UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
JONES LANG LASALLE INCORPORATED
----------------------------------------------
(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)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
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 previous 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:
JONES LANG LASALLE INCORPORATED
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
April 4, 2005
VIA EDGAR TRANSMISSION
----------------------
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: FILING OF PRELIMINARY PROXY STATEMENT ON SCHEDULE 14A
-----------------------------------------------------
Ladies and Gentlemen:
On behalf of Jones Lang LaSalle Incorporated, a Maryland corporation
(the "Company"), transmitted herewith for filing, pursuant to Rule 14a-6(a)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
is the Company's preliminary Proxy Statement on Schedule 14A (the "Proxy
Statement") relating to the Company's 2005 Annual Meeting of Shareholders.
Pursuant to Rule 14a-6(d) under the Exchange Act, the Company
supplementally informs the Securities and Exchange Commission that the
Company intends to release to its shareholders on or about April 19, 2005
the definitive form of the Proxy Statement to be filed pursuant to Rule
14a-6(b).
If you have any questions or comments in connection with the
preliminary Proxy Statement, please contact me at (312) 228-2423.
Facsimile transmissions may be sent to the undersigned at (312) 228-2277.
Very truly yours,
/s/ Mark J. Ohringer
------------------------------
Mark J. Ohringer
Executive Vice President,
Global General Counsel
and Corporate Secretary
PRELIMINARY PROXY MATERIALS
SUBJECT TO COMPLETION
Jones Lang LaSalle Incorporated
200 East Randolph Drive
Chicago, Illinois 60601
April 19, 2005
Dear Shareholder:
We would like to invite you to attend our 2005 Annual Meeting of
Shareholders, which will be held on Thursday, May 26, 2005, beginning at
8:30 a.m., local time, at The Mid-America Club, located on the 80th floor
of the Aon Center, 200 East Randolph Drive, Chicago, Illinois.
Our Annual Report for 2004 (which includes our Form 10-K) is enclosed
for your information. Also enclosed are a proxy card and a postage-paid
return envelope.
Your vote is very important to us. To be sure that your shares will
be voted at the meeting, you may either:
(1) complete and sign the enclosed proxy card and return it by mail
in the enclosed envelope as promptly as possible; or
(2) vote electronically, by telephone or over the Internet, as
described on the proxy card.
If you attend the Annual Meeting, you may vote your shares in person
even though you may have previously given your proxy. We appreciate your
continued interest in our firm.
Sincerely,
/s/ Sheila A. Penrose /s/ Colin Dyer
--------------------------- ---------------------------
Sheila A. Penrose Colin Dyer
Chairman of the President and
Board of Directors Chief Executive Officer
PRELIMINARY PROXY MATERIALS
SUBJECT TO COMPLETION
JONES LANG LASALLE INCORPORATED
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
--------------------
NOTICE OF 2005 ANNUAL MEETING OF SHAREHOLDERS
To Be Held Thursday, May 26, 2005
--------------------
The 2005 Annual Meeting of Shareholders of Jones Lang LaSalle
Incorporated will be held on Thursday, May 26, 2005, beginning at
8:30 a.m., local time, at The Mid-America Club, located on the 80th floor
of the Aon Center, 200 East Randolph Drive, Chicago, Illinois, for the
following purposes:
1. To elect two Directors to serve until the 2008 Annual Meeting
of Shareholders or until their successors are elected and
qualify;
2. To ratify the appointment of KPMG LLP as our independent
registered public accounting firm for the year ending
December 31, 2005;
3. To approve a proposed amendment to the Jones Lang LaSalle Stock
Award and Incentive Plan to increase the number of shares of
our Common Stock reserved for issuance under that Plan by
3,000,000;
4. To approve a proposal by our Board of Directors to amend the
Jones Lang LaSalle Articles of Incorporation to declassify the
terms of the members of the Board of Directors; and
5. To transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
Our Board of Directors has fixed the close of business on Friday,
March 25, 2005 as the record date for determining the shareholders entitled
to receive notice of and to vote at the Annual Meeting. Only shareholders
or persons holding proxies from shareholders will be permitted to attend
the Annual Meeting.
By Order of the Board of Directors
/s/ Mark J. Ohringer
----------------------------------
Mark J. Ohringer
Corporate Secretary
April 19, 2005
YOUR VOTE IS VERY IMPORTANT. ANY SHAREHOLDER MAY ATTEND THE ANNUAL
MEETING IN PERSON. IN ORDER FOR US TO HAVE THE QUORUM NECESSARY TO CONDUCT
THE ANNUAL MEETING, WE ASK THAT SHAREHOLDERS WHO DO NOT INTEND TO BE
PRESENT AT THE ANNUAL MEETING IN PERSON EITHER (1) SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT BY MAIL IN THE ACCOMPANYING ENVELOPE OR
(2) GIVE THEIR PROXY BY TELEPHONE OR OVER THE INTERNET. ANY PROXY MAY BE
REVOKED IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT AT ANY
TIME BEFORE IT HAS BEEN VOTED AT THE ANNUAL MEETING.
Please [ ]
Mark Here
for Address
Change or
Comments
SEE REVERSE SIDE
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION
IS INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS
AND FOR PROPOSALS 2, 3 and 4.
The Board of Directors recommends a vote FOR the listed nominees.
1. Election of Directors FOR WITHHOLD
|_| |_|
01 Colin Dyer
02 Shelia A. Penrose
Withheld for the nominees you list below: (Write that nominee's name in the
space provided below.)
________________________________________________________________________
The Board of Directors recommends a vote FOR Proposals 2, 3 and 4.
2. Ratification of the appointment of KPMG LLP as independent registered
public accounting firm for 2005.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. To approve a proposed amendment to the Jones Lang LaSalle Stock
Award and Incentive Plan to increase the number of shares of our
Ccommon stock reserved for issuance under that Plan by 3,000,000.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. To approve a proposal by our Board of Directors to amend the Jones
Lang LaSalle Articles of Incorporation to declassify the terms
of the members of the Board of Directors; and
FOR AGAINST ABSTAIN
|_| |_| |_|
5. To vote upon any other matters that may properly be presented at the
meeting according to their best judgment and in their discretion.
Choose MLinkSM for fast, easy and secure 24/7 online access to your
future proxy materials, investment plan statements, tax documents and
more. Simply log on to Investor ServiceDirect(R) at
www.melloninvestor.com/isd where step-by-step instructions will
prompt you through enrollment.
Signature____________________ Signature___________________ Date______
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
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^ FOLD AND DETACH HERE ^
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11:59 PM Eastern
Time the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies
to vote your shares in the same manner as if you marked,
signed and returned your proxy card.
------------------------------------ -------------------------------- ---------------------
Internet Telephone Mail
http://www.proxyvoting.com/jll 1-866-540-5760
Mark, sign and date
Use the internet to vote your proxy. OR Use any touch-tone telephone to OR your proxy card
Have your proxy card in hand when vote your proxy. Have your proxy and
you access the web site. card in hand when you call. return it in the
enclosed postage-paid
envelope.
------------------------------------ -------------------------------- ---------------------
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
If you are located outside of the United States,
the delivery of your Proxy MUST be via the INTERNET or MAIL
You can view the Annual Report and Proxy Statement
on the internet at www.joneslanglasalle.com
PROXY
[LOGO] JONES LANG
LASALLE(SM)
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS -- MAY 26, 2005
The undersigned hereby appoints Colin Dyer, Lauralee E. Martin and
Mark J. Ohringer, and each of them, with full power of substitution, to
represent the undersigned and as proxies to vote all the Common Stock of
Jones Lang LaSalle Incorporated which the undersigned has power to vote,
with all powers which the undersigned would possess if personally present
at the Annual Meeting of Shareholders to be held on May 26, 2005, or at any
adjournment or postponement thereof.
This proxy will be voted as specified by the undersigned. If no
choice is specified, this proxy will be voted FOR all the proposals.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side)
_________________________________________________________________________
Address Change/Comments (Mark the corresponding box on the reverse side)
_________________________________________________________________________
_________________________________________________________________________
--------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
You can now access your Jones Lang LaSalle account online.
Access your Jones Lang LaSalle shareholder account online via Investor
ServiceDirect(R) (ISD).
Mellon Investor Services LLC, Transfer Agent for Jones Lang LaSalle, now
makes it easy and convenient to get current information on your shareholder
account.
. View account status . View payment history for
dividends
. View certificate history . Make address changes
. View book-entry information . Obtain a duplicate 1099 tax form
. Establish/change your PIN
Visit us on the web at http://www.melloninvestor.com
For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time
TABLE OF CONTENTS
PRELIMINARY PROXY STATEMENT
FOR THE 2005 ANNUAL MEETING OF SHAREHOLDERS
ITEM PAGE
---- ----
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND
OUR ANNUAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . 1
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS . . . . . . . . . 6
Information about the Board of Directors
and Corporate Governance. . . . . . . . . . . . . . . . . . 6
Director Independence . . . . . . . . . . . . . . . . . . . . 6
Non-Executive Chairman of the Board . . . . . . . . . . . . . 6
The Board and Board Committees. . . . . . . . . . . . . . . . 7
The Audit Committee . . . . . . . . . . . . . . . . . . . . . 7
The Compensation Committee. . . . . . . . . . . . . . . . . . 8
The Nominating and Governance Committee . . . . . . . . . . . 9
Nominations Process for Directors . . . . . . . . . . . . . . 10
Director Compensation . . . . . . . . . . . . . . . . . . . . 11
Classification of the Terms of the
Members of the Board of Directors . . . . . . . . . . . . . 12
Changes to the Board's Composition During 2004. . . . . . . . 12
PROPOSAL 1--ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . 14
Directors and Executive Officers. . . . . . . . . . . . . . . 14
Non-Executive Directors . . . . . . . . . . . . . . . . 14
Director Who Is Also an Executive Officer . . . . . . . 16
Additional Executive Officers . . . . . . . . . . . . . 16
Executive Compensation. . . . . . . . . . . . . . . . . . . . 19
Compensation Committee Report on
Executive Compensation. . . . . . . . . . . . . . . . 19
Compensation Tables . . . . . . . . . . . . . . . . . . 24
Summary of Plans, Programs and Agreements . . . . . . . 31
Equity Compensation Plan Information. . . . . . . . . . 43
Common Stock Security Ownership of Certain
Beneficial Owners and Management. . . . . . . . . . . . . . 44
Performance Graph . . . . . . . . . . . . . . . . . . . . . . 46
Section 16(a) Beneficial Ownership Reporting Compliance . . . 47
Certain Relationships and Related Transactions. . . . . . . . 47
PROPOSAL 2--RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM . . . . . . . . . . 50
Information About the Independent Registered
Public Accounting Firm. . . . . . . . . . . . . . . . . . . 50
Audit Committee Report. . . . . . . . . . . . . . . . . . . . 51
PROPOSAL 3--APPROVAL OF AMENDMENT TO THE STOCK AWARD
AND INCENTIVE PLAN. . . . . . . . . . . . . . . . . . . . . . . . 53
PROPOSAL 4--PROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS . . . . . 59
PROXY SOLICITATION EXPENSE. . . . . . . . . . . . . . . . . . . . . 61
ATTENDANCE BY MEMBERS OF THE BOARD OF DIRECTORS
AT THE ANNUAL MEETING OF SHAREHOLDERS . . . . . . . . . . . . . . 61
COMMUNICATING WITH OUR BOARD OF DIRECTORS . . . . . . . . . . . . . 61
APPENDIX I: Proposed Form of Amendment to the
Stock Incentive Plan
APPENDIX II: Proposed Form of Amendment to the
Articles of Incorporation
i
JONES LANG LASALLE INCORPORATED
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
--------------------
PRELIMINARY PROXY STATEMENT
--------------------
2005 ANNUAL MEETING OF SHAREHOLDERS
QUESTIONS AND ANSWERS ABOUT THE
PROXY MATERIALS AND OUR ANNUAL MEETING
Q: WHY AM I RECEIVING THESE MATERIALS?
A: The Board of Directors (the BOARD) of Jones Lang LaSalle
Incorporated, a Maryland corporation (JONES LANG LASALLE, which may
sometimes be referred to as the COMPANY or as WE, US or OUR), is providing
these proxy materials for you in connection with the Company's 2005 Annual
Meeting of Shareholders (including any adjournments or postponements, the
ANNUAL MEETING), which will take place at 8:30 a.m. local time, on
Thursday, May 26, 2005 at The Mid-America Club, located on the 80th floor
of the Aon Center, 200 East Randolph Drive, Chicago Illinois. We are
sending this Proxy Statement and the enclosed form of proxy to our
shareholders on or about April 19, 2005.
As one of our shareholders, you are invited to attend the Annual
Meeting and you are entitled and encouraged to vote on the items of
business described in this Proxy Statement.
Q: WHAT INFORMATION IS CONTAINED IN THIS PROXY STATEMENT?
A: The information we have included in this Proxy Statement relates to
the proposals to be voted on at the Annual Meeting and also to the voting
process. We have organized this Proxy Statement according to the four
different matters on which our shareholders will be voting and the
information we are required to provide in order for you to make your
decision about how to vote.
Q: WHAT INFORMATION IS INCLUDED WITH THIS PROXY STATEMENT?
A: We are also sending you our 2004 Annual Report, which includes our
Form 10-K for the year ended December 31, 2004, as well as a proxy card and
a postage-paid return envelope.
Q: WHAT ITEMS OF BUSINESS WILL BE VOTED ON AT THE ANNUAL MEETING?
A: The items of business scheduled to be voted on at the Annual Meeting
are:
. The election of two Directors to serve until the 2008 Annual
Meeting of Shareholders;
. The ratification of the appointment of our independent
registered public accounting firm for the year ending
December 31, 2005;
. The approval of an amendment to the Company's Stock Award and
Incentive Plan; and
. The approval of an amendment to the Company's Articles of
Incorporation.
We will also consider other business that properly comes before the Annual
Meeting.
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE?
A: Our Board recommends that you vote your shares as follows:
. FOR each of the nominees to the Board;
. FOR the ratification of the appointment of our independent
registered public accounting firm for 2005;
. FOR the amendment to the Stock Award and Incentive Plan serving
to increase the number of shares of our Common Stock reserved
for issuance under that Plan by 3,000,000; and
. FOR the amendment to the Company's Articles of Incorporation
serving to declassify our Board of Directors.
Q: WHAT SHARES CAN I VOTE?
A: Only shareholders of record of Jones Lang LaSalle's Common Stock,
$.01 par value per share (the COMMON STOCK), at the close of business on
Friday, March 25, 2005 (the RECORD DATE), are entitled to notice of and to
vote at the Annual Meeting. Each share of Common Stock is entitled to one
vote on all matters voted upon by shareholders and is entitled to vote for
as many persons as there are Directors to be elected. Based on the
information we received from our transfer agent and stock registrar, there
were 33,972,089 shares of Common Stock outstanding on the Record Date held
in approximately 720 registered accounts representing approximately 6,300
beneficial owners.
Q: WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A SHAREHOLDER OF
RECORD AND AS A BENEFICIAL OWNER?
A: Most Jones Lang LaSalle shareholders hold their shares through a
broker or other nominee rather than directly in their own names. There are
some distinctions between shares held of record and those owned
beneficially, as we summarize below:
SHAREHOLDER OF RECORD
If your shares are registered directly in your name with Jones Lang
LaSalle's transfer agent, Mellon Investor Services, then with respect
to those shares you are considered to be the shareholder of record
and we are therefore sending you these proxy materials directly to
you. As the shareholder of record, you have the right to grant your
voting proxy directly to the Company or to vote in person at the
meeting. The Company has enclosed a proxy card for you to use.
BENEFICIAL OWNER
If your shares are held in a brokerage account or by a trustee or
another nominee, then you are considered the beneficial owner of
shares held "in street name" and these proxy materials are being
forwarded to you by your broker, trustee or nominee, together with a
voting instruction card. As the beneficial owner, you have the right
to direct your broker, trustee or nominee how to vote and you are
also invited to attend the Annual Meeting.
Since a beneficial owner is not the shareholder of record, you may
not vote these shares in person at the Annual Meeting unless you obtain a
"legal proxy" from the broker, trustee or nominee that holds your shares,
giving you the right to vote the shares at the Annual Meeting. Your
broker, trustee or nominee has enclosed or provided voting instructions to
you on how to vote your shares.
Q: HOW CAN I ATTEND THE ANNUAL MEETING?
A: You are entitled to attend the Annual Meeting only if you were a
Jones Lang LaSalle shareholder as of the close of business on Friday,
March 25, 2005 or you hold a valid proxy for the Annual Meeting. You
should be prepared to present a photo identification for admittance. In
addition, if you are a shareholder of record, your name will be verified
against the list of shareholders of record on the Record Date prior to your
being admitted to the Annual Meeting. If you are not a shareholder of
record but hold shares through a broker, trustee or nominee (in STREET
NAME), you should provide proof of beneficial ownership on the Record Date,
such as your most recent account statement prior to March 25, 2005, a copy
of the voting instruction card provided to you, or other similar evidence
of ownership. If you do not provide photo identification or comply with
the other procedures outlined above upon request, you will not be admitted
to the Annual Meeting.
Q: HOW CAN I VOTE MY SHARES IN PERSON AT THE ANNUAL MEETING?
A: You may vote in person at the Annual Meeting those shares you hold in
your name as the shareholder of record. Shares held beneficially in street
name may be voted in person at the Annual Meeting only if you obtain a
legal proxy from the broker, trustee or nominee that holds your shares
giving you the right to vote the shares. Even if you plan to attend the
Annual Meeting, we recommend that you also submit your proxy or voting
instructions as described below so that your vote will be counted if you
later decide not to attend the Annual Meeting.
Q: HOW CAN I VOTE MY SHARES WITHOUT ATTENDING THE ANNUAL MEETING?
A: Whether you hold shares directly as the shareholder of record or
beneficially in street name, you may direct how your shares are voted
without attending the Annual Meeting. Shareholders may deliver their
proxies either:
(1) by completing and submitting a properly signed proxy card or
voting instruction card;
(2) by telephone; or
(3) electronically over the Internet.
You will find instructions on the proxy card or voting instruction
card.
Q: MAY I CHANGE MY VOTE OR REVOKE MY PROXY?
A: You may change your vote at any time prior to the vote at the Annual
Meeting. If you are the shareholder of record, you may change your vote
by:
(1) granting a new proxy bearing a later date (which automatically
revokes the earlier proxy);
(2) providing a written notice of revocation prior to your shares
being voted; or
(3) attending the Annual Meeting and voting in person.
A written notice of revocation must be sent to our Corporate
Secretary at the address of our principal executive office set forth above.
Attendance at the Annual Meeting will not cause your previously granted
proxy to be revoked unless you specifically so request. For shares you
hold beneficially in street name, you may change your vote by submitting
new voting instructions to your broker, trustee or nominee, or, if you have
obtained a legal proxy from your broker or nominee giving you the right to
vote your shares, by attending the Annual Meeting and voting in person.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have any questions about the Annual Meeting or how to vote or
revoke your proxy, please contact Mellon Investor Services at +1 888 213
0965.
If you need additional copies of this Proxy Statement or voting
materials, please contact Mellon Investor Services at the number above or
the Company's Investor Relations team at +1 312 228 2430.
Q: HOW MANY SHARES MUST BE PRESENT OR REPRESENTED TO CONDUCT BUSINESS AT
THE ANNUAL MEETING?
A: The quorum requirement for holding the Annual Meeting and transacting
business is that holders of a majority of shares of our Common Stock that
are issued and outstanding and are entitled to vote must be present in
person or represented by proxy.
Q: WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS?
A: Directors will be elected by a plurality of the votes cast at the
Annual Meeting, which means that the two nominees receiving the highest
number of votes will be elected. There is no cumulative voting for
Directors. The affirmative vote of a majority of the total number of votes
cast by holders of Common Stock entitled to vote at the Annual Meeting will
be necessary to ratify the appointment of KPMG LLP as our independent
registered public accounting firm for 2005. The affirmative vote of a
majority of the total number of votes cast by holders of Common Stock
entitled to vote at the Annual Meeting will also be necessary to approve
the amendment to the Stock Award and Incentive Plan, provided that the
total vote cast on this proposal represents over 50% of the total number of
shares outstanding on the Record Date. The affirmative vote of eighty
percent (80%) of the total number of shares outstanding on the Record Date
will be necessary to approve the amendment to the Company's Articles of
Incorporation to declassify the Company's Board of Directors.
Q: HOW ARE VOTES COUNTED?
