Inc. and of Commonwealth Atlantic Properties Inc. Mr. Larson was initially elected to the Board of Trustees in December 1999 as the designee of LF Strategic Realty Investors L.P. ("LFSRI"), a fund managed by LFREI and from whose affiliates the Company acquired a portfolio of properties in September 1998. LFSRI has a contractual right to designate a nominee to serve on the Board, and the Company has agreed to use reasonable efforts to cause the nominee to be elected to the Board. Mr. Larson has agreed to resign from the Board upon LFSRI's request. -4- Warren V. Musser, Trustee. Mr. Musser was first elected a Trustee on August 22, 1996. He has served as Chairman and Chief Executive Officer of Safeguard Scientifics, Inc. since 1953. Mr. Musser also serves as the Chairman of the Board of Directors of Cambridge Technology Partners (Massachusetts), Inc. and CompuCom Systems, Inc. He is also a Director of Investment Capital Group, Inc. and Tycom Ltd. Mr. Musser also serves on a variety of civic, educational, and charitable Boards of Directors and serves as Vice President/Development, Cradle of Liberty Council, Boy Scouts of America, vice chairman of the Eastern Technology Council and Chairman of the Pennsylvania Partnership on Economic Education. Charles P. Pizzi, Trustee. Mr. Pizzi was first elected a Trustee on August 22, 1996. Mr. Pizzi has served as President of the Greater Philadelphia Chamber of Commerce since 1989. Mr. Pizzi is a Director of Vestaur Securities, Inc. and serves on a variety of civic, educational, charitable and other Boards of Directors, including Drexel University, Philadelphia Stock Exchange, Independence Blue Cross, WHYY-Channel 12, Philadelphia Convention & Visitors Bureau, Philadelphia Industrial Development Corporation and United Way of Southeastern Pennsylvania. Mr. Pizzi also serves on the Board of Advisors at Day & Zimmerman. Committees of the Board of Trustees Audit Committee. The audit committee of the Board of Trustees (the "Audit Committee") currently consists of Messrs. D'Alessio, Pizzi and Axinn, each of whom is independent as the term independent is defined in Section 303.01(B)(2)(a) and (3) of the listing standards of the New York Stock Exchange. The function of the Audit Committee is to assist the Board of Trustees in assuring conservative and accurate financial reporting through recommendations regarding the independent public accountants and their scope of services, review Company audits and accounting policies, review findings of the Company's internal accounting staff and coordinate communication between the Company's internal accounting staff and its independent public accountants. The Audit Committee's charter was adopted by the full Board in December 1999, and a copy of the charter was attached as Appendix A to the Company Proxy Statement for the Annual Meeting of Shareholders held in May 2000. Three meetings of the Audit Committee were held in 2000, and two meetings were held in 2001 to discuss the 2000 audit with Arthur Andersen LLP, the Company's independent public accountants. Compensation Committee. The Compensation Committee of the Board of Trustees currently consists of Messrs. D'Alessio and Pizzi. The Compensation Committee is authorized to determine compensation for the Company's executive officers, although formal action on compensation matters during 2000 was taken by the full Board (with interested members of the Board abstaining). Five meetings of the Compensation Committee were held in 2000 to discuss compensation of the Company's executive officers. Executive Committee. The Executive Committee of the Board of Trustees currently consists of Messrs. Nichols, Musser, Sweeney and D'Alessio. The Executive Committee has been delegated all powers of the Board of Trustees except the power to: (i) declare dividends on shares of beneficial interest; (ii) issue shares of beneficial interest (other than as permitted by the By-Laws); (iii) recommend to shareholders any action that requires shareholder approval; (iv) amend the Bylaws of the Company; and (v) approve any merger or share exchange which does not require shareholder approval. The Executive Committee did not meet in 2000. Corporate Governance Committee. The Corporate Governance Committee of the Board of Trustees was established in February 2001 and currently consists of Messrs. Larson, Aloian and D'Alessio, none of whom is an employee of the Company. The Corporate Governance Committee has been formed to recommend to the full Board candidates for election by the shareholders to the Board. The Corporate Governance Committee will annually review and make recommendations to the Board concerning the composition and size of the Board and committees of the Board. In making its recommendations, the Corporate Governance Committee may consider, in its sole judgment, recommendations of the President and Chief Executive Officer, its senior executives and shareholders. No procedures have been established for the consideration by the Corporate Governance Committee of nominees recommended by shareholders. -5- Meetings of Trustees The Trustees held five meetings in 2000. Each incumbent Trustee (except Mr. Musser) attended at least 75% of the meetings of the Board of Trustees and meetings held by all committees on which such Trustee served. Mr. Musser attended three of the five meetings of the Board in 2000. Compensation of Trustees During 2000, the Company paid its Trustees who are not officers of the Company fees for their services as Trustees. These non-employee Trustees received annual compensation of $20,000 and a fee of $1,000 for attendance at each meeting of the Board of Trustees and $500 for participation in each meeting of a committee of the Board of Trustees. Non-employee Trustees may elect to receive up to all of their annual fee in Common Shares. Trustees who are employees of the Company receive no separate compensation for services as a Trustee or committee member. Executive Officers The following are biographical summaries of the executive officers