A: Shares of Common Stock represented in person or by properly executed
proxy will be counted for the purpose of determining whether a quorum is
present at the Annual Meeting. Shares which abstain from voting as to a
particular matter and broker non-votes (as defined below) will be treated
as shares that are present at the Annual Meeting for purposes of
determining whether a quorum exists, but will not be counted as votes cast
on such matter. Accordingly, abstentions and broker non-votes will have no
effect in determining whether director nominees have received the requisite
number of affirmative votes. Abstentions and broker non-votes will have no
effect on the voting with respect to the approval of KPMG LLP. Abstentions
and broker non-votes will have the effect of a vote against the approval of
the amendment to the Stock Award and Incentive Plan unless holders of 50%
of the total number of shares outstanding on the Record Date cast votes on
such proposal, in which event an abstention or broker non-vote will have no
effect on the result of the vote. Since 80% of the total number of
outstanding shares (as opposed to votes cast) must be voted in favor of the
amendment to the Articles of Incorporation to declassify the Board of
Directors, abstentions and broker non-votes are equivalent to votes against
this particular matter.
A "broker non-vote" occurs when a broker does not vote on a matter on
the proxy card because the broker does not have discretionary voting power
for that particular matter and has not received voting instructions from
the beneficial owner.
Q: WHAT HAPPENS IF ADDITIONAL MATTERS ARE PRESENTED AT THE ANNUAL
MEETING?
A: Each valid proxy returned to Jones Lang LaSalle will be voted at the
Annual Meeting as indicated on the proxy or, if no indication is made with
respect to a proposal, in accordance with the recommendations of our Board
of Directors as set forth in this Proxy Statement. We do not know of any
matters to be presented at the Annual Meeting other than the proposals
described in this Proxy Statement. However, if any other matters are
properly presented at the Annual Meeting, the persons named on the enclosed
proxy intend to vote the shares represented by them in accordance with
their best judgment pursuant to the discretionary authority granted them in
the proxy.
Q: WHO WILL SERVE AS INSPECTOR OF ELECTIONS?
A: The inspector of elections will be a representative of Mellon
Investor Services.
Q: WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?
A: You may receive more than one set of voting materials, including
multiple copies of this Proxy Statement and multiple proxy cards or voting
instruction cards. For example, if you hold your shares in more than one
brokerage account, you may receive a separate voting instruction card for
each brokerage account in which you hold shares. If you are a shareholder
of record and your shares are registered in more than one name, you will
receive more than one proxy card. Please complete, sign, date and return
each Jones Lang LaSalle proxy card and voting instruction card that you
receive.
Q: WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
A: We intend to announce preliminary voting results at the Annual
Meeting and publish final results in our quarterly report on Form 10-Q for
our quarter ended June 30, 2005.
Q: WHAT IS THE DEADLINE TO PROPOSE ACTIONS FOR CONSIDERATION AT NEXT
YEAR'S ANNUAL MEETING OF SHAREHOLDERS OR TO NOMINATE INDIVIDUALS TO SERVE
AS DIRECTORS?
A: Shareholder proposals, including nominations for individuals to serve
as directors, intended to be presented at the 2006 Annual Meeting and
included in Jones Lang LaSalle's proxy statement and form of proxy relating
to that Annual Meeting pursuant to Rule 14a-8 under the Securities and
Exchange Act of 1934 (the EXCHANGE ACT) must be received by Jones Lang
LaSalle at our principal executive office by December 19, 2005. In order
for shareholder proposals made outside of Rule 14a-8 under the Exchange Act
to be considered "timely" within the meaning of Rule 14a-4(c) under the
Exchange Act, such proposals must be received by Jones Lang LaSalle at our
principal executive office by March 3, 2006. Our Bylaws require that
proposals of shareholders made outside of Rule 14a-8 under the Exchange Act
must be submitted not later than February 24, 2006 and not earlier than
January 26, 2006.
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
Our policies and practices reflect corporate governance initiatives
that we believe comply with the listing requirements of the New York Stock
Exchange (NYSE), on which our Common Stock is traded, the corporate
governance requirements of the Sarbanes-Oxley Act of 2002 as currently in
effect, various regulations issued by the Securities and Exchange
Commission (SEC) and certain provisions of the General Corporation Law in
the State of Maryland, where Jones Lang LaSalle is incorporated.
We maintain a corporate governance section on our public website,
www.joneslanglasalle.com, which includes key information about our
corporate governance initiatives including our Corporate Governance
Guidelines, the Charters for the three Committees of our Board of Directors
described below, a Statement of Qualifications of Members of the Board of
Directors and our Code of Business Ethics. This information is also
available in print to any shareholder who requests it in writing from our
Corporate Secretary at the address of our principal executive office set
forth above. The Board of Directors regularly reviews corporate governance
developments and modifies our Guidelines and Charters accordingly.
Our Code of Business Ethics applies to all employees of the Company,
including all of our executive officers, as well as to the members of our
Board of Directors.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
The Board, which is elected by the shareholders, is the ultimate
decision-making body of the Company, except with respect to those matters
reserved to the shareholders either by applicable law, our Articles of
Incorporation or our By-Laws. The Board elects the Chairman of the Board,
the Chief Executive Officer and certain other members of the senior
management team, which is charged with conducting the Company's business
under the oversight of the Board to enhance the long-term value of the
Company to the shareholders. The Board acts as an advisor and counselor to
the Company's senior management and ultimately monitors its performance.
DIRECTOR INDEPENDENCE
A majority of our Board must consist of independent Directors. All
of the members of the Audit, Compensation and Nominating and Governance
Committees of our Board must be independent Directors. For a Director to
be considered independent, the Board must determine that the Director does
not have any direct or indirect material relationship with the Company.
The Board observes all criteria for independence and experience established
by the NYSE (including Rule 303A in its Listed Company Manual) and by other
governing laws and regulations. At least annually, the Board reviews any
relationships that the Directors have with the Company in order to reaffirm
their independence. All Directors whom we describe in this Proxy Statement
as being independent satisfy the foregoing criteria.
NON-EXECUTIVE CHAIRMAN OF THE BOARD
Effective January 1, 2005, the role of the Chairman of the Board has
been held by Sheila A. Penrose, a Non-Executive Director who is independent
and who the Board has determined will also serve as the Lead Independent
Director of the Board for purposes of the NYSE's corporate governance
rules, including presiding over regularly scheduled executive sessions of
our Non-Executive Directors (meaning Directors whom we do not otherwise
employ as Company officers). The Board has determined that each person who
serves as Chairman of the Board from time to time, if that person is
independent, will automatically also serve as a member of each of the
Board's Committees.
THE BOARD AND BOARD COMMITTEES
The full Board of Directors held six meetings in 2004. Each Director
who held such position during 2004 attended, in aggregate, at least 75% of
all meetings of the Board and of any Committee on which such Director
served. Our Non-Executive Directors meet in executive session without
management participation during every in-person Board meeting.
Our Board of Directors has a standing Audit Committee, Compensation
Committee and Nominating and Governance Committee. The following table
identifies:
(1) the current members of each of the Committees, all of whom are
Non-Executive Directors and are independent;
(2) the Director who currently serves as the Chair of each
Committee; and
(3) the number of meetings each Committee held during 2004.
CURRENT COMMITTEE MEMBERSHIP AND NUMBER OF MEETINGS DURING 2004
NOMINATING AND
AUDIT COMPENSATION GOVERNANCE
DIRECTOR NAME COMMITTEE COMMITTEE COMMITTEE
------------- --------- ----------- --------------
Henri-Claude de Bettignies x x x
Darryl Hartley-Leonard x x
Sir Derek Higgs Chair x x
Sheila A. Penrose x x Chair
Thomas C. Theobald Chair x
NUMBER OF MEETINGS
DURING 2004: 8 6 5
THE AUDIT COMMITTEE
Sir Derek Higgs (Chair), Messrs. de Bettignies and Hartley-Leonard
and Ms. Penrose served as members of the Audit Committee during the entire
year of 2004.
Under the terms of its Charter, the Audit Committee acts on behalf of
the Board to monitor (1) the integrity of the Company's financial
statements, (2) the qualifications and independence of the Company's
independent auditor, (3) the performance of the Company's internal audit
function and of its independent auditor and (4) compliance by the Company
with legal and regulatory requirements. In fulfilling its
responsibilities, the Audit Committee has the full authority of the Board
to, among other things:
. appoint or replace the independent auditor, which reports
directly to the Audit Committee;
. review with management and the independent auditor the
Company's quarterly financial statements, including disclosures
made in management's discussion and analysis, prior to the
filing of the Company's Quarterly Reports on Form 10-Q;
. review with management and the independent auditor the
Company's annual audited financial statements, including
disclosures made in management's discussion and analysis, prior
to the filing of the Company's Annual Report on Form 10-K;
. discuss with management the Company's major financial risk
exposures and the steps management has taken to monitor and
control such exposures, including the Company's risk assessment
and risk management policies;
. discuss with management and the independent auditor the
Company's internal controls, disclosure controls and procedures
and any major issues as to the adequacy of those controls and
procedures and any special steps adopted in light of any
material control deficiencies;
. establish procedures for the treatment of complaints received
by the Company regarding accounting, internal accounting
controls or auditing matters, and the confidential, anonymous
submission by employees of concerns regarding questionable
accounting or auditing matters; and
. discuss with management and advise the Board with respect to
the Company's policies and procedures regarding compliance with
applicable laws and regulations and the Company's Code of
Business Ethics.
See also the report of the Audit Committee set forth in the section
headed "Audit Committee Report" below under "Proposal 2."
Our Board has determined that each of the members of our Audit
Committee is "financially literate" and that at least one of the members
has "accounting or related financial management expertise," in each case as
required by the NYSE. While the Board has also determined that no
individual member of the Audit Committee meets the specific technical
definition under SEC regulations of an "audit committee financial expert"
with respect to generally accepted accounting principles within the United
States, the Board believes that the members comprising the Audit Committee,
all of whom have had distinguished careers within prominent and
sophisticated international business or academic institutions, have the
requisite attributes and abilities to allow them collectively to fulfill
their responsibilities as Audit Committee members.
The Charter of the Audit Committee was attached as an appendix to the
Company's Proxy Statement for its 2004 Annual Meeting of Shareholders and
has not been subsequently amended. No member of our Audit Committee serves
simultaneously on the audit committees of more than three publicly
registered companies.
THE COMPENSATION COMMITTEE
Messrs. Theobald (Chair) and de Bettignies and Sir Derek Higgs served
as members of the Compensation Committee during the entire year of 2004.
Jackson P. Tai served as a member of the Compensation Committee during the
entire year of 2004 until his resignation from the Board of Directors on
October 6, 2004. Ms. Penrose became a member of the Compensation Committee
effective January 1, 2005.
Under the terms of its Charter, the Compensation Committee acts on
behalf of the Board to formulate, evaluate and approve the compensation of
the Company's executive officers and key employees and to oversee all
compensation programs involving the use of the Company's Common Stock. In
fulfilling its responsibilities, the Compensation Committee has the full
authority of the Board to, among other things:
. annually review and approve corporate goals and objectives
relevant to the compensation of the Company's Chief Executive
Officer, evaluate the Chief Executive Officer's performance in
light of those goals and objectives and determine his or her
compensation levels based on such evaluation;
. annually review and approve the compensation of the other
executive officers of the Company;
. review and approve any employment contracts, severance
arrangements and other agreements (including any change of
control provisions that are included) for executive officers of
the Company and the overall programs under which any such
arrangements may be offered to other employees of the Company;
. approve cash incentives and deferred compensation plans for
executives and oversee performance objectives and funding for
executive incentive plans; and
. approve and oversee compensation programs involving the use of
the Company's Common Stock and, where required, submit equity
compensation matters to the Company's shareholders.
See also the report of the Compensation Committee set forth in the
section headed "Compensation Committee Report" below under "Proposal 1."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS. There are no Compensation Committee interlocks or
insider participation on the Compensation Committee. Certain executive
officers have and will attend meetings of the Compensation Committee in
order to present information and answer questions of the members of the
Compensation Committee.
THE NOMINATING AND GOVERNANCE COMMITTEE
Ms. Penrose (Chair), Sir Derek Higgs and Messrs. de Bettignies,
Hartley-Leonard and Theobald served as members of the Nominating and
Governance Committee during the entire year of 2004. Jackson P. Tai served
as a member of the Nominating and Governance Committee during the entire
year of 2004 until his resignation from the Board of Directors on
October 6, 2004.
Under the terms of its Charter, the Nominating and Governance
Committee acts on behalf of the Board to (1) identify and recommend to the
Board qualified candidates for director nominees for each Annual Meeting of
Shareholders and to fill vacancies on the Board occurring between such
Annual Meetings, (2) recommend to the Board nominees for Directors to serve
on each Committee of the Board, (3) develop and recommend to the Board
corporate governance guidelines and (4) lead the Board in its annual review
of the Board's performance. In fulfilling its duties, the Nominating and
Governance Committee has the full authority of the Board to, among other
things:
. Adopt and periodically review the criteria for the selection of
Directors and members of Board Committees and, when necessary,
conduct searches for and otherwise aid in attracting highly
qualified candidates to serve on the Board, including
candidates recommended by shareholders;
. Review the qualifications of new candidates for Board
membership and the performance of incumbent Directors whose
terms are to expire at the next Annual Meeting of Shareholders;
. Periodically review the compensation paid to non-Executive
Directors for their services as members of the Board and its
Committees and make recommendations to the Board for any
appropriate adjustments;
. Periodically review and bring to the attention of the Board
current and emerging trends in corporate governance issues and
how they may affect the business operations of the Company;
. Periodically review the structure, size, composition and
operation of the Board and each Committee of the Board and
recommend committee assignments to the Board, including
rotation, re-assignment or removal of any committee member; and
. Oversee and periodically review the orientation program for new
Directors and continuing education programs for existing
Directors.
NOMINATIONS PROCESS FOR DIRECTORS
IDENTIFYING AND EVALUATING NOMINEES FOR DIRECTORS
The Nominating and Governance Committee employs a variety of methods
to identify and evaluate nominees for Director. The Committee regularly
assesses the appropriate size of the Board and whether any vacancies on the
Board are expected due to retirement or otherwise. In the event that
vacancies are anticipated or otherwise arise, the Committee would consider
various potential candidates for Director. Candidates may come to the
attention of the Committee through then current Board members, Company
executives, shareholders, professional search firms or other persons. The
candidates would be evaluated at regular or special meetings of the
Committee and may be considered at any point during the year depending upon
the circumstances. As described below, the Committee will consider
properly submitted shareholder nominations for candidates for election to
the Board at an Annual Meeting. Following verification of the shareholder
status of the persons proposing candidates, recommendations would be
aggregated and considered by the Committee at a regularly scheduled meeting
which would generally be the first or second meeting prior to the issuance
of a proxy statement for the subsequent Annual Meeting. If any materials
are provided by a shareholder in connection with the nomination of a
Director candidate, they will be forwarded to the Committee. The Committee
would also review materials provided by professional search firms or other
parties in connection with a nominee who is not proposed by a shareholder.
If the Committee nominated a candidate proposed by a professional search
firm, the Committee would expect to compensate the firm for its services,
but the Board would not pay any compensation for suggestions of candidates
from any other source.
DIRECTOR QUALIFICATIONS
Our Board has adopted a Statement of Qualifications of Members of the
Board of Directors, which is available on our website and contains the
membership criteria that apply to nominees to be recommended by the
Nominating and Governance Committee. According to these criteria, the
Board should be composed of individuals who have demonstrated notable or
significant achievements in business, education or public service. In
addition, the members of the Board should possess the acumen, education and
experience to make a significant contribution to the Board and bring a
range of skills, diverse perspectives and backgrounds to the deliberations
of the Board. Importantly, the members of the Board must have the highest
ethical standards, a strong sense of professionalism and a dedication to
serving the interests of all the shareholders and be able to make
themselves readily available to the Board in the fulfillment of their
duties. All members of the Board must also satisfy all additional criteria
for Board membership that may be set forth in the Company's Corporate
Governance Guidelines. The criteria also set forth the particular
attributes that the Committee should consider when evaluating a candidate's
management and leadership experience, the skills and diversity that a
candidate would contribute to the Board and the candidate's integrity and
professionalism.
SHAREHOLDER NOMINEES
The Nominating and Governance Committee will consider properly
submitted nominations for candidates for membership on the Board as
described above. Any shareholder nominations proposed for consideration by
the Committee should include the nominee's name and qualifications for
Board membership and evidence of consent of the proposed nominee to serve
as a director if elected. Nominations should be addressed to our Corporate
Secretary at the address of our principal executive office set forth above.
Consistent with the deadline for submission of shareholder proposals
generally, nominations for individuals to be considered for election at the
2006 Annual Meeting must be received by the Corporate Secretary at our
principal executive office by no later than December 19, 2005.
DIRECTOR COMPENSATION
NON-EXECUTIVE DIRECTORS
Under its Charter, our Nominating and Governance Committee is
responsible for determining and recommending to the Board the overall
compensation program for our Non-Executive Directors. In 2004, under the
program that the Committee has established, each Non-Executive Director
received:
. an annual retainer of $40,000, paid quarterly;
. $3,500 for attendance at each meeting ($1,000 for telephonic
meetings) of the Board;
. $1,500 per meeting ($1,000 for telephonic meetings) for each
Committee meeting; and
. an annual grant of restricted stock in an amount equal to
$50,000 (with the number of shares determined based on the
closing price of the stock on the grant date), to become vested
on the fifth anniversary of the date of grant.
In addition, the Chair of the Audit Committee received an annual retainer
of $10,000 and the Chair of each of the Compensation and the Nominating and
Governance Committees received an annual retainer of $5,000. Upon being
elected to the Board for the first time, a Director will also receive a
one-time grant of restricted stock in an amount equal to $50,000 (with the
number of shares determined based on the closing price of the stock on the
grant date), to become vested on the fifth anniversary of the date of
grant.
Directors who are also officers or employees of Jones Lang LaSalle
are not paid any Directors' fees. Jones Lang LaSalle reimburses all
Directors for expenses incurred in attending meetings.
Through 2003, (1) each Non-Executive Director elected to the Board
for the first time received upon such election a one-time grant of options
to purchase 5,000 shares of Common Stock at fair market value on the date
of grant and (2) each Non-Executive Director also received an annual grant
of options to purchase 5,000 shares on the day after each Annual Meeting of
Shareholders after which the Non-Executive Director continued in office.
All of the foregoing options have a 10-year term and vest over a 5-year
period, with 20% becoming vested on each anniversary of the date of grant.
The foregoing grants of options were made automatically under our Stock
Incentive Plan (as defined and discussed below).
Through 2002, a Non-Executive Director could also elect, under the
terms of the Stock Incentive Plan, to receive, in lieu of the annual cash
retainer, an option for a number of shares such that the value of the
option was equal to the amount of the annual retainer. The Stock Incentive
Plan provided that the value of these options was 33% of the exercise price
for options issued with respect to 1999, 2000, 2001 and 2002. For options
issued with respect to 1999 and years thereafter, the exercise price was
equal to the average closing prices of our Common Stock on the last trading
day of each calendar quarter during the year. Such stock options were
granted on January 1 of the year following the year in which the retainer
was earned, were fully vested upon grant and have 10-year terms.
Beginning in 2003, pursuant to the terms of the Stock Incentive Plan,
Non-Executive Directors were permitted to elect to receive shares of our
Common Stock in lieu of any or all of their annual cash retainer, on a
quarterly basis, based on the closing price of our Common Stock on the last
trading day of each quarter. In addition, the Non-Executive Directors may
elect to defer receipt of such shares for specified periods and, consistent
with our Stock Ownership Program described below, any shares so deferred
will be increased by the Company by 25%.
CHAIRMAN OF THE BOARD
As a Non-Executive Director who was elected to the position of
Chairman of the Board effective January 1, 2005, Ms. Penrose receives
compensation in addition to the foregoing amounts in consideration of
undertaking the responsibilities and time commitments associated with that
position which the Board has established. The Chairman's compensation for
the first calendar year of the two-year term to which she has been elected
is $100,000 and will be subject to review for the second year of the term.
In addition, Ms. Penrose received a one-time grant of 1,000 shares of
restricted stock, to become vested on the second anniversary of the date of
grant.
CLASSIFICATION OF THE TERMS OF THE MEMBERS OF THE BOARD OF DIRECTORS
Jones Lang LaSalle's Articles of Incorporation provide for our Board
to be divided into three classes, as nearly equal in number as possible,
serving staggered three-year terms. The Board currently consists of two
Class I Directors (Messrs. de Bettignies and Hartley-Leonard), two Class II
Directors (Ms. Penrose and Mr. Dyer) and two Class III Directors (Mr.
Theobald and Sir Derek Higgs).
The terms of our Class I Directors, Class II Directors and Class III
Directors will expire upon the election and qualification of successor
Directors at the Annual Meetings of Shareholders held during the calendar
years 2007, 2008 and 2006, respectively. As indicated in this Proxy
Statement, our Board is proposing at the 2005 Annual Meeting that the
Company's Articles of Incorporation be amended by the shareholders in order
to declassify the Board. If our shareholders approve this amendment, then
each of our Directors will serve his or her then remaining term, after
which each Director would be elected to a one-year term. See "Proposal to
Declassify the Board of Directors" below under "Proposal 4."
CHANGES TO THE BOARD'S COMPOSITION DURING 2004
Christopher A. Peacock, who previously was a Class II Director and
the Company's President and Chief Executive Officer, resigned from all of
such positions on January 7, 2004. At that time, Stuart L. Scott, who then
served as the Chairman of the Board, was named as the Company's interim
President and Chief Executive Officer while a search was conducted for a
successor.
Consistent with the Board's previous determination that each of the
leaders of the Company's four business segments should focus his or her
efforts on managing those businesses without having additional obligations
as a member of the Board, Peter C. Roberts did not stand for re-election as
a Class I Director at our 2004 Annual Meeting.
On August 30, 2004, Colin Dyer was elected to the position of
President and Chief Executive Officer and also became a member of the Board
as a Class II Director, filling the vacancy created by Mr. Peacock's
resignation.
On October 6, 2004. Jackson P. Tai resigned from his position as a
member of the Board. Mr. Tai had served as a Class II Director.
On December 31, 2004, Mr. Scott, as previously announced, retired
from the Board as a Class III Director and from his executive officer
positions after more than thirty years of service to the Company.
Effective January 1, 2005, the Board elected Ms. Penrose, a Non-Executive
Director, to serve as the Chairman of the Board for a two-year term,
subject to her re-election by our shareholders as a member of the Board at
the 2005 Annual Meeting.
The Board intends to fill each of current Class I, II and III
vacancies as soon as it identifies suitable candidates who agree to serve
as members of the Board. If any of such vacancies is filled while the
Board is still classified, then such vacancy would be filled for the
remainder of the term for the applicable class whose vacancy has been so
filled. If our shareholders approve the proposed amendment to the
Company's Articles of Incorporation to declassify the Board, then each of
such vacancies filled after such amendment would be for a one-year term.
PROPOSAL 1
ELECTION OF DIRECTORS
Our Class II Directors, Ms. Penrose and Mr. Dyer, are standing for
re-election at our 2005 Annual Meeting. Biographical information for each
of the nominees is set forth below under the caption "Directors and
Executive Officers." The Class II Directors will serve three-year terms
until the Jones Lang LaSalle's Annual Meeting of Shareholders in 2008 and
until their successors are elected and qualify, or until their earlier
death, resignation, retirement, disqualification or removal.
THE BOARD RECOMMENDS YOU VOTE "FOR" THE ELECTION OF EACH OF THE TWO
NOMINEES LISTED BELOW:
NOMINEES
Class II (term expiring in 2008)
Sheila A. Penrose
Colin Dyer
Each valid proxy returned to Jones Lang LaSalle will be voted at the
Annual Meeting for the two nominees listed above unless the proxy specifies
otherwise. Proxies may not be voted for more than two nominees for
Director. While the Board does not anticipate that either of the nominees
will be unable to stand for election as a Director at the Annual Meeting,
if that is the case, proxies will be voted in favor of such other person or
persons as our Board may designate.
DIRECTORS AND EXECUTIVE OFFICERS
The following biographical summaries provide information about each
of (1) our current Non-Executive Directors, including Ms. Penrose, one of
the two nominees standing for election at the 2005 Annual Meeting, (2) Mr.
Dyer, a Director who is also one of our Executive Officers and one of the
nominees standing for election at the 2005 Annual Meeting, and (3) those
additional corporate officers whom we define as Executive Officers for SEC
reporting purposes.
NON-EXECUTIVE DIRECTORS
(Including a Director Nominee)
HENRI-CLAUDE DE BETTIGNIES. Professor de Bettignies, 66, has been a
Director of Jones Lang LaSalle since March 1999. His term on our Board of
Directors expires at our 2007 Annual Meeting. Professor de Bettignies
joined the European Institute of Business Administration, Fontainebleau,
France (INSEAD) in 1967 as an Assistant Professor and became a Full
Professor in 1975. Since 1988, he has held a joint professorship at the
Stanford University Graduate School of Business. Professor de Bettignies
started and developed INSEAD's activities in Japan and the Asia Pacific
region, which led to the creation in 1980 of the Euro-Asia Centre of which
he was the Director General until 1988. At INSEAD and Stanford, he teaches
courses on international management, ethics and the Japan and the Asia
Pacific region. He has created and directs several executive programs
organized in Asia and Europe, including AVIRA, a program for chief
executive officers held in Europe, the United States and Asia. He serves
as a consultant to a number of major organizations and has published five
books and over 50 articles in business and professional journals. He is a
member of the Asian Academy of Management and serves on the Editorial Board
of a number of journals, including The New Academic Review (New York), The
Journal of Asian Business (Ann Arbor), Asian Academy of Management Journal
(Penang), Ethica (Asti), The Revue Francaise de Gestion (Paris) and The
Thunderbird International Business Review (New York). Professor de
Bettignies was educated at the Sorbonne, the Catholic University of Paris
(EPP) and the Harvard Business School.
DARRYL HARTLEY-LEONARD. Mr. Hartley-Leonard, 59, has been a Director
of Jones Lang LaSalle since July 1997. His term on our Board of Directors
expires at our 2007 Annual Meeting. Mr. Hartley-Leonard has been Chairman
and Chief Executive Officer of PGI, Inc., an event and communication
agency, since January 1998. He served as Chairman of the Board of Hyatt
Hotels Corporation (Hyatt), an international owner and manager of hotels,
from 1994 to 1996. From 1986 to 1994, he served as Chief Executive Officer
and Chief Operating Officer of Hyatt. Mr. Hartley-Leonard retired from
Hyatt in 1996 after a 32-year career with that organization.
Mr. Hartley-Leonard also serves on the board of directors of LaSalle Hotel
Properties, a real estate investment trust. Mr. Hartley-Leonard holds a
B.A. from Blackpool Lancashire College of Lancaster University and an
honorary doctorate of business administration from Johnson and Wales
University.
SIR DEREK HIGGS. Sir Derek, 61, has been a Director of Jones Lang
LaSalle since March 1999. His term on our Board of Directors expires at
our 2006 Annual Meeting. Sir Derek was Chairman of Prudential Portfolio
Managers Limited, a fund manager, and a Director of Prudential plc, a
financial services company, from January 1996 to December 2000, and prior
to that he was employed by S.G. Warburg & Co. Ltd., an investment bank,
from 1972 until 1996, serving as a Director beginning in 1979, Head of
Global Corporate Finance beginning in 1986 and Chairman beginning in 1994.
He is a member of the Financial Reporting Council of the UK. He is
Chairman of Partnerships UK plc, an advisor on public-private partnerships
for the delivery of public services, Deputy Chairman of The British Land
Company PLC, a property company, and a Director of Allied Irish Banks,
p.l.c., a banking organization, and Egg plc, an internet bank. Sir Derek
is also a senior advisor to UBS Investment Bank. He is a member of the
Institute of Chartered Accountants in England and Wales and holds a
Bachelor of Arts degree from the University of Bristol. In January 2004,
Sir Derek was knighted by the Queen of England for his services to
corporate governance and finance.
SHEILA A. PENROSE. Ms. Penrose, 59, has been a Director of Jones
Lang LaSalle since May 2002 and was elected Chairman of the Board effective
January 1, 2005. She is a nominee standing for re-election to our Board of
Directors at the 2005 Annual Meeting. Ms. Penrose has served as an
Executive Advisor to The Boston Consulting Group since January 2001, after
retiring from Northern Trust Corporation, a bank holding company and a
global provider of personal and institutional financial services, in
September 2000 after more than 23 years of service. While at Northern
Trust, Ms. Penrose served as President of Corporate and Institutional
Services and as a member of the Management Committee. Ms. Penrose is a
member of the board of directors of eFunds Corporation, a provider of
integrated information and payment solutions, and Datacard Group, a
supplier of systems for card programs and identity solutions. She received
a Bachelors degree from the University of Birmingham in England and a
Masters degree from the London School of Economics. She also attended the
Executive Program of the Stanford Graduate School of Business.
THOMAS C. THEOBALD. Mr. Theobald, 67, has been a Director of Jones
Lang LaSalle since July 1997. His term on our Board of Directors expires
at our 2006 Annual Meeting. Mr. Theobald has served as a Partner and
Senior Advisor of Chicago Growth Partners LLC since September 2004. He
previously served as a Managing Director at William Blair Capital Partners
from September 1994 to September 2004. From July 1987 to August 1994,
Mr. Theobald was Chairman and Chief Executive Officer of Continental Bank
Corporation. He currently is Chairman of the board of directors of
Columbia Funds, a mutual fund complex, and serves on the boards of
directors of Ambac Financial Group, Inc., a guarantor of public finance and
structured finance obligations, Anixter International, a supplier of
electrical apparatus and equipment, Ventas Inc., a health-care real estate
investment trust, and the MacArthur Foundation. Mr. Theobald holds an A.B.
from the College of the Holy Cross and an M.B.A. from Harvard Business
School.
DIRECTOR WHO IS ALSO AN EXECUTIVE OFFICER
(and a Director Nominee)
COLIN DYER. Mr. Dyer, 52, has been the President and Chief Executive
Officer, and a Director, of Jones Lang LaSalle since August 2004. He is a
nominee standing for re-election to our Board of Directors at the 2005
Annual Meeting. Mr. Dyer is currently the Chairman of our Global Executive
Committee. From September 2000 to August 2004 he was the founding Chief
Executive Officer of the WorldWide Retail Exchange, an internet-based
business-to-business exchange whose members include more than 40 of the
world's leading retailers and manufacturers. From 1996 until September
2000, Mr. Dyer was Chief Executive Officer of Courtaulds Textiles plc, an
international clothing and fabric company, having served in various
management positions with that firm since 1982. From 1978 until 1982, he
was a client manager at McKinsey & Company, an international consulting
firm. He serves on the board of directors, and is the chairman of the
audit committee, of Northern Foods plc, a major food supplier to the
British retail sector. Mr. Dyer holds a BSc degree from Imperial College
in London and an M.B.A. from INSEAD in Fontainebleau, France.
ADDITIONAL EXECUTIVE OFFICERS
PETER A. BARGE. Mr. Barge, 54, has been the Chief Executive Officer
of our Asia Pacific operating segment since January 2003. He is currently
a member of our Global Executive Committee. Since December 2002, he has
also served as Chairman of Jones Lang LaSalle Hotels. He was Chief
Executive Officer of Jones Lang LaSalle Hotels from March 1999 to
December 2002 and Chief Executive Officer of our Corporate Solutions
business in the Americas from January 2001 through December 2002.
Previously, Mr. Barge was Chief Executive Officer of JLW TransAct, the
hotel business of Jones Lang Wootton. Mr. Barge had also held various
positions with that company, which was known as TransAct Hotel & Tourism
Property Limited before it was acquired by Jones Lang Wootton. Before
that, Mr. Barge served as "Lecturer in Charge" of all hotel and tourism
programs at Australia's pre-eminent school of Food and Hotel Administration
in Adelaide, South Australia, and worked in hotel management and tourism
consulting.
MARGARET A. KELLY. Ms. Kelly, 47, has been the Chief Marketing and
Communications Officer of the Company since March 1999. Previously,
Ms. Kelly was Director of Marketing and Communications for LaSalle
Partners. During Ms. Kelly's career with our firm, she has served as
Director of Corporate Marketing from 1994 to 1999, Director of Property
Marketing from 1992 to 1994 and Director of the West Coast division of
Property Marketing from 1990 to 1992. Ms. Kelly received a B.A. from Drake
University.
LAURALEE E. MARTIN. Ms. Martin, 54, has been Executive Vice
President and Chief Financial Officer of Jones Lang LaSalle since
January 2002. In January 2005 she was appointed to the additional position
of Chief Operating Officer. Ms. Martin is currently a member of our Global
Executive Committee. She served as Executive Vice President and Chief
Financial Officer of Heller Financial, Inc., a commercial finance company,
from May 1996 to November 2001. Ms. Martin had previously held the
positions of Senior Group President, responsible for Heller Financial's
Real Estate, Equipment Financing, and Small Business Lending groups, and
President of its Real Estate group. She was a member of the board of
directors of Heller Financial from May 1991 to July 1998. Ms. Martin has
been a member of the board of directors of KeyCorp, a bank holding company,
since December 2003, and a member of the board of directors of Gables
Residential Trust, a real estate investment trust, since January 1994.
Prior to joining Heller Financial in 1986, Ms. Martin held certain senior
management positions with General Electric Credit Corporation. She
received a B.A. from Oregon State University and an M.B.A. from the
University of Connecticut.
MARK J. OHRINGER. Mr. Ohringer, 46, has been Executive Vice
President, Global General Counsel and Corporate Secretary of Jones Lang
LaSalle since April 2003. From April 2002 through March 2003, he served as
Senior Vice President, General Counsel and Secretary of Kemper Insurance
Group, Inc., an insurance holding company. Prior to that, Mr. Ohringer
served as General Counsel and Secretary of Heller Financial, Inc., a
commercial finance company, since September 2000. He previously served as
Chief Corporate Counsel and Deputy General Counsel of Heller Financial from
March 1999 to September 2000, Associate General Counsel from March 1996 to
March 1999, and Senior Counsel from December 1993 to February 1996. Prior
to joining Heller Financial, Mr. Ohringer was a Partner at the law firm of
Winston & Strawn. Mr. Ohringer has a B.A. in Economics from Yale University
and a J.D. from Stanford Law School.
ROBERT S. ORR. Mr. Orr, 45, has been Chief Executive Officer for our
European operating segment since March 1999. He is currently a member of
our Global Executive Committee. Mr. Orr was a member of the Board of
Directors of Jones Lang LaSalle from May 2001 to September 2002. From
January 1998 to March 1999, Mr. Orr was European Chief Executive of Jones
Lang Wootton. From 1991 to 1998, he served as Country Manager for Jones
Lang Wootton's operations in Germany. Mr. Orr joined Jones Lang Wootton in
1980 and held a number of positions with them in Europe. Mr. Orr has a
Bachelor in Science (BSc.) in Estate Management from Oxford Polytechnic.
NAZNEEN RAZI. Ms. Razi, 52, has been Executive Vice President and
Chief Human Resources Officer of the Company since February 2004. From
November 2000 to January 2004, Ms. Razi was Executive Vice President, Chief
Administrative Officer of Comdisco, a provider of technology services,
where she had responsibility for human resources worldwide. Comdisco filed
a voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code in July, 2001 and emerged from bankruptcy under a confirmed
plan of reorganization in August, 2002. Prior to Comdisco, Ms. Razi held
various positions within CNA Insurance Companies, including senior vice
president and senior human resources officer for CNA Risk Management.
Ms. Razi holds bachelor degrees in political science, history and English
literature from St. Francis College, India, a masters degree in English
literature from Osmania University, India, and an M.B.A. in operational
management and organizational behavior and a Ph.D. in Organizational
Development from Benedictine University, Illinois.
PETER C. ROBERTS. Mr. Roberts, 44, has been the Chief Executive
Officer of our Americas operating segment since January 2003. He served as
a member of the Jones Lang LaSalle Board of Directors from December 2001
until May, 2004. Mr. Roberts is currently a member of our Global Executive
Committee. He was the Chief Operating Officer of Jones Lang LaSalle from
January 2002 through December 2002 and he served as Chief Financial Officer
from January 2001 through December 2001. Prior to that he served as
Managing Director of Jones Lang LaSalle's Tenant Representation Group in
North America since December 1996 and then in March 1999 also became that
group's Co-President. Mr. Roberts joined our Tenant Representation Group
in June 1993 as Vice President and thereafter held the positions of Senior
Vice President, Executive Vice President and then Managing Director. He
joined Jones Lang LaSalle in 1986. Prior to that, Mr. Roberts worked
within the Aerospace and Defense Contractor Group at Morgan Guaranty Trust
Company of New York. Mr. Roberts is a member of the board of directors of
Corus Bankshares, Inc., a commercial banking institution. He received an
A.B. degree from Dartmouth College and an M.B.A. from Harvard Business
School.
STANLEY STEC. Mr. Stec, 45, has been Senior Vice President and
Global Controller of Jones Lang LaSalle since November, 2004. From May
2001 until October 2004, Mr. Stec served as Vice President, Controller of
CCC Information Services, Inc., a publicly traded supplier of automobile
claims information and processing and communications services. During
2000, he was Vice President of Operations for Finetrics (a divine
interVentures company), a provider of web-based financial applications and
business services. From February 1992 to March 2000, Mr. Stec held
various financial management positions with J.D. Edwards & Company, a
publicly held developer and marketer of enterprise and supply chain
computing solutions, including Senior Director of Business Development,
Senior Director of Worldwide Financial Service Centers, Director of
International Finance and Director of Financial Reporting and Accounting.
Mr. Stec, who is a certified public accountant, received a B.A. in Business
from St. Xavier College and attended the Executive Program at the Kellogg
Graduate School of Management.
LYNN C. THURBER. Ms. Thurber, 58, has been the Chief Executive
Officer of LaSalle Investment Management, Jones Lang LaSalle's investment
management business, since March 2000, and from March 1999 until March 2000
she was the Co-Chief Executive Officer of LaSalle Investment Management.
She is currently a member of our Global Executive Committee. She was a
member of the Board of Directors of Jones Lang LaSalle from its
incorporation until March 1999 and then again from May 2000 to
September 2002. From April 1997 until March 1999, she was Co-President of
LaSalle Advisors Capital Management, Inc. (now known as LaSalle Investment
Management), an operating subsidiary of Jones Lang LaSalle. Ms. Thurber
was a Managing Director and Co-President of LaSalle Advisors Limited
Partnership from November 1994 until 1997. Prior to that, she was Chief
Executive Officer of Alex Brown Kleinwort Benson Realty Advisors
Corporation (ABKB) from May 1993 to November 1994, at which time its assets
were acquired by Jones Lang LaSalle. From July 1992 to May 1993,
Ms. Thurber served as Chief Operating Officer and Director of Acquisitions
of ABKB. Prior to that time, Ms. Thurber was a Principal at Morgan
Stanley & Co. Incorporated. She holds an A.B. degree from Wellesley
College and an M.B.A. from Harvard Business School.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for the oversight of
executive compensation and Jones Lang LaSalle's compensation programs,
including those with respect to stock ownership.
We believe that our employee compensation system is unusual in the
real estate industry in many parts of the world, including the United
States. Our system is designed to reward the strengthening of existing
client relationships, securing new client relationships, client
satisfaction and teamwork, as well as to foster employee commitment and
align employee and shareholder interests. Toward this end, we generally
compensate our real estate professionals and managers with salary, bonus
and stock ownership programs, rather than primarily on a commission basis
as we believe is typical for other real estate firms in the United States
and other parts of the world.
ANNUAL CASH COMPENSATION PROGRAMS.
Our executive officers are assigned target annual compensation
consisting of a base salary and target bonus. The Compensation Committee
approved the executive officers' 2004 base salaries during the first
quarter of 2004. Their bonuses paid in March 2005 and reported in this
Proxy Statement as compensation earned in respect of 2004 were based on
target bonuses that were established during the first quarter of 2004.
Target bonus levels for executive officers are set to provide compensation
levels which, together with their base salaries, are sufficiently
competitive to attract and retain high caliber executives.
As described below under "Management Incentive Plan," the payment of
an employee's bonus in a particular year is based upon an evaluation of
performance against specific performance objectives set in the beginning of
the prior year. These performance objectives include both objective and
subjective criteria and vary from employee to employee. All of our
executive officers have their performance objectives established as part of
our Individual Performance Management Program (IPMP), in which
substantially all of our employees participate on an annual basis. For
executive officers with primarily global firm responsibilities, including
our President and Chief Executive Officer and our Chief Operating and
Financial Officer, performance objectives relate to overall firm
performance and fell principally into the categories of (1) meeting
assigned financial targets, (2) contributing to the growth of the Company
and (3) providing superior employee management. Each executive officer
leading one of our regional or global business segments is principally
measured against these categories, including also providing superior client
service and developing new business opportunities insofar as they apply to
the particular business for which such executive officer was responsible.
Those business segment executives who are also members of our Global
Executive Committee, which is our senior-most executive management
committee currently consisting of our Global Chief Executive Officer,
Global Chief Operating and Financial Officer and the Chief Executive
Officers of our Americas, Europe, Asia-Pacific and LaSalle Investment
Management business segments, also have an overall global performance
objective as a component of their target bonuses.
The performance objectives on which bonuses were paid in 2005
relating to the overall 2004 financial performance of Jones Lang LaSalle
were measured on achievement of the earnings per share target for the 2004
calendar year. Those other executive officers who were evaluated on the
financial performance of their regional or global business units were
measured principally on achievement of the financial plans for those units.
Individualized performance objectives concentrated on key matters upon
which the particular executive officer was to focus and were set based upon
identified goals for Jones Lang LaSalle as a whole, as well as identified
goals for particular business units or groups of business units. The
Compensation Committee has encouraged management to set performance
objectives, to the extent possible, in a manner which allows objective
measurement of performance, including by setting quantitative standards
where appropriate.