of the Company who are not Trustees of the Company: Jeffrey F. Rogatz, Senior Vice President and Chief Financial Officer. Mr. Rogatz, age 39, became Senior Vice President and Chief Financial Officer of the Company on January 19, 1999. Mr. Rogatz was employed for over 11 years as an investment banker with Legg Mason Wood Walker, Inc. ("Legg Mason") and most recently served as a managing director in Legg Mason's corporate finance group. Mr. Rogatz served as the lead investment banker from Legg Mason in advising the Company on capital markets transactions, including seven public offerings which raised in excess of $650 million. Anthony S. Rimikis, Senior Vice President--Development & Construction. Mr. Rimikis, age 52, became an executive of the Company on October 13, 1997. From January 1994 until October 1997, Mr. Rimikis served as Vice President of Emmes Realty Services, Inc., a New York-based real estate services company, where he managed the company's construction and development activities in New Jersey and Maryland. Prior to joining Emmes, he served as Vice President of Development for DKM Properties Corp. from 1988 to 1994. Anthony A. Nichols, Jr., Senior Vice President - Development & New Business. Mr. Nichols, age 34, became an officer of the Company on August 22, 1996. Previously Mr. Nichols was employed at The Nichols Company, a private real estate development company, which he joined in 1989 as a marketing representative. In 1992, Mr. Nichols became an Assistant Vice President - Property Management of The Nichols Company, and, in 1995, he became Vice President - Marketing. Mr. Nichols is a member of the Board of Directors for the Eastern Pennsylvania Region of the NAIOP. Mr. Nichols is the son of Anthony A. Nichols, Sr., the Company's Chairman of the Board. H. Jeffrey DeVuono, Senior Vice President - Operations. Mr. DeVuono, age 35, became an officer of the Company on January 15, 1997. From January 1993 until that time, he was employed in several capacities by LCOR, Incorporated, a real estate development firm. Barbara L. Yamarick, Senior Vice President - Tenant Services & Administration. Ms. Yamarick, age 48, joined the Company on October 20, 1997. Prior to joining the Company she was a Regional Vice President of Premisys Real Estate Services, Inc., a subsidiary of Prudential Insurance Company, and has over 26 years of experience in property management. George Sowa, Senior Vice President. Mr. Sowa, age 41, joined the Company in 1998. Prior to joining the Company, Mr. Sowa was employed by Keating Development Company, a real estate development firm, from 1997 to 1998 as a Development Manager. Mr. Sowa was also employed by LCOR, Inc. as Director of Development/Operations from 1989 to 1997. -6- Bradley W. Harris, Vice President and Chief Accounting Officer. Mr. Harris, age 41, became Vice President and Chief Accounting Officer of the Company on September 20, 1999. Mr. Harris was employed by Envirosource, Inc. from September 1996 to May 1999 as Controller. Prior to joining Envirosource, he was employed by Ernst & Young, LLP for over 15 years, most recently as a Senior Manager. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers, Trustees and persons who own more than 10% of the Common Shares to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, Trustees and greater than 10% shareholders are required by regulation to furnish the Company with copies of all Section 16(a) forms they file. Based solely on review of the copies of such forms furnished to the Company, or written representations that no Annual Statements of Beneficial Ownership of Securities on Form 5 were required to be filed, the Company believes that during the year ended December 31, 2000, its officers, Trustees and greater than 10% shareholders complied with all applicable Section 16(a) filing requirements. Cash and Non-Cash Compensation Paid to Executive Officers The following table sets forth certain information concerning the compensation paid for the years ended December 31, 2000, 1999 and 1998: (i) to the Company's President and Chief Executive Officer and (ii) to each of the four other most highly compensated executive officers (the "Named Executive Officers") of the Company during the year ended December 31, 2000. -7- Summary Compensation Table
Annual Compensation Long-Term Compensation --------------------------------------- ---------------------------- Other Restricted Securities Annual Share Underlying All Other Name and Principal Position Year(1) Salary Bonus(3) Compensation Awards(9) Options (#) Compensation ($)(15) --------------------------- ------- ------ ----- ------------ ------ ----------- ---------------- Anthony A. Nichols, Sr. 2000 $253,000 $236,429 --- $ 750,000(10) --- $18,605 Chairman of the Board 1999 $250,000 $244,063 $ 85,298(4) --- --- $ 5,620 1998 $250,000 $228,313 --- $4,000,000(10) 678,958 $ 785 Gerard H. Sweeney 2000 $300,000 $283,714 $ 5,956(5) --- $22,157 President and Chief $1,500,000(10) Executive Officer 1999 $300,000 $310,875 $113,596(5) --- --- $ 5,965 1998 $300,000 $273,976 --- $6,000,000(10) 1,018,489 $ 1,038 Jeffrey F. Rogatz 2000 $220,000 $170,000 $ 15,000(6) $ 41,375(11) --- $13,973 Senior Vice President and 1999(2) $188,500 $150,000 $ 9,264(6) $ 381,838(12) 56,582 $ 5,662 Chief Financial Officer 1998 --- --- --- --- --- --- Barbara L. Yamarick 2000 $168,000 $113,750 --- $ 20,687(13) --- $11,231 Senior Vice President - 1999 $150,000 $100,000 $ 34,838(7) $ 204,942(14) 22,631 $ 5,504 Tenant Services & 1998 $120,769 $ 33,350 --- --- 25,000 --- Administration Anthony S. Rimikis 2000 $165,000 $104,000 $ 4,587(8) $ 20,687(13) --- $10,927 Senior Vice President - 1999 $127,400 $100,000 $ 16,602(8) $ 204,942(14) 22,631 $ 5,255 Development & Construction 1998 $100,000 $ 50,000 --- --- 25,000 $ 622