The determination of compensation by the Compensation Committee for
those individuals who served as our Chief Executive Officer during 2004 is
explained below under "Compensation of Chief Executive Officer." With
respect to the base salaries that were established and paid during 2004,
Stuart L. Scott, our interim Chief Executive Officer during a portion of
2004, reviewed the performance of the relevant executive officers,
including the other persons identified as our Named Executive Officers for
purposes of the Summary Compensation Table below, and, with the assistance
of our Chief Human Resources Officer, presented his evaluation and the
resulting compensation recommendations to the Compensation Committee. The
Compensation Committee reviewed these evaluations and recommendations,
discussed them with Mr. Scott and our Chief Human Resources Officer and
determined base compensation early in 2004. With respect to the
determination of the bonuses paid in 2005 and related to 2004 performance,
Colin Dyer, who became our Chief Executive Officer on August 30, 2004,
reviewed the performance of each of the other Named Executive Officers,
determined bonus levels based upon his evaluation of performance against
objectives and, with the assistance of our Chief Human Resources Officer,
presented his evaluation and the resulting compensation recommendations to
the Compensation Committee. The Compensation Committee reviewed these
evaluations and recommendations, discussed them with Mr. Dyer and our Chief
Human Resources Officer and determined the bonus payments that are reported
in this Proxy Statement. In connection with its approval process, the
Compensation Committee also met in executive session without Mr. Dyer being
present.
The amount of the bonuses paid to our Named Executive Officers in
2005 (in respect of the Company's 2004 performance) increased significantly
over the amount of the bonuses paid to those individuals in 2004 (in
respect of the Company's 2003 performance). The increases related to the
achievement, and often over-performance, of individual goals and to the
strength of the Company's financial performance during 2004, as net income
increased by 78% over the prior year to a record $64.2 million, net debt
was reduced by $119 million during the year and each of our business
segments showed significant performance improvement and contributed to the
Company's overall results. Importantly, these results were achieved during
a year in which the Company conducted a global search for, and then
transitioned to, a new Chief Executive Officer.
STOCK PLANS AND LONG-TERM COMPENSATION PROGRAMS.
We have various equity and other incentive plans and programs that
are designed to align the interests of our employees, and particularly our
executives, with the interests of our shareholders and to serve as longer-
term retention vehicles for our people. Our plans and programs are
described in more detail below under "Summary of Plans, Programs and
Agreements."
Our executive officers, as well as other management employees, are
eligible to receive equity-based awards under our Stock Incentive Plan (as
defined and discussed below). Prior to 2003, we principally used stock
options as our equity compensation vehicle, but in 2003, consistent with
evolving best-practices we observed at other firms generally, we decided to
use restricted stock grants as our principal equity compensation method.
Half of the shares of restricted stock that were granted to executive
officers in 2003 vest three years from the date of grant and the remaining
half vest five years from the date of grant. Ongoing awards under the
Stock Incentive Plan are expected to be made annually, with the
Compensation Committee and senior management to decide how such awards will
be allocated among our people.
Programs such as the Co-Investment Plan and the LIM Co-Investment
Program (both as defined and discussed below) are intended to provide more
targeted performance and/or retention incentives to specific groups of key
employees where particular line-of-sight attributes are deemed the best use
of compensation resources.
The Stock Purchase Plan, the Stock Ownership Program and the UK Share
Plan (all as defined and described below) also provide certain executive
officers, as well as other employees, a means for accumulating Jones Lang
LaSalle Common Stock. The Stock Purchase Plan provides employees in the
United States with a means to purchase stock at a 15% discount through
regular payroll deductions. Under the Stock Ownership Program, executive
officers and officers at certain other levels receive a portion of their
bonuses in restricted stock units that vest equally over 18 and 30 month
periods. The UK Share Plan provides employees in the UK with an option to
purchase stock at a 15% discount through regular payroll deductions. The
opportunity to offer employees stock purchase plans differs from country to
country depending on the tax laws of that country. The Company regularly
evaluates additional opportunities to establish similar plans.
COMPENSATION OF CHIEF EXECUTIVE OFFICER.
The 2004 year was an important transitional one for our Company as
Christopher A. Peacock resigned as our Chief Executive Officer effective
January 7th of that year and Stuart L. Scott, who had then previously been
our Chairman of the Board, served as our interim Chief Executive Officer
while a search was conducted for Mr. Peacock's successor. Colin Dyer was
then elected as our Chief Executive Officer effective August 30, 2004.
CHRISTOPHER A. PEACOCK
Upon his resignation as our Chief Executive Officer, Mr. Peacock and
the Company entered into an amendment to his Employment Agreement pursuant
to which, among other aspects, Mr. Peacock agreed to assist in the transfer
of his employment duties, provide the Company transition support for key
client relationships and provide consulting services to the Company and
advice on business strategies and related matters. Mr. Peacock also agreed
to extend certain restrictive covenants with respect to his ability to
solicit clients and employees of the Company and to compete with the
Company. Taking the value of these agreements into account, and given the
rights Mr. Peacock already had under the then current provisions of his
Employment Agreement, we determined that it would be appropriate to
compensate Mr. Peacock for the period from January 7, 2004 through the
April 9, 2005 termination date of his revised Employment Agreement at an
annualized rate of $850,000 that was equivalent to the $400,000 annual base
salary he was then being paid plus the actual amount of his previous year's
bonus, which was $450,000. Provided that Mr. Peacock continued to comply
with the terms of his amended Employment Agreement, we did not set any
additional performance objectives, or conduct any review, during the
remainder of the term of his Employment Agreement.
For additional information about the terms of Mr. Peacock's
Employment Agreement, please see "Employment Agreement with Christopher A.
Peacock" below.
STUART L. SCOTT
When Mr. Scott became our interim Chief Executive Officer during
2004, while he continued in his previous role as the Chairman of our Board,
we established his compensation under an agreement that provided Mr. Scott
with an annualized base salary to be paid during the period that he served
as our Chief Executive Officer that was the same as what Mr. Peacock's base
salary had been. We also established a bonus target against which we
established certain specific performance objectives, one of which was to
actively participate in the identification and selection of a new chief
executive officer and another of which was to lead the Company to
achievement of a certain minimum earnings per share target. Once a new
chief executive officer had been hired, Mr. Scott's compensation would
revert to what it would then continue to be for his serving as an executive
member of the Board and its Chairman, as well as for certain services to
LaSalle Investment Management and as a member of the boards of directors
for certain of its investment funds and management committees. Mr. Scott's
compensation for 2004 is disclosed below in the Summary Compensation Table
and the terms of his agreement are further discussed below under
"Compensation Arrangements with Stuart L. Scott."
We evaluated Mr. Scott's performance in early 2005 against his
objectives in order to determine the amount of his bonus. The actual bonus
paid to Mr. Scott for his 2004 performance exceeded his target bonus amount
because of, among other elements, (1) the quality of his leadership of our
Company and the members of its Global Executive Committee during the
transition from one chief executive officer to another, (2) the quality of
his participation in the search for, and hiring of, our new chief executive
officer, which we believe was very successful and was achieved within the
desired time-frame, and (3) the fact that the Company significantly
improved its earnings per share during 2004 over what it had been for 2003
(and over-performed versus the target objective we had set for Mr. Scott),
rising to $1.96 per diluted share from $1.12, an increase of 75%.
COLIN DYER
The compensation that Mr. Dyer received during 2004 was determined
pursuant to the agreement that was negotiated with Mr. Dyer in connection
with his election to the position of our Chief Executive Officer effective
August 30, 2004. Our agreement with Mr. Dyer is summarized below under
"Compensation Arrangements with Colin Dyer." The Compensation Committee
approved the terms and conditions of the agreement as an overall
appropriate and reasonable compensation package based on a number of
factors, including (1) the level of compensation necessary to attract an
experienced, globally-oriented executive with the potential to provide high
quality leadership and strategic guidance to a complex, multi-national
organization, (2) a review of the publicly available data on compensation
being paid for similar positions at competitor and other comparable firms
and (3) the compensation being paid to other executives within our own
firm.
Mr. Dyer's agreement did provide that his bonus for 2004 (payable in
2005) would at a minimum be $250,000 subject to further review by the
Compensation Committee. The Committee decided that Mr. Dyer's actual bonus
for 2004 would be $400,000 because, when it reviewed Mr. Dyer's transition
to his new responsibilities during 2004 and the objectives for his first
four months with the Company that the Board had discussed with him, the
Committee was of the view that Mr. Dyer had exceeded its expectations in
terms of the effort he made, and the results he achieved, in (1)
familiarizing himself with the Company and its people, (2) the positive
relationships he had developed with the Global Executive Committee members
and with the other corporate staff group heads who report to him, (3) the
strategic vision for the Company that he was beginning to develop and
communicate to the Board and the Company's leadership and (4) contributing
to the Company's strong financial and operating performance for 2004 as
noted above.
The Committee and Mr. Dyer have established his IPMP objectives for
2005, which relate principally to achievement of the budgeted earnings per
share for 2005 that the Board has approved and the delivery of certain
planned global business and infrastructure programs that are critical to
the achievement of the Company's overall strategic plan.
CERTAIN TAX MATTERS.
United States tax laws limit the deduction a publicly held
corporation is allowed for compensation paid to the chief executive officer
and to the four most highly compensated executive officers other than the
chief executive officer. Generally, amounts paid in excess of $1 million
to a covered executive, other than performance compensation, cannot be
deducted. Jones Lang LaSalle considers ways to maximize the deductibility
of executive compensation but reserves the right to compensate executive
officers in a manner commensurate with performance and the competitive
environment for executive talent. As a result, some portion of executive
compensation paid to an executive officer whose compensation is subject to
the deduction limits described above may not be deductible by Jones Lang
LaSalle in the United States.
COMPENSATION COMMITTEE
Thomas C. Theobald (Chair)
Henri-Claude de Bettignies
Sir Derek Higgs
Sheila A. Penrose
COMPENSATION TABLES
The following tables and footnotes set forth information regarding the cash and other forms of compensation
we paid in respect of performance during 2004, 2003 and 2002 to each person who served as the Company's chief
executive officer during 2004 and to the five other members of the Company's Global Executive Committee, who
constituted the other most highly compensated executive officers (the NAMED EXECUTIVE OFFICERS) during 2004.
Descriptions of the Company-sponsored plans under which such compensation was paid are provided following the
tables in "Summary of Plans, Programs and Agreements." As applicable, all amounts shown in the table have been
converted to U.S. Dollars from the foreign currencies in which the compensation was actually paid.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------ ------------------------
AWARDS $
------------------------
RESTRICTED SECURITIES ALL OTHER
STOCK UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (5) AWARDS (6) OPTIONS SATION (7)
--------------------------- ---- ---------- ---------- ---------- ---------- ----------
Colin Dyer (1) 2004 $255,769 $320,000 $1,380,000 0 $325,000
President and Chief 2003 $0 $0 $0 0 $0
Executive Officer 2002 $0 $0 $0 0 $0
Stuart L. Scott (2) 2004 $356,666 $845,595 $0 0 $8,720
Interim President and Chief 2003 $270,000 $120,666 $37,708 0 $53,170
Executive Officer 2002 $250,000 $114,000 $35,625 0 $290,348
Christopher A. Peacock (3) 2004 $17,700 $0 $0 0 $886,881
Former President and Chief 2003 $400,000 $450,000 $130,000 0 $26,677
Executive Officer 2002 $400,000 $360,000 $112,500 12,500 $24,077
Lauralee E. Martin (4) 2004 $370,000 $800,000 $596,350 0 $10,950
Chief Operating and 2003 $340,000 $240,000 $205,000 0 $6,692
Financial Officer 2002 $340,000 $147,200 $46,000 32,500 $0
Peter C. Roberts 2004 $330,000 $1,100,000 $92,360 0 $67,500
Chief Executive Officer, 2003 $330,000 $670,000 $97,500 0 $367,588
Americas 2002 $330,000 $280,000 $87,500 10,000 $300,897
Lynn C. Thurber
Chief Executive Officer, 2004 $310,000 $1,062,101 $457,101 0 $13,000
LaSalle Investment 2003 $310,000 $527,887 $222,637 0 $6,581
Management 2002 $310,000 $424,000 $132,500 5,000 $2,705
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------ ------------------------
AWARDS $
------------------------
RESTRICTED SECURITIES ALL OTHER
STOCK UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (5) AWARDS (6) OPTIONS SATION (7)
--------------------------- ---- ---------- ---------- ---------- ---------- ----------
Robert S. Orr 2004 $300,000 $740,000 $323,610 0 $46,620
Chief Executive Officer, 2003 $250,000 $210,000 $122,500 0 $39,840
Europe 2002 $250,000 $100,000 $25,000 5,000 $37,350
Peter A. Barge 2004 $300,000 $720,000 $317,360 0 $140,000
Chief Executive Officer, 2003 $250,000 $338,855 $203,392 0 $146,250
Asia Pacific 2002 $250,000 $212,000 $66,250 9,000 $92,731
(1) Mr. Dyer was elected as President and Chief Executive Officer of the Company effective August 30, 2004.
He was not employed by the Company in any capacity prior to that date in 2004 or during either of 2003 or
2002. Additional information is provided below under "Compensation Arrangements with Colin Dyer."
(2) Mr. Scott served as interim President and Chief Executive Officer of the Company from January 7, 2004
until August 30, 2004. Mr. Scott served as the Chairman of the Board and a member of executive management
during the remainder of 2004 and for all of both 2003 and 2002, and his compensation during those periods
reflects such positions. Additional information is provided below under "Compensation Arrangements with
Stuart L. Scott."
(3) Mr. Peacock served as President and Chief Executive Officer, and as a member of the Board of Directors, of
the Company for all of 2003 and 2002 prior to his resignation from all of such positions on January 7,
2004. Additional information is provided below under "Employment Arrangements with Mr. Peacock."
(4) Ms. Martin has served as our Chief Financial Officer since she joined the Company in January 2002. In
January 2005, she was appointed to the additional position of our Chief Operating Officer. Her 2005
compensation will reflect her promotion and the additional responsibilities associated with her new
position.
(5) (a) Consistent with previous years' disclosure, the bonus amounts shown for 2004 were paid in March 2005
and relate to the achievement of performance objectives previously established for 2004. As further
explained in footnote (6)(a) below, certain of the bonus amounts shown in this column exclude the amounts
deducted for purposes of the Stock Ownership Program which are instead included in the Restricted Stock
Awards column.
(b) From the total amount of his bonus shown in the table for 2004, Mr. Roberts elected to defer $99,000
under the Company's Deferred Compensation Plan established for certain employees in the United States and
described in more detail below under "Summary of Plans, Programs and Agreements." Mr. Roberts elected to
defer $53,600 from the total amount of his bonus shown in the table for 2003.
(c) A portion of Ms. Thurber's bonus payment showed in this column, $182,101 for 2004 and $83,877 for
2003, was earned as part of the LaSalle Investment Management Long-Term Incentive Compensation Program
described in more detail below under "Summary of Plans, Programs and Agreements." Of each of the
foregoing amounts, half was paid in cash during the year indicated and the other half will vest and be
paid in cash 12 months after the grant provided Ms. Thurber has not voluntarily terminated her employment
with the Company prior to that time.
(6) (a) The Named Executive Officers, along with certain other officers, received a portion of their 2004,
2003 and 2002 bonuses in the form of deferred shares under our Stock Ownership Program described below,
except as indicated. The portion of the bonus paid in deferred shares under the Stock Ownership Program
is not included in the dollar value under Bonus, but the value of the deferred shares received (under the
terms of the Program, based on the average trading price during the first business day of the calendar
year in which the bonus was paid and giving effect to the 25% increase in value that we add to the amounts
of bonuses that were paid in SOP Shares rather than in cash) is included in the above table under
Restricted Stock Award(s). The number of deferred shares received by each of the Named Executive Officers
in 2004, 2003 and 2002, respectively, is as follows:
Number of SOP Shares
-------------------------------
Name 2004 2003 2002
---- ------- ------- -------
Colin Dyer 2,677 0 0
Stuart L. Scott 0 0 1,805
Christopher A. Peacock 0 0 7,080
Lauralee E. Martin 6,694 3,590 2,895
Peter C. Roberts 0 0 5,507
Lynn C. Thurber 7,364 6,642 8,339
Robert S. Orr 6,192 1,197 2,177
Peter A. Barge 6,024 5,069 2,643
Half of the restricted shares reported above vest in 18 months and the other half vest in 30 months.
Since he had previously resigned as our Chief Executive Officer and the terms of his Employment Agreement
were renegotiated, Mr. Peacock was not paid a bonus in respect of 2004 and none of Mr. Peacock's bonus in
respect of 2003 was deferred in restricted shares.
In each of 2004 and 2003, as all participants are permitted to do under the internal stock ownership
guidelines established under the Stock Ownership Program, Messrs. Scott and Roberts, each of whom had
satisfied the ownership guidelines, elected to receive their bonuses entirely in cash and not to
participate in the Stock Ownership Program for those years.
(b) Beginning in 2003, the Named Executive Officers received grants of restricted stock under our Stock
Incentive Plan rather than stock options, which had been granted in previous years. These restricted
stock grants, the value of which is based upon the closing price of shares of our Common Stock on the date
of grant, are included in the table under Restricted Stock Award(s) for 2004 and 2003. The number of
shares of restricted stock granted in 2004 and 2003 is set forth in the following table. Half of the
restricted shares reported below vest in 3 years and the other half in 5 years. Additional grants of
restricted stock have been made to certain of the Named Executive Officers during 2005 and will be
reported in the Proxy Statement for our 2006 Annual Meeting.
Name 2004 2003
---- ------ ------
Colin Dyer (1) 40,000 0
Stuart L. Scott 0 0
Christopher A. Peacock 0 10,000
Lauralee E. Martin 15,000 10,000
Peter C. Roberts 4,000 7,500
Lynn C. Thurber (2) 0 0
Robert S. Orr 4,000 7,500
Peter A. Barge 4,000 7,500
(1) Mr. Dyer's restricted stock grant was made in connection with the determination of his
employment arrangements when he was elected as our Chief Executive Officer effective August 30,
2004. His grant includes certain additional provisions and conditions which are described below
under "Compensation Arrangements with Colin Dyer."
(2) See note (c) following with respect to Ms. Thurber, who received certain consideration under an
alternative delivery mechanism.
(c) In 2003, Ms. Thurber received shares of restricted stock only in connection with the Stock
Ownership Program and not in connection with the separate Stock Incentive Plan. As more particularly
explained below, while Ms. Thurber has participated in the LaSalle Investment Management Long-Term
Incentive Compensation Program, she has not otherwise received grants of options or restricted stock
under the Stock Incentive Plan. This column does include, however, shares of restricted stock
originally valued at $182,101 that were granted to Ms. Thurber in 2005 and at $83,877 that were
granted to her in 2004 under the LIM Compensation Program, in each case half of which will vest in
24 months after grant and the other half of which will vest in 36 months after grant.
(7) (a) The amount shown in this column for Mr. Dyer for 2004 reflects a "make-whole" payment to Mr. Dyer of
$325,000 to compensate him for a bonus payment that he forfeited when he left his prior employer.
Additional information is provided below under "Compensation Arrangements with Colin Dyer."
The amount shown in this column for Mr. Peacock for 2004 represents the sum of (i) the compensation of
$832,300 paid to him pursuant to his amended employment agreement after his resignation effective January
7, 2004 from the positions of President and Chief Executive Officer, (ii) a pension allowance of $27,761
and (iii) allowances for transportation, communication and personal accounting expenses of $26,820.
Additional information is provided below under "Employment Arrangements with Mr. Peacock."
The other amounts in this column with respect to 2004 reflect (i) matching contributions by Jones Lang
LaSalle to the Savings and Retirement Plan (the SAVINGS PLAN) qualified under Section 401(k) of the United
States Internal Revenue Code of 1986 (as amended, the CODE) of $8,720 for Mr. Scott, $10,950 for
Ms. Martin, $13,000 for Mr. Roberts and $13,000 for Ms. Thurber, (ii) international expatriate relocation
reimbursements of $54,500 for Mr. Roberts, (iii) international expatriate relocation, living and tax
expense reimbursements for Mr. Barge of approximately $140,000 and (iv) a pension allowance of $19,800 and
allowances for transportation, communication and personal accounting expenses of $26,820 for Mr. Orr.
(b) The amounts in this column with respect to 2003 reflect (i) matching contributions by Jones Lang
LaSalle to the Savings Plan of $3,000 for Mr. Scott, $6,692 for Ms. Martin, $6,050 for Mr. Roberts and
$6,581 for Ms. Thurber, (ii) international expatriate tax equalization expenses of $50,170 for Mr. Scott,
(iii) international expatriate relocation and living expenses reimbursements of $361,538 for Mr. Roberts,
(iv) a pension allowance of $26,677 for Mr. Peacock, (v) international expatriate relocation, living and
tax expenses and reimbursements for Mr. Barge of $146,250 and (vi) a pension allowance of $16,000 and
allowances for transportation, communication and personal accounting expenses of $23,840 for Mr. Orr.
(c) The amounts in this column with respect to 2002 reflect (i) matching contributions by Jones Lang
LaSalle to the Savings Plan of $2,750 for each of Mr. Scott, Mr. Roberts and Ms. Thurber, (ii)
international expatriate tax equalization expenses of $287,599 for Mr. Scott, (iii) international
expatriate relocation and living expenses and reimbursements of $298,147 for Mr. Roberts, (iv) a pension
allowance of $24,077 for Mr. Peacock, (v) international expatriate living and tax expenses and
reimbursements for Mr. Barge in the amount shown in the table and (vi) a pension allowance of $15,000 and
allowances for transportation, communication and personal accounting expenses of $22,350 for Mr. Orr.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
We did not grant any stock options to the Named Executive Officers in 2004 and do not anticipate doing so
during 2005.
YEAR-END STOCK OPTION VALUES
The following table sets forth certain information concerning options we granted to the Named Executive
Officers prior to 2004, including any exercises of such options during 2004 and the value of options owned on
December 31, 2004, when the price per share of our Common Stock at the close of trading on the New York Stock
Exchange was $37.41.
Number of Securities
Underlying Value of Unexercised
Number of Unexercised Options at In-The-Money Options at
Shares Fiscal Year-End Fiscal Year-End
Acquired -------------------------- -------------------------
on Value Unexer- Unexer-
Name Exercise Realized Exercisable cisable Exercisable cisable
---- ---------- -------- ----------- ----------- ----------- -----------
Colin Dyer 0 $0 0 0 $0 $0
Stuart L. Scott 10,000 $95,000 130,834 1,666 $2,440,051 $23,874
Christopher A. Peacock 75,834 $1,032,349 0 4,166 $0 $59,699
Lauralee E. Martin 0 $0 21,667 10,833 $398,490 $199,235
Peter C. Roberts 0 $0 56,667 3,333 $1,022,288 $47,762
Lynn C. Thurber 0 $0 55,834 1,666 $738,676 $23,874
Robert S. Orr 0 $0 10,834 1,666 $236,476 $23,874
Peter A. Barge 0 $0 10,000 3,000 $115,620 $42,990
CO-INVESTMENT LONG-TERM INCENTIVE PLAN--
AWARDS COVERING FOUR-YEAR PERIOD FROM 2002 THROUGH 2005
The following table sets forth certain information concerning units we granted to the Named Executive
Officers in 2002 through 2005 under the Co-Investment Long-Term Incentive Plan:
Number of Estimated Future Payouts Under
Shares, Performance or Non-Stock Price-Based Plan
Units Other Period ----------------------------------
or Other Until Maturation Maximum
Name Rights (#) or Payout Threshold Target (5)
---- ---------- ---------------- ---------- -------- --------
Colin Dyer (1) 2 5 years from each grant date $0 $83,000 $166,000
Stuart L. Scott 0 n/a n/a n/a n/a
Christopher A. Peacock (2) 2 5 years from each grant date $0 $85,000 $170,000
Lauralee E. Martin (3) 3 5 years from each grant date $0 $124,000 $248,000
Peter C. Roberts (3) 3 5 years from each grant date $0 $124,000 $248,000
Lynn C. Thurber (4) 1 5 years from first grant date $0 $41,000 $82,000
Robert S. Orr (3) 3 5 years from each grant date $0 $124,000 $248,000
Peter A. Barge (3) 3 5 years from each grant date $0 $124,000 $248,000
--------------------
(1) Mr. Dyer received one 2004 unit pursuant to the compensation arrangements made when he was hired and
one 2005 unit.
(2) Mr. Peacock was granted one unit in each of 2002 and 2004.
(3) Each of Ms. Martin and Messrs. Roberts, Orr and Barge received one unit in each of 2002, 2004 and
2005.
(4) After an initial grant in 2002, Ms. Thurber has not participated further in this Plan since she has
participated in the separate LaSalle Investment Management Long-Term Incentive Compensation Program.
(5) As described below in the description of the plan under the caption "Summary of Plans, Programs and
Agreements," the maximum amounts will ultimately be determined by the performance of certain real
estate investment funds in the future, which cannot be estimated with certainty at this time. The
actual maximum amounts may therefore be greater than the estimated amounts shown above, but they are
unlikely to be materially greater. The target amount of each unit granted in 2002 was $41,000; the
target amount for each unit granted in 2004 was $44,000; and the target amount for each unit granted
in 2005 was $39,000.
SUMMARY OF PLANS, PROGRAMS AND AGREEMENTS
The following section describes the various Company-sponsored plans,
programs and agreements under which we may pay compensation to our
executive officers, including our Named Executive Officers and Directors.
We have filed as exhibits to (or incorporated by reference in) our Form 10-
K filed with the SEC for the year ended December 31, 2004 the legal
documents pursuant to which certain of the plans, programs and agreements
were established, and each of the following summaries is qualified in its
entirety by reference to the actual terms of those plans.
MANAGEMENT INCENTIVE PLAN
Professional and management employees, including the Named Executive
Officers, receive a portion of their annual compensation in the form of
incentive compensation (namely, a bonus). Such employees are assigned a
target bonus, the payment of which is based upon an evaluation of
performance against specific objective and subjective standards which vary
from employee to employee. Performance against these standards may lead to
receiving more than, or less than, the target bonus. Bonuses relating to
performance during one calendar year are typically paid in the first
quarter of the subsequent year after reviews are completed as part of the
Company's Individual Performance Management Program (IPMP). Additionally,
bonus payments may vary in a year when Jones Lang LaSalle's results are
above or below the year's business plan. Further information regarding the
bonuses paid to the Named Executive Officers is set forth above in
"Compensation Committee Report on Executive Compensation."
AMENDED AND RESTATED STOCK AWARD AND INCENTIVE PLAN
Our Amended and Restated Stock Award and Incentive Plan (the STOCK
INCENTIVE PLAN) provides for the grant of various types of stock-based
compensation to eligible participants. The purpose of the Stock Incentive
Plan is to promote the success of Jones Lang LaSalle's business in the best
interests of its shareholders by providing incentives to those individuals
who are or will be responsible for such success.
The Stock Incentive Plan is designed to comply with the requirements
for "performance-based compensation" under Section 162(m) of the Code and
the conditions for exemption from the short-swing profit recovery rules
under Rule 16b-3 of the Exchange Act.
The Stock Incentive Plan provides for the granting of stock options
(OPTIONS), including "incentive stock options" (ISOs) within the meaning of
Section 422 of the Code, and nonqualified stock options (NQSOs). Options
granted under the Stock Incentive Plan may be accompanied by stock
appreciation rights, limited stock appreciation rights, or both (RIGHTS).
Rights may also be granted independently of Options. The Stock Incentive
Plan also provides for the granting of restricted stock and restricted
stock units (RESTRICTED AWARDS), dividend equivalents, performance shares
and other stock-and cash-based awards. Pursuant to the Stock Incentive
Plan and as more fully described above under the caption "Director
Compensation," (1) certain Options have been granted to Non-Executive
Directors and (2) Non-Executive Directors are eligible to receive grants of
Restricted Awards and may elect to receive additional Restricted Awards in
lieu of their cash retainers. The Stock Incentive Plan also permits the
Plan Administrator to make loans to participants in connection with the
grant of awards, on terms and conditions determined solely by the Plan
Administrator. However, in compliance with the Sarbanes-Oxley Act of 2002,
new loans to Directors and the Named Executive Officers, among others, are
prohibited by Company policy. Each award is evidenced by an agreement (an
AWARD AGREEMENT) setting forth the terms and conditions applicable thereto.
Certain officers have received portions of their bonuses as Restricted
Awards that constitute SOP Shares (as described below under "Stock
Ownership Program").
The Stock Incentive Plan is administered by the Compensation
Committee, as Plan Administrator. Subject to the terms of the Stock
Incentive Plan, the Plan Administrator has the right to grant awards to
eligible recipients and to determine the terms and conditions of Award
Agreements, including the vesting schedule and exercise price of such
awards. The Plan provides that, unless otherwise determined by the Plan
Administrator, in the event of a change in control of Jones Lang LaSalle
(as defined in the Stock Incentive Plan) awards under the Plan will, among
other things, become fully vested on an accelerated basis as provided in
the Plan.
The number of shares originally reserved for issuance under the Stock
Incentive Plan was 9,110,000. These shares may be authorized but unissued
shares of Common Stock or shares which we have reacquired in the open
market, in private transactions or otherwise. Since approximately
8,550,000 shares had been issued as of March 15, 2005, we are asking our
shareholders, in the Proxy Statement, to approve the issuance of an
additional 3,000,000 shares under the Stock Incentive Plan. See "Approval
of Amendment to the Stock Award and Incentive Plan" below under "Proposal
3."
Discretionary grants of awards under the Stock Incentive Plan may be
made to any Director (including Non-Executive Directors), employee or any
independent contractor of Jones Lang LaSalle or its direct and indirect
subsidiaries and affiliates who the Plan Administrator determines to be
eligible for participation in the plan. ISOs, however, may only be granted
to employees of Jones Lang LaSalle and its subsidiaries.
Options vest and become exercisable over the exercise period, at such
times and upon such conditions, including amount and manner of payment of
the exercise price, as the Plan Administrator determines and sets forth in
a particular Award Agreement. The Plan Administrator may accelerate the
exercisability of any outstanding Option at such time and under such
circumstances as it deems appropriate. Options that are not exercised
within 10 years (or such shorter term as the Plan Administrator may
determine) from the date of grant, however, will expire without value.
Options are exercisable during the optionee's lifetime only by the
optionee. The Award Agreements contain provisions regarding the exercise
of Options following termination of employment with Jones Lang LaSalle,
including terminations due to the death, disability or retirement of an
award recipient.
Restricted Stock Units vest at such times and upon such conditions as
the Plan Administrator determines and sets forth in the applicable Award
Agreement. Historically, half of the Restricted Stock Units that are
granted on an annual basis to key employees as part of our compensation
program vest in 3 years after grant and the other half in five years. Half
of the Restricted Stock Units that have been issued under our Stock
Ownership Program (further described below) vest in 18 months and the other
half in 30 months. Restricted Stock Awards may not be transferred except
under the laws of distribution after an employee's death. The Plan
Administrator may accelerate the vesting of Restricted Stock Units at such
time and under such circumstances as it deems appropriate. The Award
Agreements contain provisions regarding the vesting of Restricted Stock
Awards following termination of employment with or service to Jones Lang
LaSalle, including terminations due to the death, disability or retirement
of an award recipient.
As described in the Summary Compensation Table above, certain of the
Named Executive Officers received Options prior to 2003, Restricted Stock
Awards in 2003 and 2004 and, it is anticipated, will continue to receive
Restricted Stock Awards as part of their regular compensation packages for
services rendered as executive officers. As described above under "Director
Compensation," Jones Lang LaSalle's Non-Executive Directors received annual
grants of Options during and prior to 2003 and will receive annual grants
of Restricted Awards in 2004 and thereafter as part of their regular
compensation package for services rendered as Directors.
EMPLOYEE STOCK PURCHASE PLAN
Our Employee Stock Purchase Plan (the STOCK PURCHASE PLAN) provides
an opportunity for persons employed by Jones Lang LaSalle and designated
subsidiaries in the United States, including those of our Named Executive
Officers who are eligible, to purchase shares of Common Stock through
voluntary automatic payroll deductions. The Stock Purchase Plan thereby
seeks to help attract, retain and reward our people and strengthen the
mutuality of interests between them and our shareholders. On December 31,
2004, approximately 700 of our employees were participating in the Stock
Purchase Plan.
The Stock Purchase Plan currently provides that an aggregate of
1,750,000 shares of Common Stock may be sold pursuant to the Plan, subject
to adjustment in certain events. This reflects the approval we obtained
from our shareholders at our 2004 Annual Meeting to increase the number of
shares authorized for issuance under the Plan by 750,000.
The Stock Purchase Plan provides that separate accounts will be
established for each participant (PAYROLL DEDUCTION ACCOUNTS). With the
amounts credited to each such separate account, a participant will have the
opportunity to purchase as many shares of Common Stock as he or she is
eligible to purchase. Participants may purchase shares only through
voluntary, automatic payroll deductions, and cash contributions will not be
permitted. The purchase price for shares of Common Stock will not be less
than the lesser of (1) an amount equal to 85% of the closing price of the
shares of Common Stock at the beginning of the Offering Period (as defined
below) or (2) an amount equal to 85% of the closing price of shares of
Common Stock on the date the shares are purchased. The Stock Purchase Plan
is administered by the Compensation Committee, as Plan Administrator, which
has the authority to establish a different purchase price as long as such
price complies with the provisions of Section 423 of the Code and the
corresponding Treasury regulations.
Unless otherwise determined by the Plan Administrator, the Stock
Purchase Plan will be implemented by establishing consecutive six-month
offering periods (each, an OFFERING PERIOD), with a new Offering Period
commencing on the first trading day on or after the first day of each
January and July during the term of the Stock Purchase Plan. The Committee
will have the power to change the duration of the Offering Periods
(including the commencement dates thereof) with respect to future
offerings. The last trading day of each Offering Period prior to the
termination of the Stock Purchase Plan (or such other trading date as
determined by the Plan Administrator) will constitute the purchase date on
which each participant will purchase his or her appropriate number of
shares (the SHARE PURCHASE DATE).
Notwithstanding the foregoing, Jones Lang LaSalle will not permit the
exercise of any right to purchase shares of Common Stock (1) by any
employee who immediately after the right is granted would own shares
possessing 5% or more of the total combined voting power or value of all
classes of stock of Jones Lang LaSalle or any subsidiary; or (2) which
would permit an employee's rights to purchase shares under the Stock
Purchase Plan, or under any other qualified employee stock purchase plan
maintained by Jones Lang LaSalle, to accrue at a rate in excess of $25,000
in fair market value (as determined on the first day of the Offering
Period) for each calendar year. Employees who have not been employed for at
least one year and certain part-time employees are not eligible to
participate in the Stock Purchase Plan.
Section 424(d) of the Code will be applied to determine the stock
ownership of a participant in the Plan, and the shares that a participant
may purchase under outstanding rights or options will be treated as shares
owned by the participant.
If a participant's employment is terminated for any reason, if a
participant dies, if a participant is granted a leave of absence of more
than 90 days duration, or if a participant otherwise ceases to be eligible
to participate in the Stock Purchase Plan, payroll deductions will cease
and any amounts then credited to his or her Payroll Deduction Account will
be refunded to the participant as soon as practicable. Employees are,
however, always fully vested in all shares which have previously been
purchased for their accounts.
The Stock Purchase Plan may be amended at any time, provided that no
such amendment will be effective unless approved by the shareholders if
such approval is necessary to comply with either Section 423 of the Code or
the Exchange Act. We may suspend or discontinue the Stock Purchase Plan at
any time. We intend the Stock Purchase Plan to meet the requirements of
Section 423 of the Code.
STOCK OWNERSHIP PROGRAM
Under our STOCK OWNERSHIP PROGRAM, executive officers, including the
Named Executive Officers, and certain other officers receive up to 20% of
their annual bonuses in Restricted Stock Awards (SOP SHARES) out of the
Stock Incentive Plan rather than in cash. The SOP seeks to link the
interests of our employees to those of our shareholders. The amount of
bonus paid in SOP Shares varies with the level of the participant. We
increased by 25% the amounts of the 2004, 2003 and 2002 bonuses that were
paid in SOP Shares rather than in cash. The number of shares allocated to
a participant is determined by the number of shares of our Common Stock
that could have been purchased at the closing price per share as of the
first trading day of the January preceding the date of the related bonus
payment. Fifty percent of the SOP Shares vest and will be issued eighteen
months after the end of the year to which the bonus is attributable
(namely, July 1, 2006 with respect to 2004 bonuses), and the remaining 50%
will vest and be issued thirty months after such year (namely, July 1, 2007
with respect to 2004 bonuses). At our discretion, we may pay employees
cash in the amount of the fair market value of SOP Shares that vest rather
than issue shares to them. Dividends, if any, paid with respect to SOP
Shares prior to vesting will be reinvested in further SOP Shares having the
same vesting date, and a participant will also receive further SOP shares
in the case of a stock split or stock dividend. A participant who is
terminated for cause (as defined in the Stock Incentive Plan) or who
voluntarily resigns his or her employment will forfeit any SOP Shares which
have not vested. If a participant's employment terminates by reason of
death, disability or special circumstances (as defined by the Plan
Administrator), SOP Shares will continue to vest on their normal schedule;
however, in such cases the Compensation Committee, as Plan Administrator,
may choose to accelerate vesting. SOP Shares vest immediately upon an
employee's approved retirement. In the event of a change in control of
Jones Lang LaSalle (as defined in the Stock Incentive Plan), all SOP Shares
will become fully vested on an accelerated basis as provided in the Plan.
Employees may opt out of further participation in the SOP if they
hold shares in the Company whose value exceeds certain minimum stock
ownership guidelines that are based on different values for different
officer levels. Employees who are among our International Directors, which
includes our Chief Executive Officer and the other Named Executive
Officers, my opt out when they hold shares equal in value to four times
their annual base salaries; those who are Regional Directors may do so at
three times their annual base salaries; and National Directors may do so at
two times their annual base salaries.
UK SAVINGS RELATED SHARE OPTION PLAN
Our Savings Related Share Option (UK) Plan (the UK SHARE PLAN)
provides an opportunity for the employees of Jones Lang LaSalle Europe
Limited, a wholly-owned indirect subsidiary of Jones Lang LaSalle operating
in the United Kingdom, and any qualified subsidiaries, to purchase shares
of our Common Stock using accumulated savings from payroll deductions. The
UK Share Plan seeks to help attract, retain and reward those employees and
strengthen the mutuality of interests between them and our shareholders.
The Plan is intended to meet the requirements of Schedule 9 of the UK
Income and Corporation Taxes Act 1988 (ICTA).
The Compensation Committee administers the UK Share Plan. The
Committee is authorized, subject to the provisions of the UK Share Plan, to
establish any rules and regulations for the proper administration of the
Plan, to make determinations and interpretations, and to take any actions
in connection with the Plan that it deems necessary or advisable. Our Board
of Directors may at any time and for any reason amend, suspend or
discontinue the UK Share Plan.
Subject to the adjustment provisions in the UK Share Plan (dividend
or distribution, stock split, recapitalization, combination or exchange of
shares, or a merger, consolidation or other corporate reorganization), we
were originally authorized to issue up to 500,000 shares of our Common
stock under the UK Share Plan. These shares of Common Stock may be
authorized but unissued shares, treasury shares or shares purchased on the
open market or from private sources. As the result of an initial offering
in 2001, we issued approximately 220,000 shares under the UK Share Plan,
and options for an additional approximately 106,000 shares were subscribed
pursuant to a second offering in 2005. A total of 493 employees subscribed
for shares under the 2001 offering and a total of 458 employees have
subscribed for shares under the 2005 offering. Robert S. Orr, one of our
Named Executive Officers, has elected to participate in the 2005 offering.
All employees, including any full-time director, of Jones Lang
LaSalle Europe Limited and of each qualified subsidiary are eligible to
participate in the UK Share Plan except for (1) employees who have been
employed for less than six months at the date of invitation and
(2) employees who are not chargeable to income tax in the United Kingdom
under Case 1, Schedule E of ICTA. At the election of the participant, the
UK Share Plan provides a savings period of both thirty-six months and sixty
months. Participants' savings are used at the end of the savings period to
purchase the appropriate number of shares. Jones Lang LaSalle will
establish an account for each participant in the UK Share Plan, and will
credit all payroll deductions made to this account. A participant may
withdraw from a savings period at any time. Once the participant has
withdrawn there is no opportunity to resume participation for that savings
period. The administrator of the UK Share Plan will make any repayment of
savings to the participant if so requested. A guaranteed tax-free bonus
amount is allocated to the savings account which serves as the equivalent
of a fixed rate of interest to be earned by the participants, provided the
participant has continued to save for the full savings period.
Participant options may be exercised in whole or in part following
the earliest of (1) the end of the savings period, (2) the death of the
participant, (3) the participant ceasing to be in employment by reason of
retirement, injury, disability or redundancy, (4) the participant ceasing
to be employed due to a change in control of the company or the business in
which the participant is employed, (5) the participant reaching the age of
sixty-five and continuing to be employed, and (6) the date on which an
option becomes exercisable pursuant to a takeover, reconstruction or
voluntary winding up of Jones Lang LaSalle Europe Limited. An option will
lapse to the extent it has not been exercised by the earliest of (1) the
expiration of six months from the end of the savings period, (2) the
expiration of twelve months after death (or twelve months from the end of
the savings period if death occurred during the six months following the
end of the savings period), or (3) the expiration of six months following
retirement, injury, disability, redundancy or change of control. Rights
granted under the UK Share Plan may not be transferred by the participant
in any way (other than by will or the laws of descent and distribution) and
are exercisable during the participant's lifetime only by the participant.