----------------- (1) Compensation is reportable in the year in which the compensable service was performed even if the compensation was paid in a subsequent year. (2) Mr. Rogatz became an employee of the Company on January 19, 1999. (3) Bonus amounts for 2000, which were approved by the Board of Trustees in accordance with the Company's executive compensation guidelines, were paid as follows: (i) 25% either in Common Shares or a Common Share equivalent investment account established under a deferred compensation plan, with each share or share equivalent valued at $20.6875 per share (the closing price of a Common Share on December 31, 2000) and (ii) 75%, at the election of the applicable executive officer, in any combination of cash and Common Shares (or a Common Share equivalent under the deferred compensation account) valued at 85% of the closing price of a Common Share on December 31, 2000. Of the Common Shares (or Common Share equivalents) elected to be received in satisfaction of the 75% portion of the bonus, the portion of such Common Shares (or the Common Share equivalents) received as a result of the discounted purchase price is subject to certain transfer restrictions until December 31, 2002. (4) For 1999, includes the difference between the price paid for Common Shares and the market price of such shares on the date of acquisition ($57,191) and loan forgiveness ($28,107). (5) For 2000, represents the difference between the price paid for the Common Shares and the market price of such shares on the date of acquisition. For 1999, includes the difference between the price paid for Common Shares and the market price of such shares on the date of acquisition ($79,868) and loan forgiveness ($33,728). (6) For 2000, represents the difference between the price paid for the Common Shares and the market price of such shares on the date of acquisition. For 1999, consists of the difference between the price paid for Common Shares and the market price of such shares on the date of acquisition ($9,264). (7) For l999, includes the difference between the price paid for Common Shares and the market price of shares on the date of acquisition ($21,780) and loan forgiveness ($13,058). -8- (8) For 2000, represents the difference between the price paid for the Common Shares and the market price of such shares on the date of acquisition. For 1999, includes the difference between the price paid for Common Shares and the market price of such shares on the date of acquisition ($5,720) and loan forgiveness ($10,882). (9) The holder of restricted shares is entitled to vote the shares and to receive distributions on the shares. All restricted shares vest upon a change of control of the Company. The total number of restricted Common Share awards held by each executive officer listed above and the value of such restricted Common Share awards at December 31, 2000, the last trading day of the year, were as follows: --------------------------------------------------------------------------- Total Number of Aggregate Value at Name Restricted Common Shares December 31, 2000 --------------------------------------------------------------------------- Anthony A. Nichols, Sr. 155,292 $3,212,681 --------------------------------------------------------------------------- Gerard H. Sweeney 251,177 $5,196,350 --------------------------------------------------------------------------- Jeffrey F. Rogatz 21,061 $ 435,710 --------------------------------------------------------------------------- Barbara L. Yamarick 11,067 $ 228,954 --------------------------------------------------------------------------- Anthony S. Rimikis 11,067 $ 228,954 --------------------------------------------------------------------------- (10) As of January 2, 2001, 37.5% of the 1998 restricted share awards to Messrs. Nichols, Sr. and Sweeney had vested, and the remaining 62.5% vests in five equal annual installments commencing on January 2, 2002. Eighty-one and one-quarter percent of the restricted shares awarded to Messrs. Nichols, Sr. and Sweeney in 2000 vest in three annual installments commencing on January 2, 2002. The remaining 18.75% of such shares is eligible to vest over a three-year period ending January 2, 2004, with the number of shares vesting tied to the Company's total shareholder return compared to the total shareholder return of peer group companies. (11) These shares vest in three equal annual installments commencing January 1, 2002. (12) Consists of 13,201 shares which vest in four equal annual installments commencing on January 2, 2000, and 9,160 shares which vest in four equal annual installments commencing on January 2, 2001. (13) Consists of 1,000 shares which vest in three equal annual installments commencing on January 1, 2002. (14) Consists of 5,280 shares which vest in four equal annual installments commencing on July 1, 2000, and 6,107 shares which vest in four equal annual installments commencing on January 2, 2001. (15) Includes employer matching and profit sharing contributions to the Company's 401(k) retirement and profit sharing plan and deferred compensation plan. -9- Stock Options Held by Executive Officers at December 31, 2000 The following table sets forth certain information regarding options for the purchase of Common Shares that were held by: (a) the Company's President and Chief Executive Officer and (b) each of the other Named Executive Officers of the Company at December 31, 2000. No options for the purchase of Common Shares were exercised by such persons during the fiscal year ended December 31, 2000. Aggregated Options/SAR Exercises in Last Fiscal Year And Fiscal Year End Option/SAR Values
Number of Securities Underlying Value of Unexercised Unexercised Options/SAR at In-the-Money Sharew FY-End (#) Options at FY End Acquired on Value Exercisable/ ($) Exercisable/ Name Exercise (#) Realized ($) Unexercisable (1) Unexercisable ----------------------------------- --------------- ------------- -------------------- --------------------- Anthony A. Nichols, Sr. N/A N/A 294,609/424,349 $0 / $0 Chairman of the Board Gerard H. Sweeney N/A N/A 528,600/636,556 $524,439/ $0 President and Chief Executive Officer Jeffrey F. Rogatz N/A N/A 28,292/28,290 $0 / $0 Senior Vice President and Chief Financial Officer Barbara L. Yamarick N/A N/A 26,316/21,315 $0 / $0 Senior Vice President - Tenant Services & Administration Anthony S. Rimikis N/A N/A 26,316/21,315 $0 / $0 Senior Vice President - Development & Construction