The purchase price for shares of Common Stock will be the price in
U.S. Dollars for the acquisition of a share underlying any option, but will
not be less than an amount equal to 85% of the average of the high and low
prices of shares of Common Stock as listed by the New York Stock Exchange
on a date which will be no more than forty-two days before the date options
are granted. Inland Revenue rules provide that shares purchased under an
approved Sharesave plan can be purchased at a discount of not more than 20%
of the market price on the date of grant. However, the Company determined
that 15% is appropriate given the similar discount provided to participants
in the Stock Purchase Plan for United States employees.
CO-INVESTMENT LONG-TERM INCENTIVE PLAN
Our Co-Investment Long-Term Incentive Plan (the CO-INVESTMENT PLAN)
has been designed to provide the group of approximately 135 of our senior
leaders around the world, known as our International Directors, with the
opportunity to benefit on a notional basis from real estate investments
made by the Company on their behalf through its LaSalle Investment
Management business. The Co-Investment Plan seeks to (1) help the Company
retain its most senior people, (2) increase their efforts on behalf of the
Company and to promote its success in the interests of our shareholders and
(3) align the interests of participants with those of the Company's real
estate investment clients.
The Co-Investment Plan was originally established for investments to
be made over a three-year period starting on January 1, 2002, with an
initial notional allocation by the Company of $5 million among those
employees who were International Directors on that date. An additional
$5 million was earmarked to be invested in the Co-Investment Plan for the
International Directors in place on each of January 1, 2003 and January 1,
2004 if the Company achieved a certain performance level during the
respective previous years. The Company did not achieve the required level
of performance during 2002 with the consequence that no investment was made
in 2003. The Company did achieve the required level of performance in 2003
and so a second investment was made in 2004. In October 2004, our Board
extended the Co-Investment Plan for one additional investment allocation to
be made in 2005 in the event the Company achieved a certain performance
level during 2004. Since the Company did achieve the required level of
performance during 2004, a third notional investment of $5 million has been
made in 2005.
A participant vests in the portion of his or her notional investment
account upon the earlier of (1) five years from the date as of which each
allocated investment is made, (2) retirement, (3) death or permanent
disability or (4) a change in control of the Company. Termination of
employment for any reason other than those set forth in the prior sentence
results in a forfeiture of all of a participant's interests in the Co-
Investment Plan. The value of a participant's account is determined by the
performance of particular real estate funds managed by LaSalle Investment
Management. The Co-Investment Plan is administered under the authority of
the Compensation Committee.
While they have participated in the separate LaSalle Investment Long-
Term Incentive Compensation Program described below, certain of our
International Directors, including Lynn C. Thurber, one of our Named
Executive Officers, have not also participated in the Co-Investment Plan.
Beginning in 2005, International Directors who are employees of LaSalle
Investment Management in certain countries where permitted, including Ms.
Thurber, have been allowed to make investments from their own funds, either
directly or, if otherwise eligible, through our United States Deferred
Compensation Plan described below, the returns on which will be calculated
as if they were grants made under the Co-Investment Plan.
LASALLE INVESTMENT MANAGEMENT LONG-TERM COMPENSATION PROGRAM
One of our Named Executive Officers, Lynn C. Thurber, participates in
the LaSalle Investment Management Long-Term Compensation Program (the LIM
COMPENSATION PROGRAM), as a result of which she has not also participated
in the 2004 or 2005 allocation for the Co-Investment Plan and, other than
through the Stock Ownership Program, did not also receive awards of stock
options or restricted stock under the Stock Incentive Plan. Ms. Thurber
did not receive any payments during 2003 under the LIM Compensation
Program. Her first payment under the LIM Compensation Program was earned
and paid in 2004 in respect of performance during 2003 and was reported in
the 2004 Proxy Statement for the first time.
Our Compensation Committee established the LIM Compensation Program
during 2002, with the first measurement year being 2003 and the first
payments being made in 2004. We designed the Program to provide certain
executives of LaSalle Investment Management (LIM), one of our four
principal operating segments, with (1) an opportunity to further align
their interests with those of our shareholders, (2) a long-term retention
incentive, (3) an incentive to grow LIM's core advisory revenues and
margins and (4) an incentive to achieve LIM's performance and incentive fee
projections. Like Ms. Thurber, other LIM executives who have participated
in this Program have not also participated either in the Co-Investment Plan
or in the Stock Incentive Plan (other than the SOP component thereof).
The Program is designed to determine a fixed bonus amount to be paid
during each of the years 2004 through 2008 in respect of respective
performance targets established for each of the years 2003 through 2007.
One-quarter of each bonus amount, once determined, will be paid in cash
during the first year promptly after determination, one-quarter will be
paid in cash twelve months later, one-quarter will be paid in restricted
stock that vests 24 months later and one-quarter will be paid in restricted
stock that vests 36 months later. Since the performance period for the
fixed bonus amount determined in one year relates only to the immediately
preceding year, payments under the Program to Ms. Thurber (and any other
Named Executive Officer who may participate in the Program in the future)
will be reported as Other Annual Compensation (with respect to the cash
portion) and as Restricted Stock in the Summary Compensation Table rather
than as long-term incentive plan payouts.
The payout earned and paid in a given year is based on whether LIM
clears certain margin and growth rate hurdles for the immediately preceding
calendar year. The amount of the payout is then made out of a pool of cash
flow that exceeded the hurdle amounts to those executives who were granted
a fixed number of participant points (out of a total of 100) against the
pool. If an employee forfeits his or her points due to voluntary
termination, that employee's participant points will be reallocated to
other participants in the Program.
In order to receive each portion of the bonus, participants must be
employed by the Company at the time of payment (subject to exceptions in
the cases of involuntary termination without cause, death or disability),
meaning that a participant forfeits unvested amounts of cash or restricted
stock if he or she voluntarily terminates employment or is terminated with
cause or for documented poor performance. Unvested cash and stock will vest
immediately on an accelerated basis and be distributed upon a change in
control.
UNITED STATES SAVINGS AND RETIREMENT PLAN
Our United States Savings and Retirement Plan (the SAVINGS AND
RETIREMENT PLAN) is a defined contribution plan qualified under
Section 401(k) of the Code. Subject to certain limitations under the Code,
we make matching contributions to each eligible participant's account in an
amount equal to 100% of the first three percent of the participant's pre-
tax contributions to the Plan and 50% on the next two percent of such pre-
tax contributions. A participant does not become eligible to receive the
Company's matching payments unless he or she has completed at least
1,000 hours of service during the 12-month period beginning on the date of
hire or during any Plan year that begins after the date of hire. Matching
contributions begin on the January 1 or July 1 following completion of one
full year of service. Participants are vested in all amounts in their Plan
accounts. Those of our Named Executive Officers who are United States
taxpayers are eligible to participate in the Savings and Retirement Plan
and any matching contributions we make on their behalf are reported on the
Summary Compensation Table above.
SEVERANCE PLANS
UNITED STATES. We currently maintain a Severance Pay Plan for full
time employees, including executive officers, who provide services to Jones
Lang LaSalle or certain subsidiaries in the United States. To be eligible
to receive benefits under the Severance Pay Plan, an employee must be
involuntarily terminated from employment due to a permanent reduction in
work force, job elimination or the permanent shutdown of a facility,
department or subdivision, and also must meet all of the conditions of the
Severance Pay Plan. Severance benefits include Base Severance, comprised of
one-half month of base pay (not including target bonus) in effect at the
time of the employment termination, and Enhanced Severance, provided the
employee executes a Severance Agreement and General Release in favor of
Jones Lang LaSalle. Enhanced Severance is comprised of enhanced severance
pay, which is a multiple of base pay, based on an employee's position level
and length of service, reimbursement for certain COBRA costs and
outplacement for professional employees. The maximum benefit under the
Plan would be 15 months of base pay. For employees terminated after June 30
of any given year and before bonuses are paid for the year in which they
are terminated, Enhanced Severance also may include a bonus payment,
calculated as a prorated share of the employee's target bonus for the year
of termination, subject to Jones Lang LaSalle's then existing practice of
determining discretionary bonus payments.
Under our Severance Pay Plan, in addition to the other benefits
available under the Plan, each of the members of our Global Executive
Committee, which currently consists of our Global Chief Executive Officer,
Global Chief Operating and Financial Officer and the Chief Executive
Officers for each of our four operating segments, namely the Americas,
Europe, Asia-Pacific and LaSalle Investment Management, would be eligible
to receive twelve months of base salary as Enhanced Severance if his or her
employment is involuntarily terminated by the Company without cause and not
as the result of any of the other circumstances set forth above.
UNITED KINGDOM AND OTHER COUNTRIES. Jones Lang LaSalle is obligated
to make statutory payments to employees, including executive officers,
employed in the United Kingdom who are terminated for reasons of
redundancy. For an executive officer who is made redundant, the required
payment would be calculated according to a formula, set by the United
Kingdom government, based on age and length of service. Additionally, any
payments provided for in the executive officer's contract of employment
would be made. Similar circumstances may exist in other countries where
executive officers reside.
UNITED STATES DEFERRED COMPENSATION PLAN
Effective for compensation paid on and after January 1, 2004, we have
established a Deferred Compensation Plan for our employees in the United
States who are at our National Director level and above (the DEFERRED
COMPENSATION PLAN). The Deferred Compensation Plan is a non-qualified and
unfunded deferred compensation program under which the eligible
participants, including those of our Named Executive Officers who are
subject to United States income tax, may voluntarily elect to defer up to
75% of their base salaries, up to 100% of their annual bonuses and up to
100% of their restricted stock grants under the Stock Incentive Plan or the
Stock Ownership Plan. Member of our Board of Directors are eligible to
participate in the Deferred Compensation Plan with respect to their
Director fees.
The amounts of any compensation deferred under the Plan remain an
asset of the Company and constitute an unsecured obligation of the Company
to pay the participants in the future and, as such, are subject to the
claims of other creditors in the event of insolvency proceedings. Gains
and losses on deferred amounts are credited based upon the performance of a
variety of investment choices selected by the participants. A
participant's account may or may not appreciate depending upon the
investment choices of each participant and their relative performance.
Participants may elect certain future distribution dates on which all or a
portion of their accounts will be paid to them in cash, including in the
case of a change in control of the Company.
EMPLOYMENT ARRANGEMENTS WITH CHRISTOPHER A. PEACOCK
Prior to his resignation on January 7, 2004 as our President, Chief
Executive Officer and a member of our Board of Directors, Christopher A.
Peacock was a party to a Senior Executive Service Agreement (the EMPLOYMENT
AGREEMENT) providing the terms of his employment with Jones Lang LaSalle.
The Employment Agreement was consistent with the form generally used with
other senior executives employed in the United Kingdom. The Employment
Agreement provided for a minimum level of base salary of 260,000, participation in bonus arrangements established by Jones
Lang LaSalle and certain other benefits. The Employment Agreement required
Mr. Peacock to dedicate all of his employment time and attention to his
work with Jones Lang LaSalle and prohibited him from having any other
employment. Additionally, the Employment Agreement provided for certain
restrictions on his business activities following termination of his
employment. The Employment Agreement was terminable by Jones Lang LaSalle
on twelve months notice and by Mr. Peacock on six months notice.
Under an agreement executed in 2004 that amended the Employment
Agreement (and was filed with the SEC with the Company's Form 10-Q for the
quarter ended March 31, 2004), Mr. Peacock and the Company agreed that he
would remain employed by the Company until April 9, 2005 following an
extended notice period further to his resignation from the positions
described above. During such period, at the request of the Company,
Mr. Peacock will provide various consulting services to the Company, will
assist in the transfer of his employment duties and will provide transition
support for key client relationships (including attending and hosting
client relationship functions). Additionally, the various employee and
customer non-solicitation provisions and the non-competition provisions in
the Employment Agreement were extended to remain in effect during such
period.
The Employment Agreement provides that Mr. Peacock shall receive
$850,000 on an annual basis until April 9, 2005 as well as benefits
consistent with past practice. The Employment Agreement further provides
that all outstanding equity awards previously granted to Mr. Peacock under
the Stock Incentive Plan (including the SOP) and the Co-Investment Plan
shall continue to vest in accordance with their original terms until
December 31, 2004, at which time all unvested awards would fully vest
except that option grants would continue to vest until April 9, 2005 and
would be governed by the retirement provisions thereof. All unvested
awards will be forfeited, however, in the event Mr. Peacock is terminated
for cause or if he breaches any of his representations or covenants made in
the Employment Agreement.
COMPENSATION ARRANGEMENTS WITH STUART L. SCOTT
Under an agreement that we filed with SEC in 2004, we established Mr.
Scott's compensation for 2004 both for his service to the Company as an
executive Chairman of the Board of Directors and as our interim Chief
Executive Officer. The agreement sets forth his duties as Chairman of the
Board and also establishes his objectives as Chief Executive Officer and
the methodology under which his actual bonus would be determined against
his target. For that portion of 2004 during which he served only as
Chairman, the agreement provided that Mr. Scott would receive a base salary
on an annualized basis of $270,000 and have a bonus target on an annualized
basis of $80,000. For that portion of 2004 during which he also served as
our interim Chief Executive Officer, the agreement provided that Mr. Scott
would instead receive a total base salary on an annualized basis of
$400,000 and have a bonus target on an annualized basis of $600,000. Mr.
Scott's compensation for serving as Chairman only was paid during the
periods of January 1, 2004 through January 7, 2004 and from September 1
through December 31, 2004. His compensation for serving as both Chairman
and interim Chief Executive Officer was paid during the period of January
8, 2004 through August 30, 2004.
LaSalle Investment Management has retained Mr. Scott for certain
services in 2005 relating to his continued membership on the boards of
directors of investment funds, membership on the advisory boards of certain
additional investment funds, assistance in relationship management with
respect to certain clients and participation in various events with
employees and in mentoring employees. LaSalle Investment Management has
agreed to compensate Mr. Scott for these services at the rate of $60,000
annually plus reimbursement of expenses incurred in the performance of his
responsibilities and provision of administrative assistance.
COMPENSATION ARRANGEMENTS WITH COLIN DYER
Under an agreement that we filed with the SEC in 2004, we established
certain terms and conditions with respect to our employment of Colin Dyer
as our Chief Executive Officer. The principal elements of that agreement
insofar as they related to Mr. Dyer's compensation are as follows:
BASE SALARY. We agreed to pay Mr. Dyer a base salary of $750,000 per
annum through December 31, 2005, after which it be subject to adjustment by
the Compensation Committee in accordance with our normal procedures in
effect from time to time with respect to the establishment of executive
compensation generally and based on his individual performance, the
financial performance of the Company and market considerations generally,
except that both Mr. Dyer's base salary and his annual target bonus
opportunity referred to below for 2006 and thereafter will be no less than
his base salary and target bonus opportunity for 2005.
ANNUAL BONUS. During his employment, Mr. Dyer will be eligible to
receive an annual bonus under the Company's annual bonus program. His
target bonus for the remainder of the calendar year 2004 after his election
effective August 30, 2004 was established at $250,000, to be paid in no
less than such amount in 2005 at the same time as we generally pay bonuses.
We established Mr. Dyer's target bonus for calendar year 2005 to be
$750,000, payable in 2006 at the same time as we generally pay bonuses.
For calendar year 2006 and after, the Compensation Committee will establish
his annual target bonus amounts as set forth below.
Subject to the minimum guaranteed amount for 2004 set forth above,
the payment of Mr. Dyer's bonus will be established annually by our
Compensation Committee and will be based on the Committee's evaluation of
his performance against specific objective and subjective standards that
will be developed in accordance with the Company's Individual Performance
Management Program and on the overall performance of the Company. A
consideration of these factors may lead to his receiving more than, or less
than, his target bonus amounts. If Mr. Dyer leaves the firm involuntarily
for any reason other than Cause (as defined in his agreement), or if he
dies or becomes totally and permanently disabled, in any case prior to
August 30, 2008, he will be paid a pro rata portion of his target annual
bonus for the applicable year.
2004 MAKE-WHOLE BONUS PAYMENT. In addition to the Annual Bonus
payable in respect of 2004 as set forth in the foregoing section, the
Company agreed to pay Mr. Dyer a make-whole bonus amount (MAKE-WHOLE BONUS)
to the extent that his actual bonus paid by his former employer in respect
of 2004 was less than his target bonus at such employer, provided, however,
that in no event would the Make-Whole Bonus exceed $325,000. As that
condition was met, we paid the full amount of the Make-Whole Bonus to Mr.
Dyer during 2004.
RESTRICTED STOCK. In connection with the execution of his agreement,
Mr. Dyer was granted 40,000 shares of Restricted Stock under the Stock
Incentive Plan, one half of which will vest on August 30, 2007 and the
other half of which will vest on August 30, 2009.
In addition to the foregoing, if the Company has met its objectives
for 2005 as established by the Board, then the Company has agreed to grant
Mr. Dyer no less than 20,000 additional shares of Restricted Stock under
the Stock Incentive Plan promptly after the Board has determined in its
discretion during 2006 that such objectives have been met. One-half of
this grant would vest on January 1, 2008 and one-half would vest on
January 1, 2010. For 2006 and thereafter, the Board or its Compensation
Committee will annually establish Mr. Dyer's equity-based compensation
award levels according to his individual performance, the financial
performance of the Company, and market considerations generally.
All equity-based compensation awards made to Mr. Dyer that remain
unvested at such time as his employment may be terminated by the Company
without Cause shall automatically become fully vested and remain
exercisable for the lesser of three years or the remaining full term of the
option or other award.
SEVERANCE PROVISIONS. Mr. Dyer is eligible for severance payments
under the terms of, and subject to the conditions to, the Severance Pay
Plan described above as applicable to the members of our Global Executive
Committee, except that in the event Mr. Dyer's employment is terminated
prior to August 30, 2008 under circumstances for which he would otherwise
be eligible to receive severance, then the amount of severance he would
receive will equal two years of base salary and target bonus rather than
one.
FRINGE BENEFITS. Mr. Dyer is entitled to the fringe benefits
generally available to the Company's employees located in the United States
and to our tax equalization policy which provides certain protection
against taxation in multiple jurisdictions. In addition, we agreed to pay
for certain legal and other services relating to Mr. Dyer's employment
arrangements, tax return preparation in multiple jurisdictions and visa
matters.
EMPLOYMENT AGREEMENT WITH ROBERT S. ORR
As is customary with respect to our other senior executives employed
in the United Kingdom, Robert S. Orr, one of our Named Executive Officers,
is a party to a Senior Executive Service Agreement (EMPLOYMENT AGREEMENT)
providing terms of his employment with Jones Lang LaSalle. The Employment
Agreement is in a form used generally with other senior executives employed
in the United Kingdom. The Employment Agreement provides for a minimum
level of annual base salary in the amount of 162,500,
participation in bonus arrangements established by Jones Lang LaSalle and
certain other benefits. It requires Mr. Orr to dedicate his whole time and
attention to his work with Jones Lang LaSalle and prohibits him from having
any other employment. Additionally, it provides for certain restrictions
on his business activities following termination of employment with Jones
Lang LaSalle. The Employment Agreement may be terminated by Jones Lang
LaSalle on twelve months notice and by Mr. Orr on six months notice. If
Jones Lang LaSalle terminates Mr. Orr's employment other than for reasons
specified in the Employment Agreement, Mr. Orr would be entitled to twelve
months of salary and the value of other benefits provided for in the
Employment Agreement.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2004 with
respect to shares of our Common Stock that are issuable under our equity
compensation plans as described above:
(c)
Number of
Securities
(a) Remaining
Number of (b) Available for
Securities to be Weighted-Average Future Issuance
Issued Upon Exercise Under Equity
Exercise of Price of Compensation Plans
Outstanding of Outstanding (Excluding
Options, Warrants Options, Warrants Securities in
Plan Category and Rights and Rights column (a))
------------- ----------------- ---------------- ------------------
Equity Compen-
sation Plans
Approved by
Security
Holders:
Stock Incen-
tive Plan (1) 5,038,000 $24.14 1,491,000
Stock Purchase
Plan -- -- 618,000
--------- ---------
Subtotal 5,038,000 2,109,000
--------- ---------
Equity Compen-
sation Plans
Not Approved
by Security
Holders:
UK Share Plan 220,000 $13.63 280,000
Subtotal 220,000 280,000
--------- ---------
Total 5,258,000 2,389,000
========= =========
(1) Includes restricted stock awards made under the Stock Ownership
Program (SOP).
COMMON STOCK SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of our Common Stock, which constitutes the only
outstanding voting securities and equity securities of Jones Lang LaSalle,
as of March 25, 2005 (except where otherwise noted) by: (1) each Director
and Director nominee of Jones Lang LaSalle; (2) each of the Named Executive
Officers; (3) the Directors, Director nominees and executive officers of
Jones Lang LaSalle as a group; and (4) each person who is known to Jones
Lang LaSalle to have been the beneficial owner of more than five percent of
our Common Stock. On March 25, 2005, there were 33,972,089 shares of
Common Stock outstanding.
The table includes shares which the indicated individual had the
right to acquire through stock options granted under the Stock Incentive
Plan and which were exercisable on March 25, 2005 or which would become
exercisable within 60 days of that date. It also includes shares the
receipt of which certain of our Directors have deferred under a deferred
compensation program described above under "Director Compensation". The
table does not include unvested restricted stock units issued under the
Stock Incentive Plan, since none of such units or shares carries voting or
investment power. Unless otherwise indicated in the footnotes, all of such
interests are owned directly, and the indicated person or entity has sole
voting and dispositive power.
Shares of
Common Stock
Beneficially Owned
----------------------
Names of Percent of
Beneficial Owners (1) Number Class (%)
--------------------- ---------- ----------
Ariel Capital Management, Inc. (2) 8,016,510 23.60
The Dai-ichi Mutual Life Insurance Company (3) 2,199,162 6.47
Henri-Claude de Bettignies (4) 48,385 0.14
Darryl Hartley-Leonard (4) 68,638 0.20
Sir Derek Higgs (4) 16,000 0.05
Sheila A. Penrose (4) 17,717 0.05
Thomas C. Theobald (4)(5) 92,463 0.27
Colin Dyer 0 0
Stuart L. Scott (4)(6)(7) 219,675 0.65
Christopher A. Peacock (4) 80,650 0.24
Lauralee E. Martin (4) 36,130 0.11
Peter C. Roberts (4) 124,615 0.37
Lynn C. Thurber (4)(7) 132,967 0.39
Robert S. Orr (4) 106,083 0.31
Peter A. Barge (4) 29,737 0.09
All Directors, Director nominees and
executive officers as a group
(17 persons) (7) 997,326 2.94
--------------------
* Less than 1%
(1) Unless otherwise indicated, the address of each person or entity is
c/o Jones Lang LaSalle Incorporated, 200 East Randolph Drive,
Chicago, Illinois 60601.
(2) Information with respect to beneficial ownership of Ariel Capital
Management, Inc. (ARIEL) is included herein in reliance on a
Schedule 13G, dated December 31, 2004 and filed with the SEC on
February 14, 2005. The address of Ariel Capital Management Inc. is
200 East Randolph Drive, Suite 2900, Chicago, Illinois 60601. Ariel
has sole voting power with regard to 6,193,740 shares and sole
dispositive power with regard to 8,016,510 shares.
(3) Information with respect to beneficial ownership of The Dai-ichi
Mutual Life Insurance Company is included herein in reliance on a
Schedule 13G, dated September 28, 2001 filed with the SEC on February
11, 2002. The address of The Dai-ichi Mutual Life Insurance Company
is 13-1 Yurakucho, 1-chome, Tokyo, Japan 100.
(4) Includes the following shares which each individual had the right to
acquire through stock options granted under the Stock Incentive Plan
which were exercisable on March 25, 2005 or which would become
exercisable within 60 days of that date.
Number of
Name Shares
---- ----------
Stuart L. Scott . . . . . . . . . . . . . . . . 132,500
Christopher A. Peacock. . . . . . . . . . . . . 4,166
Henri-Claude de Bettignies. . . . . . . . . . . 43,282
Darryl Hartley-Leonard. . . . . . . . . . . . . 46,322
Sir Derek Higgs . . . . . . . . . . . . . . . . 16,000
Lauralee E. Martin. . . . . . . . . . . . . . . 32,500
Sheila A. Penrose . . . . . . . . . . . . . . . 10,806
Peter C. Roberts. . . . . . . . . . . . . . . . 35,000
Thomas C. Theobald. . . . . . . . . . . . . . . 40,516
Lynn C. Thurber . . . . . . . . . . . . . . . . 57,500
Peter A. Barge. . . . . . . . . . . . . . . . . 13,000
Robert S. Orr . . . . . . . . . . . . . . . . . 12,500
(5) 2,000 of the shares listed are held by Mr. Theobald's wife as
custodian for his daughter, and 2,000 of the shares listed are held
by Mr. Theobald as trustee of a trust for the benefit of his son.
Mr. Theobald disclaims beneficial ownership of these 4,000 shares.
(6) Of shares listed, 15,000 are held by a trust for the benefit of
Mr. Scott's children.
(7) Includes shares owned directly and by corporations of which the
reporting person is, or the reporting person and the reporting
person's spouse are, the sole shareholder(s).
PERFORMANCE GRAPH
The following line graph compares Jones Lang LaSalle's cumulative
shareholder return on its Common Stock to the cumulative total return of
the Standard & Poor's 500 Stock Index and an industry peer group index
(CUSTOM INDUSTRY INDEX) for a five-year period extending through
December 31, 2004. The Custom Industry Index is composed of the following
other publicly traded real estate services companies: Grubb & Ellis Company
and Trammell Crow Company. The graph assumes the investment of $100 in
Jones Lang LaSalle and each of the indices on December 31, 1999 and the
reinvestment of all dividends. The return shown on the graph is not
necessarily indicative of future performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG JONES LANG LASALLE INC., THE s&p 500 INDEX AND A PEER GROUP
[PERFORMANCE GRAPH]
December 31,
----------------------------------------------------
1999 2000 2001 2002 2003 2004
------- ------- ------- ------- ------- ------
Jones Lang
LaSalle . . . . . $100.00 116.84 152.00 129.52 174.57 315.03
S&P 500 . . . . . . $100.00 90.89 80.09 62.39 80.29 89.02
Peer Group. . . . . $100.00 118.32 93.66 68.58 99.04 145.73
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Jones Lang LaSalle's
Directors, certain of Jones Lang LaSalle's officers and beneficial owners
of more than 10 percent of Jones Lang LaSalle's outstanding Common Stock to
file reports of ownership and changes in ownership of Jones Lang LaSalle's
Common Stock with the SEC and to send copies of such reports to Jones Lang
LaSalle. Based solely upon a review of such reports and amendments thereto
furnished to Jones Lang LaSalle and upon written representations of certain
of such persons regarding their ownership of Common Stock, Jones Lang
LaSalle believes that no such person failed to file any such report on a
timely basis during 2004, except that the Company did not timely file the
following Form 4 reports on behalf of the indicated individuals by the end
of the second business day following the execution of the related
transactions: (1) for each of Peter Barge, Margaret Kelly, Lauralee Martin,
Robert Orr, Stuart Scott, Lynn Thurber and Earl Webb following a grant of
restricted stock units in February 2004, (2) for each of Peter Barge,
Margaret Kelly, Lauralee Martin, Robert Orr, Peter Roberts and Nicholas
Willmott following the vesting of restricted stock units in July 2004, (3)
for Peter Barge with respect to two reports for four sales of stock, (4)
for Robert Orr with respect to one report for one sale of stock, (5) for
Stuart Scott with respect to three reports for sales of shares under a Rule
10b5-1 trading plan, (6) for Lynn Thurber with respect to one report for
one sale of stock and (7) for Peter Roberts with respect to one report
relating to a gift of certain shares of stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Colin Dyer, who is our President and Chief Executive Officer and also
a member of our Board of Directors, is also a member of the board of
directors of Northern Foods plc. We received nominal fees from Northern
Foods plc during 2004 for certain services we rendered in the ordinary
course of business and on terms we believe to be no more favorable to the
client than those available to our unaffiliated clients generally.
Stuart L. Scott, who was a member of our Board of Directors until his
retirement on December 31, 2004, and who was our interim Chief Executive
Officer from January 2004 through August 2004, and an entity affiliated
with Mr. Scott are limited partners of Diverse Real Estate Holdings Limited
Partnership (DIVERSE). Diverse has an ownership interest in and operates
investment assets, primarily as the managing general partner of real estate
development ventures. Prior to January 1, 1992, Jones Lang LaSalle earned
fees for providing development advisory services to Diverse as well as fees
for the provision of administrative services. Effective January 1, 1992,
Jones Lang LaSalle discontinued charging fees to Diverse for these
services. In 1992, Diverse began the process of discontinuing its
operations and disposing of its assets. Given a projected shortfall in
assets, Jones Lang LaSalle established reserves against its receivable from
Diverse in the period 1992 to 1997. At the beginning of 2002, the net
receivable due from Diverse in connection with such fees and interest
thereon was $0.7 million. The underlying collateral security for this
receivable was significantly enhanced in 2002. As such, $2.0 million of bad
debt reserves were reversed in 2002. At December 31, 2004, the net
receivable due from Diverse was $963,000. Mr. Scott directly holds an
approximately 13.4% partnership interest in Diverse. In addition, the
Stuart Scott Trust, a trust affiliated with Mr. Scott, has a 6.4%
partnership interest in Diverse.
During 2003, each of Mr. Scott and another senior officer of the
Company personally acquired, on the same terms and conditions offered to
other investors, preferred stock convertible into less than 1% of the
common stock on a fully-diluted basis issued by SiteStuff, Inc.
(SITESTUFF). SiteStuff serves clients in the real estate industry by
helping them reduce procurement through discounted volume purchasing and
through streamlined processes for purchasing maintenance, repair and
operating products and services. Jones Lang LaSalle currently holds
approximately 20% of the equity issued by SiteStuff on a fully-diluted
basis and has a representative on the SiteStuff board of directors. Jones
Lang LaSalle also acquires services from SiteStuff in the ordinary course
of business for itself and on behalf of clients. As part of the approval
they obtained from our Board of Directors to make their personal
investments, Mr. Scott and our other officer agreed that, while they remain
our employees, they would give Jones Lang LaSalle their proxy for any
SiteStuff matters for which they were eligible to vote as equity holders.
Sir Derek Higgs, who is a member of our Board of Directors, is also a
director of British Land Company plc, a client of ours in the ordinary
course of business. We received approximately $1.5 million in net fee
revenue from British Land Company plc during 2004 and had a nominal
receivable at December 31, 2004. Jackson P. Tai, who was a member of our
Board of Directors until his resignation in October 2004, is also a
director and/or officer of DBS Group Holdings (of which DBS Bank is an
affiliate) and of CapitalLand (HK) Management Ltd., clients of ours in the
ordinary course of business. We received approximately $2.4 million in net
fee revenue from DBS Group Holdings and its affiliates during 2004 and had
a $380,000 receivable at December 31, 2004. We received nominal fees from
CapitalLand during 2004 and had a nominal receivable at December 31, 2004.
We believe that the services provided to these clients are on terms no more
favorable to them than those available to our unaffiliated clients
generally.
Gothaer Lebensversicherung A.G., which was a significant shareholder
during 2004, sold all of the Jones Lang LaSalle Common Stock it owned prior
to the end of 2004 and so is no longer a shareholder. During 2004, Gothaer
paid us fees of approximately $500,000 for services rendered by our
Investor and Occupier Services (IOS) segment in the ordinary course of
business, and which were on terms we believe to be no more favorable than
those available to our unaffiliated clients generally. However, during
2004 Gothaer made certain claims against a business unit within IOS for,
among other matters, refunds of fees from previous years. We are
investigating these claims and so far believe they are substantially
without merit and in any event will not have a material adverse effect on
our financial position or results of operations, but pending further review
and resolution of the matter with Gothaer, we have deferred recognition of
the fees paid during 2004.
From time to time, Directors and executive officers are given an
opportunity to invest individually in the real estate investment fund
products offered by subsidiaries of Jones Lang LaSalle, principally through
LaSalle Investment Management, on the same terms as are offered to other
unaffiliated investors. Additionally, executive officers and other
employees have been, and in the future may be, allowed to acquire interests
in certain investment vehicles (on the same terms as other unaffiliated
investors) in order that these vehicles can satisfy certain tax
requirements.
Jones Lang LaSalle uses LaSalle Investment Limited Partnership,
referred to as LaSalle Investment Company (LIC), as the investment vehicle
for substantially all of its co-investments with LaSalle Investment
Management clients. LIC is a series of four parallel limited partnerships
of which Jones Lang LaSalle has an effective 47.85% ownership interest
through two of the limited partnerships. Primarily institutional
investors, including a significant shareholder in Jones Lang LaSalle, hold
the remaining 52.15% interest in LIC. As of December 31, 2004, Thomas C.
Theobald, a non-Executive Director, and entities affiliated with him,
invested euro 1,014,280 and have committed to invest a total of euro
3,500,000 through LIC. In addition, as of December 31, 2004, Stuart L.
Scott, through an entity owned by Mr. Scott, has invested euro 723,058 and
committed to invest a total of euro 2,500,000 through LIC. While Gothaer
Lebensversicherung A.G. did sell all of its Jones Lang LaSalle Common Stock
during 2004, it has retained its investment and commitments to LIC. As of
December 31, 2004, Gothaer has invested euro 14,461,154 and has committed
to invest a total of euro 40,000,000 through LIC. Gothaer also is direct
investor in a number of the real estate investment fund products offered by
LaSalle Investment Management, in each case on the same terms as are
offered to other unaffiliated investors.
Lynn C. Thurber, Chief Executive Officer of LaSalle Investment
Management, previously invested $100,000 in a fund managed by one of Jones
Lang LaSalle's subsidiaries. Ms. Thurber borrowed $95,000 from the Company
in order to fund part of this investment prior to, and without any material
modifications since, the enactment of the Sarbanes-Oxley Act of 2002.
During 2004, Ms. Thurber repaid the entire outstanding balance of the loan.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed the firm of KPMG LLP as Jones Lang
LaSalle's independent registered public accounting firm for 2005. A
proposal to ratify this appointment will be presented at the 2005 Annual
Meeting.
THE BOARD UNANIMOUSLY RECOMMENDS YOU VOTE FOR RATIFICATION OF SUCH
APPOINTMENT.
Each valid proxy returned to Jones Lang LaSalle will be voted for the
ratification of the appointment of KPMG LLP as Jones Lang LaSalle's
independent registered public accounting firm for 2005 unless the proxy
specifies otherwise.
The Audit Committee retains the right to appoint a substitute
independent registered public accounting firm at any time during 2005 for
any reason whatsoever.
INFORMATION ABOUT THE INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
KPMG LLP has been for a number of years the independent accounting
firm that audits the financial statements of Jones Lang LaSalle and most of
its subsidiaries. Jones Lang LaSalle expects that representatives of KPMG
LLP will be present at the Annual Meeting and will be available to respond
to appropriate questions. Such representatives will have the opportunity
to make a statement at the Annual Meeting if they desire to do so.
AUDIT AND NON-AUDIT FEES
The following table presents fees for professional services rendered
by KPMG LLP for the audit of the Company's annual financial statements
(including attesting to the Company's internal controls over financial
reporting for purposes of Section 404 of the Sarbanes-Oxley Act of 2002),
audit related fees, tax fees and fees billed for other services rendered by
KPMG LLP for 2004 and 2003 (the fees shown are in thousands (000's)).
2004 2003
------ ------
Audit Fees, excluding audit related (1) $3,954 $2,796
------ ------
Audit Related Fees (2) $293 $101
------ ------
Tax Fees (3) $952 $855
------ ------
All Other Fees (4) $0 $5
------ ------
Total Fees $5,199 $3,757
====== ======
NOTES:
(1) Audit Fees include those necessary to perform an audit in accordance
with the standards of the Public Company Accounting Oversight Board
(United States) and quarterly reviews of the consolidated financial
statements of Jones Lang LaSalle. This includes fees for review of
the tax provision and fees for accounting consultations on matters
reflected in the consolidated financial statements. Audit Fees also
include audit or other attest services required by statute or
regulation (foreign or domestic), such as comfort letters, consents,
reviews of SEC filings, and statutory audits in non-U.S. locations.
For 2004, Audit Fees include fees of $1,400,000 related to the
attestation required under Section 404 of the Sarbanes Oxley Act of
2002 with respect to internal controls over financial reporting.
(2) Related Audit Fees include employee benefit plan audits, accounting
consultation on proposed transactions, internal control related
matters and audit or attest services not required by statute or
regulation.
(3) Tax Fees include tax compliance, tax planning and tax advice. Tax
planning and tax advice encompasses a diverse range of services,
including consultation, research, and assessment of tax planning
initiatives, assistance with tax audits and appeals, employee benefit
plans, requests for rulings or technical advice from taxing
authorities, and expatriate compliance services.
(4) All Other Fees include all other non-audit services.
PRE-APPROVAL OF AUDIT AND PERMITTED NON-AUDIT SERVICES OF THE INDEPENDENT
AUDITOR
The Audit Committee has established a policy for pre-approval of
audit and permitted non-audit services by the Company's independent
auditor. At each of its meetings, the full Audit Committee considers and
approves or rejects any proposed services and fee estimates that are
presented by the Company's management. The Chair of the Audit Committee
has been designated by the Audit Committee to consider approval of services
arising between meetings that were not pre-approved by the Audit Committee.
Services approved by the Chair are communicated to the full Audit Committee
at its next regular meeting. For each proposed service, the independent
auditor provides back-up documentation detailing the service and an
estimate of costs. During 2004, all services performed by the independent
auditor were approved by the Audit Committee.
AUDIT COMMITTEE REPORT
As more particularly described above under "Corporate Governance
Principles and Board Matters," the Audit Committee of the Board is
responsible for providing independent, objective oversight of Jones Lang
LaSalle's accounting functions and internal and disclosure controls. The
Audit Committee is composed of four Directors, each of whom is independent
as defined by the New York Stock Exchange listing standards in effect at
the time of mailing of this Proxy Statement and by applicable SEC rules.
The Audit Committee operates under a written Charter, which was most
recently revised as of July 28, 2003 and was approved by the Board of
Directors. A copy of the current Charter was attached as Appendix I to the
Proxy Statement for our 2004 Annual Meeting of Shareholders.
Management is responsible for Jones Lang LaSalle's internal and
disclosure controls and financial reporting process. The independent
registered public accounting firm is responsible for performing an
independent audit of Jones Lang LaSalle's consolidated financial statements
in accordance with the standards of the Public Company Accounting Oversight
Board (United States) and to issue a report thereon. The Audit Committee's
responsibility is to review these processes.
In connection with these responsibilities, the Audit Committee met
with management and the independent registered public accounting firm to
review and discuss the December 31, 2004 audited financial statements as
well as the Company's internal controls over financial reporting for which
an attestation by such firm is required under Section 404 of the Sarbanes-
Oxley Act of 2002. The Audit Committee also discussed with the independent
registered public accounting firm the matters required by the auditing
standards of the Public Company Accounting Oversight Board (United States),
including Statement on Auditing Standards No. 61 (Communication with Audit
Committees). The Audit Committee also received written disclosures from
the independent registered public accounting firm required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and the Audit Committee discussed with KPMG LLP that firm's
independence under the relevant standards.
Based upon the Audit Committee's discussions with management and the
independent registered public accounting firm, and the Audit Committee's
review of the representations of management and the independent auditor,
the Audit Committee recommended that the Board of Directors include the
audited consolidated financial statements in Jones Lang LaSalle's Annual
Report on Form 10-K for the year ended December 31, 2004, which has been
filed with the SEC.
THE AUDIT COMMITTEE
Sir Derek Higgs (Chair)
Henri-Claude de Bettignies
Darryl Hartley-Leonard
Sheila A. Penrose
PROPOSAL 3
APPROVAL OF AMENDMENT TO THE STOCK AWARD AND INCENTIVE PLAN
The Company originally adopted its Stock Award and Incentive Plan
(the STOCK INCENTIVE PLAN) in 1997 in connection with the initial public
offering of our Common Stock. On March 1, 2001, our Board of Directors
approved an amendment to the Stock Incentive Plan to increase the number of
shares of Common Stock authorized to be granted under the Stock Incentive
Plan from 4,160,000 to 8,610,000 shares. On May 14, 2002, a separate
equity incentive plan that had also previously been in effect, the Stock
Compensation Program, was merged into the Stock Incentive Plan as the
result of which the total number of shares authorized for issuance under
the Stock Incentive Plan was increased by 500,000 shares to a total of
9,110,000 shares. As of the close of business on March 25, 2005, Jones
Lang LaSalle Common Stock was trading at $46.50 per share.
As of December 31, 2004, approximately 1,491,000 shares of our Common
Stock remained available for future awards under the Stock Incentive Plan.
After our use of approximately 931,000 additional shares during 2005
primarily for restricted stock grants and also for restricted shares given
to management in lieu of a portion of their annual cash bonuses payments
pursuant to our Stock Ownership Program described above (SOP), only
approximately 560,000 shares remain available for future use under the
Plan. Accordingly, based upon the recommendation of its Compensation
Committee, which reviewed current market practices within comparator firms
based on information provided by an outside compensation consultant, our
Board has unanimously approved, subject to shareholder approval at our 2005
Annual Meeting, that an additional 3,000,000 shares be authorized for
issuance under the Stock Incentive Plan.