----------------- (1) Upon a change of control of the Company, unexercised options held by Messrs. Rogatz and Rimikis and by Ms. Yamarick convert into 6,601, 4,065 and 4,065 Common Shares, respectively. Similarly, 678,958 of the options held by Mr. Nichols, Sr. and 1,018,489 of the options held by Mr. Sweeney convert into 79,208 and 118,812 Common Shares, respectively, upon a change of control. The number of Common Shares issuable upon a change of control is subject to a proportional reduction in the event of any prior option exercise. -10- Long-Term Incentive Plans - Awards in Last Fiscal Year
Estimated Future Payouts under Non-Stock Price-Based Plans ------------------------------------------------- Performance Number of or Other Shares, Units Period Until or Other Maturation or Threshold Target Maximum Name Rights (#)(1) Payout ($ or #) ($ or #) ($ or #) -------------------------------------------------------------------------------------------------------------------- Anthony A. Nichols, Sr. 64,000 3 years #64,000 #64,000 #64,000 Chairman of the Board Gerard H. Sweeney 96,000 3 years 96,000 96,000 96,000 President and Chief Executive Officer Jeffrey F. Rogatz --- --- --- --- --- Senior Vice President and Chief Financial Officer Barbara L. Yamarick --- --- --- --- --- Senior Vice President Anthony S. Rimikis --- --- --- --- --- Senior Vice President - Development & Construction
----------------- (1) In February 2000, the Company loaned Messrs. Sweeney and Nichols, Sr. $1.5 million and $1.0 million, respectively, solely to enable them to purchase Common Shares (96,000 shares in the case of Mr. Sweeney and 64,000 shares in the case of Mr. Nichols, Sr.). The loans have a four-year term and bear interest at the lower of the Company's cost of funds or a rate based on the dividend payable on the Common Shares, but not to exceed 10% per annum. The loans are subject to forgiveness over a three-year period, with the amount of forgiveness tied to the Company's total shareholder return compared to the total shareholder return of peer group companies. The loans are also subject to forgiveness in the event of a change of control of the Company. Each executive may repay the loans at maturity by surrendering Common Shares valued at the executive's initial per share purchase price ($15.625). Employment Agreements Each of Messrs. Nichols, Sr. and Sweeney has entered into an employment agreement with the Company. The term of each agreement extends to December 31, 2003. The employment agreements, as amended in December 2000, establish annual base salaries for each of Messrs. Nichols, Sr. and Sweeney of $270,000 and $325,000, respectively, which compensation may be increased by the Board of Trustees in its discretion. The employment agreements include a provision entitling the applicable executive to a payment equal to three times the sum of his annual salary and bonus: (i) upon termination of the executive's employment without cause, (ii) upon resignation by the executive "for good reason" or (iii) upon his death. Resignation by the executive within six months following a reduction in the executive's salary, an adverse change in his status or responsibilities, certain changes in the location of the Company's headquarters or a change in control of the Company would each constitute a resignation "for good reason." -11- Severance Agreements The Company has entered into severance agreements with Messrs. Rogatz, Yamarick and Rimikis. These agreements provide that, if such executive's employment is terminated (or constructively terminated) within one year following the effective date of a change of control of the Company, such executive will be entitled to salary continuation for a period of one and a half years, from the effective date of such executive's termination. The Company has entered into similar agreements with 10 other officers of the Company. 401(k) Plan The Company maintains a Section 401(k) and Profit Sharing Plan (the "401(k) Plan") covering its eligible employees and other designated affiliates. The 401(k) Plan permits eligible employees to defer up to a designated percentage of their annual compensation, subject to certain limitations imposed by the Internal Revenue Code. The employees' elective deferrals are immediately vested and non-forfeitable upon contribution to the 401(k) Plan. The Company reserves the right to make matching contributions or discretionary profit sharing contributions. The 401(k) Plan is designed to qualify under Section 401 of the Code so that contributions by employees or the Company to the 401(k) Plan, and income earned on plan contributions, are not taxable to employees until withdrawn from the 401(k) Plan, and so that contributions by the Company, if any, will be deductible by them when made. Compensation Committee Interlocks and Insider Participation The Compensation Committee of the Board of Trustees is currently comprised of Charles P. Pizzi and Walter D'Alessio. No executive officer of the Company serves on the Compensation Committee. All actions taken by the Committee relating to 2000 compensation were ratified and approved by the entire Board (with interested members abstaining). Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information as of March 15, 2001 regarding the beneficial ownership of Common Shares (and Common Shares for which Class A Units of Brandywine Operating Partnership, L.P. ("Operating Partnership") may be exchanged) by each Trustee, by each Named Executive Officer, by all Trustees and executive officers as a group, and by each person known to the Company to be the beneficial owner of 5% or more of the outstanding Common Shares. Except as indicted below, to the Company's knowledge, all of such Common Shares are owned directly, and the indicated person has sole voting and investment power.
Number of Common Percentage of Name and Business Address of Beneficial Owner (1) Shares Common Shares (2) ------------------------------------------------- ------- ----------------- Five Arrows Realty Securities III, L.L.C. (3) 4,875,000 11.9% LF Strategic Realty Investors L.P. (4) 3,482,703 8.8% Robert C. Larson (5) 3,482,703 8.8% D. Pike Aloian (6) 4,876,393 11.9% Donald E. Axinn (7) 1,113,100 3.0% Gerard H. Sweeney (8) 1,018,488 2.8% Anthony A. Nichols, Sr. (9) 700,048 1.9% Jeffrey F. Rogatz (10) 87,883 * Anthony S. Rimikis (11) 54,539 * Barbara L. Yamarick (12) 51,598 * Warren V. Musser (13) 7,216 * Walter D'Alessio (14) 2,088 * Charles P. Pizzi (15) 1,532 * All Trustees and Executive Officers as a Group (15 persons) (16) 11,552,501 29.4%
----------------- *Less than one percent. (1) Unless indicated otherwise, the business address of each person listed is 14 Campus Boulevard, Suite 100, Newtown Square, Pennsylvania 19073. -12- (2) Assumes that all Class A Units eligible for redemption held by each named person or entity are redeemed for Common Shares. The total number of Common Shares outstanding used in calculating the percentage of Common Shares assumes that none of the Class A Units eligible for redemption held by other named persons or entities are redeemed for Common Shares. (3) Includes (a) 4,375,000 Common Shares issuable upon conversion of 4,375,000 Series B Preferred Shares and (b) 500,000 Common Shares issuable upon the exercise of warrants that are currently exercisable. The business address of Five Arrows Realty Securities III, L.L.C. is 1251 Avenue of the Americas, 44th Floor, New York, New York 10020. (4) Based on Amendment No. 4 to a Schedule 13D filed with the Securities and Exchange Commission on March 13, 2001. Represents (a) 560 Common Shares (the "LFSRI Shares") directly owned by LF Strategic Realty Investors L.P. ("LFSRI") and (b) 3,482,143 Common Shares (the "CAPI Shares") issuable upon redemption of Class A Units that are issuable upon redemption or conversion of Series B Preferred Units held by subsidiaries of Commonwealth Atlantic Properties, Inc. ("CAPI"). LFSRI owns 84% of the common stock of CAPI and 100% of the common stock of Commonwealth Atlantic Properties Investors Trust, which in turn owns 16% of the common stock of CAPI. Lazard Freres Real Estate Investors L.L.C. ("LFREI") is the general partner of LFSRI, and Lazard Freres & Co. LLC ("Lazard") is the managing member of LFREI. As a result of such relationships LFREI and Lazard may be deemed to indirectly beneficially own the LFSRI Shares and LFSRI, LFREI and Lazard may be deemed to indirectly beneficially own the CAPI Shares. LFSRI disclaims ownership of the CAPI Shares and LFREI and Lazard disclaim beneficial ownership of the LFSRI Shares and the CAPI Shares. Each of LFSRI, LFREI and Lazard has a business address at 30 Rockefeller Plaza, New York, New York 10020. CAPI and its subsidiaries have a business address at Three Lafayette Centre, 1155 21st St. N.W., Suite 202, Washington, DC 20036. (5) Mr. Larson is a Managing Director of Lazard and Chairman of LFREI and may be deemed to indirectly beneficially own all of the Common Shares which Lazard and LFREI indirectly beneficially own. See footnote 4. Mr. Larson disclaims beneficial ownership of all such Common Shares except to the extent of any pecuniary interest he may possess by virtue of his positions with Lazard and LFREI. Mr. Larson has a business address at 30 Rockefeller Plaza, New York, New York 10020. (6) Mr. Aloian, among others, is a Manager of Five Arrows Realty Securities III, L.L.C., which owns all 4,375,000 outstanding Series B Preferred Shares and 500,000 Common Shares issuable upon the exercise of warrants that are currently exercisable. Mr. Aloian disclaims beneficial ownership of the Series B Preferred Shares and Common Sharers issuable upon exercise of warrants. Mr. Aloian has a business address at 1251 Avenue of the Americas, 44th Floor, New York, New York 10020. (7) Includes (a) 1,116 Common Shares, (b) 100,000 Common Shares issuable upon the exercise of options that are currently exercisable, and (c) 1,011,984 Common Shares issuable upon redemption of Class A Units. Mr. Axinn has a business address at 131 Jericho Turnpike, Jericho, NY 11743. (8) Includes (a) 489,888 Common Shares and (b) 528,600 Common Shares issuable upon the exercise of options and warrants that are currently exercisable or that become exercisable within 60 days of March 15, 2001. (9) Includes (a) 405,439 Common Shares and (b) 294,609 Common Shares issuable upon exercise of options and warrants that are currently exercisable or that become exercisable within 60 days of March 15, 2001. (10) Includes (a) 59,591 Common Shares and (b) 28,292 Common Shares issuable upon the exercise of options that are currently exercisable or that become exercisable within 60 days of March 15, 2001. (11) Includes (a) 28,223 Common Shares and (b) 26,316 Common Shares issuable upon the exercise of options that become exercisable within 60 days of March 15, 2001. -13- (12) Includes (a) 25,282 Common Shares and (b) 26,316 Common Shares issuable upon the exercise of options that become exercisable within 60 days of March 15, 2001. (13) Mr. Musser has a business address at 800 The Safeguard Building, 435 Devon Park Drive, Wayne, Pennsylvania 19087. (14) Mr. D'Alessio has a business address at 1735 Market Street, Philadelphia, Pennsylvania 19103. (15) Mr. Pizzi has a business address at 200 South Broad, Philadelphia, Pennsylvania 19103. (16) Includes the LFSRI Shares and CAPI Shares shown in note (4) above and 4,875,000 Common Shares beneficially owned by Five Arrows Realty Securities III, L.L.C. Certain Relationships and Related Transactions Board Designation Rights As part of the Company's acquisition of a portfolio of office, industrial and mixed-use properties from LFSRI and its affiliates in 1998, LFSRI obtained a contractual right to designate a nominee to serve on the Board, and the Company has agreed to use reasonable efforts to cause the nominee (currently Mr. Larson) to be elected to the Board. As part of the Company's issuance of Series B Preferred Shares to Five Arrows Realty Securities III L.L.C. in 1999, Five Arrows obtained the right to elect a Trustee to the Board. Mr. Aloian has been elected to the Board as the designee of Five Arrows. Environmental Indemnity Safeguard Scientifics, Inc., of which Mr. Musser is Chairman, has indemnified the Company against the cost of remediation that may be required to be undertaken on account of certain environmental conditions at one of the properties acquired by the Company in 1996, subject to an aggregate maximum liability of approximately $2.0 million. The term of Safeguard's indemnity agreement expires on August 22, 2001. Employee Share Purchase Loans In 1998, the Board authorized the Company to make loans totaling $5.0 million to enable employees of the Company to purchase Common Shares. Thirty-six employees of the Company participated in the loan program, including the following executive officers (with the principal balances shown at December 31, 2000): Mr. Nichols, Sr. ($665,458), Mr. Sweeney ($993,006), Mr. Rogatz ($435,192), Mr. DeVuono ($198,297), Mr. Rimikis ($197,471), Ms. Yamarick ($174,999), Mr. Nichols, Jr. ($99,166) and Mr. Sowa ($74,832). Proceeds of these loans were used to enable these executive officers to purchase Common Shares. The loans have five-year terms, are full recourse and are secured by the Common Shares purchased. Interest accrues on the loans at the lower of the interest rate borne on borrowings under the Company's revolving credit facility or a rate based on the dividend payments on the Common Shares and is payable quarterly. For the quarter ended December 31, 2000, this rate was 8.12% per annum. The principal of the loans is payable at the earlier of the stated maturity date and 90 days following termination of the applicable executive's employment with the Company. Share Performance Graph The Securities and Exchange Commission requires the Company to present a chart comparing the cumulative total shareholder return on the Common Shares with the cumulative total shareholder return of (i) a broad equity index and (ii) a published industry or peer group index. The following chart compares the cumulative total shareholder return for the Common Shares with the cumulative shareholder return of companies on (i) the S&P 500 Index and (ii) the NAREIT ALL-REIT Total Return Index as provided by NAREIT for the period beginning December 31, 1995 and ending December 31, 2000. -14- COMPARISON OF CUMULATIVE SHAREHOLDERS' RETURN The Company, S&P 500 Index and NAREIT All-REIT Index
Dec. 95 Dec. 96 Dec. 97 Dec. 98 Dec. 99 Dec. 2000 The Company 100.00 193.50 266.21 203.84 204.54 280.40 S&P 500 Index 100.00 122.96 163.98 210.85 255.21 231.98 NAREIT All-REIT Index 100.00 135.75 161.36 130.99 122.50 154.21
-15- Report of Non-Employee Trustees on Executive Compensation Compensation Philosophy The Compensation Committee's compensation policies with respect to the Company's executive officers are based on the principles that compensation should, to a significant extent, be reflective of the financial performance of the Company, and that a significant portion of executive officers' compensation should provide long-term incentives. The Compensation Committee seeks to set executive compensation at levels that are sufficiently competitive so that the Company may attract, retain and motivate high quality executives to contribute to the Company's financial success. In establishing overall compensation for executive officers, the Committee considers the Company's financial performance and industry position, compensation levels and practices at peer companies, general industry data and the recommendations of third-party consultants. The President and Chief Executive Officer of the Company establishes the base salaries for executives of the Company, other than for the Chairman of the Board and himself, and makes recommendations to the Compensation Committee as to the annual bonuses and long-term incentive awards for such other executives. The Committee exercises judgment and discretion in the information it analyzes and considers. All actions taken by the Compensation Committee relating to 2000 compensation were ratified and approved by the entire Board (with interested members abstaining). Annual and Short-Term Compensation At five meetings held in 2000 and an additional meeting held in 2001, the Compensation Committee met to discuss compensation of the President and Chief Executive Officer and the Chairman of the Board. The Compensation Committee adopted guidelines for determining 2000 year-end bonuses to the President and Chief Executive Officer, the Chairman of the Board and other senior executives of the Company. The guidelines established targeted bonus amounts. The 2000 targeted bonus amounts were 95% of base salary, in the case of the President and Chief Executive Officer and Chairman of the Board, and 60% to 75% of base salary for other Company executives. The guidelines provided that the actual 2000 bonus amounts would be based on a combination of Company performance measures and, in the case of executives other than the President and Chief Executive officer and Chairman of the Board, divisional performance measures. For the President and Chief Executive Officer and Chairman of the Board, these measures and their weightings for 2000 were: total shareholder return relative to a peer group of companies (20%), growth in per share funds from operations relative to a targeted level (30%) and achievement of the Company's capital recycling objectives (50%). The 2000 unweighted achievements relative to the target levels or peer group, as applicable, for these two executives were: total shareholder return (122%), growth in per share funds from operations (84%) and capital recycling (100%), representing a total weighted achievement of approximately 99.6% of the performance measures. The guidelines provided that a minimum of 25% of the year-end bonus for each executive must be taken in Common Shares (or a Common Share equivalent under the Company's deferred compensation plan). Additionally, executives had the ability to take all or a portion of the balance of the non-discretionary portion of the year-end bonus in Common Shares (or Common Share equivalents under the Company's deferred compensation plan) at a 15% discount to the year-end market price of the Common Shares. The executives also had the ability to take all or a portion of the 75% balance of the discretionary portion of the year-end bonus in Common Shares (or Common Share equivalents under the Company's deferred compensation plan) at the closing market price of the Common Shares on the award date. Long-Term Compensation During 2000, the Compensation Committee requested a third party consultant to prepare for the Committee a report that evaluated the annual and long-term incentive program for the Company's President and Chief Executive Officer and Chairman of the Board. The Committee requested the report so that it could assess whether compensation of the Company's senior executives was at a level commensurate with their peers and structured to align their interests with the interests of shareholders generally. Based on its review of this report and discussions with the consultant, the Committee concluded that, although the annual and short-term compensation of the President and Chief Executive Officer was at or slightly below the average level for the senior executive at peer companies, the long-term incentive compensation component of the President and Chief Executive Officer's compensation was materially below the peer group average. -16- At a meeting held on December 8, 2000, the Compensation Committee approved an award of restricted Common Shares to the President and Chief Executive Officer and Chairman of the Board in the amounts of $1.5 million and $750,000, respectively. The shares are subject to vesting over a three-year period, with acceleration of vesting upon a change of control of the Company. IRS Limits on Deductibility of Compensation Section 162(m) of the Internal Revenue Code limits the Company's tax deduction each year for compensation to each of the President and Chief Executive Officer and the four other highest paid executive officers to $1 million. Section 162(m), however, allows a deduction without regard to amount for payments of performance based compensation which includes most share option and other incentive arrangements, the material terms of which have been approved by shareholders. Awards issued under the Company's Amended and Restated 1997 Long-Term Incentive Plan may, but need not, satisfy the requirements of Section 162(m). Options under this plan that have an exercise price equal to grant date fair market value and that vest based solely on continued employment qualify as "performance-based compensation." However, options exercisable for a total of 1,697,447 Common Shares awarded to Messrs. Nichols, Sr. and Sweeney do not qualify as performance-based compensation because the options were awarded subject to shareholder approval. Similarly, except for an aggregate of 20,519 Common Shares awarded to Messrs. Nichols, Sr. and Sweeney in 2000, the "restricted" Common Shares awarded to the Named Executive Officers do not qualify as performance-based compensation because the restrictions applicable to the shares lapse based solely on continued employment. The Company believes that because it qualifies as a REIT under the Code and is not subject to Federal income taxes, the payment of compensation that does not satisfy the requirements of Section 162(m) would not have a material adverse financial consequence to the Company provided it distributes 100% of its taxable income. This report is made by the undersigned Trustees, none of whom is an officer or employee of the Company. This report constitutes the report of all such members. D. Pike Aloian Donald E. Axinn Walter D'Alessio Robert C. Larson Warren V. Musser Charles P. Pizzi -17- Report of the Audit Committee The Audit Committee oversees the Company's financial reporting process on behalf of the Board of Trustees. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. The Company's independent public accountants are responsible for expressing an opinion on the conformity of the Company's audited financial statements with accounting principles generally accepted in the United States. In fulfilling its oversight responsibilities, the Audit Committee has reviewed the Company's audited financial statements for the year ended December 31, 2000, and discussed them with management and the independent public accountants, including the following aspects of the financial statements: (i) their quality, not just the acceptability of their accounting principles; (ii) the reasonableness of the significant judgements reflected in the financial statements; and (iii) the clarity of their disclosures. The Audit Committee has discussed with the Company's independent public accountants the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended. The Audit Committee has also received the written disclosures and the letters from the Company's independent public accountants required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees. The Audit Committee has discussed with the independent public accountants the independent public accountants' independence from the Company and its management. In addition, the Audit Committee has considered whether the independent public accountants' provision of non-audit services to the Company is compatible with maintaining the independent public accountants' independence. Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Trustees that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2000 for filing with the Securities and Exchange Commission. The Audit Committee's recommendation was considered and approved by the Board of Trustees. This report is made by the undersigned members of the Audit Committee. Charles P. Pizzi Walter D'Alessio Donald E. Axinn -18- OTHER INFORMATION Independent Public Accountants The Trustees have appointed Arthur Andersen LLP ("AA") to serve as the Company's independent public accountants for 2001 and to audit the Company's financial statements for 2001. The shareholders will not be asked to approve this appointment at the Meeting. A representative of AA will be present at the Meeting, will be available to respond to appropriate questions, and will have an opportunity to make a statement. Audit Fees Aggregate fees billed for AA's audit of the Company's 2000 annual financial statements and Form 10-Q filings during 2000 were $226,000. Financial Information Systems Design and Implementation Fees Aggregate fees billed for AA's services relating to financial information systems design and implementation for the year ended December 31, 2000 were $85,000. All Other Fees Aggregate fees billed for other services rendered by AA for the Company during the year ended December 31, 2000 were as follows: Recurring and non-recurring tax services $506,600 Executive compensation services $196,200 Other accounting services $ 49,500 Other Business The Company knows of no business which will be presented at the Meeting other than as set forth in this Proxy Statement. However, if other matters should properly come before the Meeting, it is the intention of the persons named in the enclosed proxy to vote in accordance with their best judgment on such matters. Expenses of Solicitation The expense of solicitation of proxies on behalf of the Trustees, including printing and postage, will be paid by the Company. Request will be made of brokerage houses and other custodians, nominees and fiduciaries to forward the solicitation material, at the expense of the Company, to the beneficial owners of Common Shares held of record by such persons. In addition to being solicited through the mails, proxies may also be solicited personally or by telephone by Trustees and officers of the Company. In addition, the Company has employed Beacon Hill Partners, Inc. to solicit proxies for the Meeting. The Company has agreed to pay $3,500, plus out-of-pocket expenses of Beacon Hill Partners, Inc., for these services. Shareholder Proposals for the 2002 Annual Meeting of Shareholders Shareholders are entitled to present proposals for action at a forthcoming meeting if they comply with the requirements of the proxy rules promulgated by the Securities and Exchange Commission. Proposals of shareholders of the Company intended to be presented for consideration at the Company's 2002 Annual Meeting of Shareholders must be received by the Company no later than December 13, 2001 in order to be included in the proxy statement and form of proxy related to that meeting. -19- If a shareholder intends to timely submit a proposal at the 2002 Annual Meeting, which is not required to be included by the Company in the proxy statement and form of proxy relating to that meeting, the shareholder must provide the Company with notice of the proposal no later than February 25, 2002. If such shareholder fails to do so, or if such shareholder fails to give timely notice of his intention to solicit proxies, the proxy holders will be allowed to use their discretionary voting authority when the proposal is raised at the 2002 Annual Meeting. -20- BRANDYWINE REALTY TRUST Proxy Solicited On Behalf Of The Board of Trustees P The undersigned shareholder of Brandywine Realty Trust, a Maryland real estate investment trust (the "Company"), hereby R appoints Anthony A. Nichols, Sr. and Gerard H. Sweeney, and each of them acting individually, as proxies for the undersigned, with full O power of substitution in each of them, to attend the Annual Meeting of the Shareholders of Brandywine Realty Trust to be held at 9:30 X a.m. on May 7, 2001, and at any postponement or adjournment thereof, to cast on behalf of the undersigned all votes that the undersigned Y is entitled to vote at such meeting and otherwise to represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting. This proxy is solicited on behalf of the Board of Trustees. When properly executed, this Proxy will be voted in the manner directed by the undersigned shareholder. If this Proxy is executed but no direction is made, this Proxy will be voted "FOR" the election of the nominees for Trustee listed on the reverse side hereof. This Proxy also delegates discretionary authority with respect to any other business which may properly come before the meeting or any postponement or adjournment thereof. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and of the accompanying Proxy Statement and revokes any Proxy previously submitted with respect to the meeting. ------------ SEE REVERSE SIDE ------------ (Continued on the reverse side.) -------------------------------------------------------------------------------- FOLD AND DETACH HERE --- Please mark your X vote as in this --- example. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FOR ALL WITHHOLD NOMINEES ALL NOMINEES Proposal 1, ---- ---- Nominees: 01. Walter D'Alessio, (Election of 02. Donald E. Axinn, Trustees): ---- ---- 03. Robert C. Larson, 04. Warren V. Musser, 05. Anthony A. Nichols, Sr., 06. Charles P. Pizzi, and 07. Gerard H. Sweeney For, except vote withheld from the following nominee(s): _______________________________________________________ DISCONTINUE --- ANNUAL REPORT --- Change of Address and/or --- Comments Mark Here --- Note: Please sign this proxy exactly as name(s) appear on your stock certificate. When signing as attorney-in-fact, executor, administrator, trustee or guardian, please add your title as such, and if signer is a corporation, please sign with full corporate name by a duly authorized officer or officers and affix the corporate seal. Where stock is issued in the name of two (2) or more persons, all such persons should sign. ___________________________________ ___________________________________ SIGNATURE(S) DATE -------------------------------------------------------------------------------- FOLD AND DETACH HERE -- IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL VOTE BY INTERNET OR TELEPHONE Quick & Easy - 24 hours a day, 7 days a week Brandyine encourages shareholders to take advantage of two cost-effective and convenient alternatives to vote your shares -- by Internet or telephone. Log onto the Internet and type http://www.eproxyvote.com/bdn o Have this proxy form ready and follow the simple instructions on the web site. o You will be able to elect to access future Annual Meeting proxy materials via the Internet. On a touch-tone phone, call toll-free 1-877-779-8683 and you will hear these instructions. o Enter the last four digits of your social security number; and o Enter the control number from the box above (just below the perforation on the proxy card). o You will then have two options: OPTION 1: to vote as the Board of Trustees recommends for all proposals; or OPTION 2: to vote on each proposal separately. o Your vote will be repeated to you and you will be asked to confirm it. Internet or telephone voting provides the same authorization to vote your shares as if you marked, signed, dated and returned the proxy/voting instruction card. If you vote by Internet or telephone, please do not mail your proxy card. THANK YOU FOR VOTING.