The form of the proposed amendment to our Stock Incentive Plan is
attached as Appendix I. The general description provided below is subject
to the full text of the amendment as provided in the Appendix. In addition
to reflecting the new shares authorized for issuance, the proposed
amendment would also make certain changes to reflect restrictions on making
loans enacted by the Sarbanes-Oxley Act of 2002 and to reflect new rules of
the New York Stock Exchange requiring shareholder approval of equity plans.
The form of the amendment set forth in the Appendix is marked to show all
of the proposed changes to the Stock Incentive Plan.
Prior to 2003, we used our Stock Incentive Plan to grant stock
options as our principal equity compensation vehicle. Beginning in 2002,
we moved away from stock options and now use our Stock Incentive Plan
principally to award restricted stock units, which we believe better meets
our goals for attracting and retaining key talent, represents evolving best
practices in equity compensation and will be more cost effective given the
new accounting rules regarding the expensing of stock options. Typically,
we make restricted stock grants annually to our key employees, half of
which vest in three years and half in five years.
Importantly, the Stock Incentive Plan is also the source of the
shares we use for awards under the Stock Ownership Program, which requires
employees above a certain level within our firm to accept 10% to 20% of
their annual bonuses in the form of restricted stock units rather than
cash. Half of these restricted stock units vest after 18 months and the
remainder after 30 months. We believe our Stock Ownership Program is
unusual in our industry and that it provides an important tool for
retention and for focusing our key people on the performance of our stock.
We believe that the continued use of our Stock Incentive Plan will be
important to maintain the alignment between the interests of our employees
and directors and the interests of our shareholders through providing
incentive compensation opportunities tied to the performance of our Common
Stock over time and through promoting increased ownership of our Common
Stock by those who are most able to influence its performance. In
addition, the Stock Incentive Plan is intended to advance the interests of
our Company and its shareholders by helping us to attract, retain and
motivate key personnel upon whose initiative, effort and judgment the
successful conduct of our business is largely dependent. Moreover, as
stated above in the report of our Compensation Committee, we believe that
our employee compensation is unusual in the real estate industry in that we
generally compensate our professional and managerial staff with salary,
bonus and stock-based programs rather than on a cash commission basis. Our
system is therefore designed to reward the strengthening of existing client
relationships, securing new client relationships, client satisfaction and
teamwork, as well as to foster longer-term employee commitment to the
success of our Company.
The Board anticipates that the 3,000,000 additional shares being
requested will be sufficient to provide projected equity incentives for the
Company's compensation plans for at least three years beyond 2005 assuming
that its usage remains consistent with 2004. The Board also believes that
this would represent a reasonable amount of potential dilution, given the
strong incentive it also believes will be provided to employees to increase
the value of the Company for all shareholders. Historically, we have
mitigated the dilution from stock issued under our Stock Incentive Plan by
repurchasing our shares. Between October 2002 and December 31, 2004, we
repurchased approximately 2,300,000 shares. Although we are not required
to do so, we would expect to continue our share repurchase programs in the
future on a similar basis.
The new shares would represent approximately 9% of diluted common
shares outstanding as of December 31, 2004. Including the new shares, the
potential overhang(1) from all stock incentives granted and available to
employees would be approximately 16.5%, although we expect this percentage
to continue to be reduced over time as the options previously issued under
the Stock Incentive Plan are exercised or expire. Our historical total
equity burn rate(2) from shares issued under the Stock Incentive Plan,
calculated in terms of the average burn rate over the three-year period
from 2002 through 2004, has been 4.2%. When the shares issued under our
Stock Ownership Program in lieu of a portion of cash bonus payments are
excluded, however, the average burn rate of other shares issued under the
Stock Incentive Plan has been 2.1%. Since the SOP shares are, in effect,
actually purchased by our employees with bonus dollars that otherwise would
have been paid to them in cash, we believe that it is appropriate to
exclude SOP usage under our Stock Incentive Plan when comparing our burn
rate to that of other companies.
--------------------
(1) Overhang is calculated as the sum of stock options and stock
appreciation rights granted and outstanding plus shares available for
grant under plans divided by the sum of (a) common shares outstanding
at fiscal year end plus (b) shares in the numerator.
(2) Total equity burn rate is calculated as the total number of equity
related awards in any given fiscal year divided by the number of
common shares outstanding at the end of that fiscal year.
Executive Officers, and to the non-executive members of our Board of
Directors, will continue to be made under the Stock Incentive Plan.
While the number of employees who have been awarded restricted stock
units in 2005 was limited to approximately 240, the number of employees who
receive restricted stock units in lieu of a portion of their cash bonus
under our Stock Ownership Program is approximately 700, in each case drawn
from our global employee pool. The restricted stock units granted to the
non-executive members of our Board of Directors, currently six in number,
as described above under "Director Compensation," are also provided under
the Stock Incentive Plan. The restricted stock grants made to our Named
Executive Officers, as described above under "Executive Compensation," have
also all been made under the Stock Incentive Plan. We anticipate that all
future grants of restricted stock units to our employees, including our
Named Additional information about our plans under which shares of our
Common Stock are authorized for issuance is provided above under "Equity
Compensation Plan Information."
A proposal to approve the amendment to the Stock Incentive Plan will
be presented at our 2005 Annual Meeting. The affirmative vote of a
majority of the total number of votes cast by holders of Common Stock
entitled to vote at the Annual Meeting will be necessary in order to
approve the amendment, provided that the total vote cast represents over
50% of the total number of shares outstanding on the Record Date for the
Annual Meeting. Each valid proxy returned to Jones Lang LaSalle will be
voted for the approval of the amendment to the Stock Incentive Plan unless
the proxy specifies otherwise. Abstentions and broker non-votes will have
the effect of a vote against the approval of the amendment to the Stock
Incentive Plan unless holders of 50% of the total number of shares
outstanding on the Record Date cast votes on such proposal, in which event
an abstention or broker non-vote will have no effect on the result of the
vote. If our shareholders approve the amendment, it will be effective as
of its adoption. In the event that our shareholders do not approve the
authorization of the additional shares that we are proposing, then we
project that will not be able to provide equity incentives to our employees
beyond 2005 in accordance with our proposed compensation plans.
THE BOARD RECOMMENDS YOU VOTE FOR APPROVAL OF THE AMENDMENT.
The following is a summary of the principal features of the Stock
Incentive Plan. This summary does not, however, purport to be a complete
description of all the provisions of the Stock Incentive Plan. Any
shareholder who wishes to obtain a copy of the plan document and amendments
may do so by written request to our Corporate Secretary at the address of
our principal executive office set forth above.
The Plan document and all amendments to date have also been filed
with the SEC as an Exhibit to our Form 10-K.
DESCRIPTION OF THE STOCK INCENTIVE PLAN
The Stock Incentive Plan is designed to comply with the requirements
of Regulation G (12 C.F.R. Section 207), the requirements for
"performance-based compensation" under Section 162(m) of the Code and the
conditions for exemption from the short-swing profit recovery rules under
Rule 16b-3 of the Exchange Act.
The Stock Incentive Plan provides for the granting of restricted
stock (RESTRICTED STOCK) and restricted stock units ("RESTRICTED STOCK
UNITS"), dividend equivalents (DIVIDEND EQUIVALENTS), performance shares
and other stock- and cash-based awards (PERFORMANCE AWARDS). The Stock
Incentive Plan also provides for the granting of stock options (OPTION"),
including "incentive stock options" (ISOs) within the meaning of Section
422 of the Code and non-qualified stock options (NQSOs). Options granted
under the Stock Incentive Plan may be accompanied by stock appreciation
rights (SAR") or limited stock appreciation rights (LIMITED SARs), or both
(RIGHTS). Rights may also be granted independently of Options. Each award
is evidenced by an agreement (an AWARD AGREEMENT) setting forth the terms
and conditions applicable thereto.
The Stock Incentive Plan is administered by the Compensation
Committee of the Board (sometimes referred to herein as the "Plan
Administrator"). Subject to the terms of the Stock Incentive Plan, the
Plan Administrator has the right to grant awards to eligible recipients and
to determine the terms and conditions of Award Agreements, including the
vesting schedule and exercise price of such awards. The plan provides
that, unless otherwise determined by the Plan Administrator, in the event
of a change in control of Jones Lang LaSalle (as defined in the Stock
Incentive Plan) awards under the plan will, among other things, become
fully vested and valued as provided in the plan.
Discretionary grants of awards under the Stock Incentive Plan may be
made to any Director (including Non-Executive Directors), employee or any
independent contractor of Jones Lang LaSalle or its direct and indirect
subsidiaries and affiliates who is determined by the Plan Administrator to
be eligible for participation in the plan. ISOs, however, may only be
granted to employees of Jones Lang LaSalle and its subsidiaries.
Options vest and become exercisable over the exercise period, at such
times and upon such conditions, including amount and manner of payment of
the exercise price, as the Plan Administrator determines and sets forth in
the Award Agreement. The Plan Administrator may accelerate the
exercisability of any outstanding Option at such time and under such
circumstances as it deems appropriate. Options that are not exercised
within 10 years (or such shorter term as the Plan administrator may
determine) from the date of grant, however, will expire without value.
Options are exercisable during the optionee's lifetime only by the
optionee. The Award Agreements contain provisions regarding the exercise
of Options following termination of employment with or service to Jones
Lang LaSalle, including terminations due to the death, disability or
retirement of an award recipient.
Restricted Stock Units vest at such times and upon such conditions as
the Plan Administrator determines and sets forth in the applicable Award
Agreement. Historically, half of the Restricted Stock Units that are
granted on an annual basis to key employees as part of our compensation
program vest in 3 years after grant and the other half in five years. Half
of the Restricted Stock Units that have been issued under our Stock
Ownership Program vest in 18 months and the other half in 30 months.
Restricted Stock Awards may not be transferred except under the laws of
distribution after an employee's death. The Plan Administrator may
accelerate the vesting of Restricted Stock Units at such time and under
such circumstances as it deems appropriate. The Award Agreements contain
provisions regarding the vesting of Restricted Stock Awards following
termination of employment with or service to Jones Lang LaSalle, including
terminations due to the death, disability or retirement of an award
recipient.
Future grants to be made under the Stock Incentive Plan will be
authorized by the Compensation Committee in its sole discretion. For this
reason, it is not possible to determine the benefits or amounts that will
be received by any particular employees or group of employees in the
future. Certain grants are made automatically to the non-executive members
of our Board of Directors as described above under "Director Compensation."
FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a discussion of the principal United States
federal income tax consequences of Options (including ISOs and NQSOs),
SARs, Limited SARs, Restricted Stock, Restricted Stock Units, Dividend
Equivalents and Performance Awards that may be granted pursuant to the
Stock Incentive Plan. THIS DISCUSSION IS BASED ON AN ANALYSIS OF THE CODE
AS CURRENTLY IN EFFECT, EXISTING LAWS, JUDICIAL DECISIONS, ADMINISTRATIVE
RULINGS AND REGULATIONS, AND PROPOSED REGULATIONS, ALL OF WHICH ARE SUBJECT
TO CHANGE.
OPTIONS
ISOs. No taxable income will be realized by an option holder upon
the grant or exercise of an ISO. If shares are issued to an option holder
pursuant to the exercise of an ISO granted under the Stock Incentive Plan
and if a disqualifying disposition of such shares is not made by such
option holder (namely, no disposition is made within two years after the
date of grant or within one year after the receipt of such shares by such
option holder), then (i) upon sale of such shares, any amount realized in
excess of the exercise price of the ISO will be taxed to such option holder
as a long-term capital gain and any loss sustained will be a long-term
capital loss and (ii) no deduction will be allowed to Jones Lang LaSalle.
However, if shares acquired upon the exercise of an ISO are disposed of
prior to the expiration of either holding period described above, generally
(x) the option holder will realize ordinary income in the year of
disposition in an amount equal to the excess (if any) of the fair market
value of the shares at the time of exercise (or, if less, the amount
realized on the disposition of the shares), over the exercise price
thereof, and (y) Jones Lang LaSalle will be entitled to deduct an amount
equal to such income. Any additional gain recognized by the option holder
upon a disposition of such shares prior to the expiration of the holding
period described above will be taxed as a short-term or long-term capital
gain, as the case may be, and will not result in any deduction by Jones
Lang LaSalle.
If an ISO is exercised at a time when it no longer qualifies as an
ISO, such option will be treated as a NQSO. Subject to certain exceptions,
an ISO generally will not be eligible for the federal income tax treatment
described above if it is exercised more than three months following
termination of employment.
NQSOs. In general, a grantee will not be subject to tax at the time
a NQSO is granted. Upon exercise of a NQSO where the exercise price is
paid in cash, the grantee generally must include in ordinary income at the
time of exercise an amount equal to the excess, if any, of the fair market
value of the Jones Lang LaSalle Common Stock at the time of exercise over
the exercise price, and will have a tax basis in such shares equal to the
cash paid upon exercise plus the amount taxable as ordinary income to the
grantee.
Jones Lang LaSalle generally will be entitled to a deduction in the
amount of a grantee's ordinary income at the time such income is recognized
by the grantee upon the exercise of a NQSO. Income and payroll taxes are
required to be withheld on the amount of ordinary income resulting from the
exercise of a NQSO.
SARs AND LIMITED SARs
A grant of SARs or Limited SARs has no federal income tax
consequences at the time of such grant, provided that the grant complies
with the newly-enacted Section 409A of the Code governing payment of
deferred compensation. Upon the exercise of SARs or Limited SARs (other
than a free standing right that is a Limited SAR), the amount of any cash
and the fair market value as of the date of exercise of any shares of the
Jones Lang LaSalle Common Stock received is taxable to the grantee as
ordinary income. With respect to a free standing right that is a Limited
SAR, however, a grantee should be required to include as taxable income on
the date of a change in control an amount equal to the amount of cash that
could be received upon the exercise of the Limited SAR, even if the Limited
SAR is not exercised until a date subsequent to the change in control date.
Jones Lang LaSalle will generally be entitled to a deduction at the same
time and in an amount equal to the amount included in the grantee's income.
RESTRICTED STOCK/RESTRICTED STOCK UNITS
A grantee will not recognize income, and Jones Lang LaSalle will not
be entitled to a deduction, upon the grant of Restricted Stock. A grantee
generally must include in ordinary income the fair market value of
Restricted Stock at the time such Restricted Stock is no longer subject to
a substantial risk of forfeiture (FORFEITURE PERIOD) within the meaning of
Section 83 of the Code including, in the case of an insider, potential
liability under Section 16(b) of the Exchange Act), and such grantee's tax
basis in such shares will be equal to their fair market value.
Jones Lang LaSalle generally will be entitled to a deduction in the
amount of an employee's ordinary income at the time such income is
recognized as described above. Income and payroll taxes are required to be
withheld on the amount of ordinary income resulting from the Restricted
Stock.
DIVIDEND EQUIVALENTS
A grantee will not be taxed upon the grant of a Dividend Equivalent,
but will instead recognize ordinary income in an amount equal to the value
of the Dividend Equivalent at the time the Dividend Equivalent becomes
payable to the grantee. Jones Lang LaSalle will be entitled to a deduction
at such time and in such amount as the grantee recognizes ordinary income
with respect to the Dividend Equivalent.
PERFORMANCE AWARDS
A grantee will not recognize income, and Jones Lang LaSalle will not
be entitled to a deduction, upon the grant of a Performance Award. A
grantee generally must include in ordinary income the fair market value of
the cash, shares of Jones Lang LaSalle Common Stock, other award or other
property received by him upon realization to the Performance Award, and
such grantee's tax basis in any such shares, award or other property will
be equal to such fair market value.
Jones Lang LaSalle generally will be entitled to a deduction in the
amount of the grantee's ordinary income at the time income is recognized as
described above. Income and payroll taxes are required to be withheld on
the amount of the ordinary income resulting from the Performance Award.
REGISTRATION OF SHARES
If the amendment to the Stock Incentive Plan is approved by our
shareholders, the Company intends to register the additional shares
reserved for issuance promptly after the Annual Meeting on a Form S-8
Registration Statement under the Securities Act of 1933.
PROPOSAL 4
PROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS
Article FIFTH of our Articles of Incorporation currently provides
that the Board of Directors of the Company be divided into three classes of
approximately equal size, composed of Directors who each serve a term of
office for three years. Our Board has voted to approve, and to recommend
to our shareholders that they approve, a proposal to amend our Articles of
Incorporation to phase out the classification of the Board, to provide
instead for the annual election of all Directors, and to make certain
corresponding conforming and technical changes to the Articles of
Incorporation.
If our shareholders approve the proposed amendment, those Directors
previously elected for three-year terms of office by our shareholders
(including the two directors who are standing for election at the 2005
Annual Meeting to three-year terms ending at the 2008 Annual Meeting) will
complete their three-year terms and would be eligible for re-election
thereafter for one-year terms each at each Annual Meeting of Shareholders.
Beginning with the Annual Meeting in 2008, the declassification of the
Board would be complete and all Directors would be subject to annual
election to one-year terms. The proposed amendment would also limit the
super-majority (80%) voting rights that currently apply to amending any
portion of Article FIFTH only to that portion of such Article that permits
a director to be removed for cause upon the vote of two-thirds of our
outstanding shares.
The proposed amendment to our Articles of Incorporation is
substantially in the form of Appendix II. The general description above is
subject to the full text of the amendment provided in Appendix II.
The affirmative vote of at least 80% of ALL outstanding shares of our
Common Stock entitled to vote will be required for approval of this
proposal. Abstentions and broker non-votes will have the same effect as
votes against the proposal. Therefore, it is important that you vote your
shares either at the meeting or by proxy.
Classified or staggered boards have been widely adopted, have a long
history in corporate law and their merits have been extensively debated.
Proponents of classified boards assert that they promote stability and
continuity of experience on a board because directors elected for multi-
year terms are less subject to outside influence and also because a
majority of directors will always have at least one full year of prior
experience as directors of the company. Furthermore, since it would take
at least two annual elections for a potential acquirer to gain control of a
classified board without the cooperation of the board, the existence of a
classified board structure may enhance shareholder value by making it more
likely that a party seeking to gain control of a target company will engage
in an arm's-length discussion with the target's existing board instead of
launching what may be a protracted proxy fight in an attempt to gain
control of the board and take over the company.
Other investors, however, view classified boards as having the effect
of reducing the accountability of directors to shareholders because
classified boards limit the ability of shareholders to evaluate and elect
all directors on an annual basis. The election of directors is the primary
means for shareholders to influence corporate governance policies and to
hold management accountable for the implementation of these policies.
Opponents of classified boards also believe that they discourage takeover
proposals and proxy contests that could have the effect of increasing
shareholder value. In light of these views, a number of major corporations
have determined that the evolving principles of corporate governance
dictate that all directors of a corporation should be elected annually.
A shareholder proposal recommending that we declassify our Board was
defeated at our 2002 Annual Meeting by a margin of slightly less than two-
to-one of the shares voted. The same proposal was approved at our 2003
Annual Meeting by more than a majority of the shares voted, although the
shares voted represented only 36.6% of our total outstanding shares at the
time. The same proposal was again approved at our 2004 Annual Meeting by a
three-to-one margin with respect to the shares voted, this time
representing slightly less than 60% of our total outstanding shares at the
time.
Our Nominating and Governance Committee and our full Board of
Directors has continued to consider carefully over the previous years the
advantages and disadvantages of maintaining the classified board structure,
and in the past has concluded that maintaining the structure was in the
best interests of the Company and its shareholders. Mindful that an
increasingly large majority of shareholders have voted in favor of
declassification at our previous three Annual Meetings, and being committed
to the principles of corporate democracy, our Nominating and Governance
Committee has again considered the various arguments for and against a
classified board and has recommended to the Board, which has decided
accordingly, that it is now appropriate to propose to the shareholders that
the Board be declassified. The Board does seek to promote governance
policies that the Company's shareholders view as maximizing management's
accountability to them, and declassifiying the Board will give shareholders
the opportunity each year to register their views with respect to all of
our Directors at one time.
The proposal to eliminate the classification of the Board of
Directors is neither the result of any effort to unseat incumbent
directors, nor any effort by any person to take control of the Board of
Directors.
If the proposal is approved by our shareholders, we will file
Articles of Amendment to our Articles of Incorporation with the State
Department of Assessments and Taxation of Maryland after the 2005 Annual
Meeting. If the proposal is not approved by our shareholders, then the
Board of Directors will remain classified, and the directors will continue
to be elected to three-year terms of office.
FOR THESE REASONS, THE BOARD UNANIMOUSLY RECOMMENDS YOU VOTE FOR THIS
PROPOSAL.
PROXY SOLICITATION EXPENSE
Jones Lang LaSalle is making this solicitation and will pay the
entire cost of preparing, assembling, printing, mailing and distributing
these proxy materials and soliciting votes. If you choose to access any
proxy materials and/or vote over the Internet, you are responsible for
Internet access charges you may incur. If you choose to vote by telephone,
you are responsible for telephone charges you may incur. In addition to the
mailing of these proxy materials, the solicitation of proxies or votes may
be made in person, by telephone or by electronic communication by our
directors, officers and employees, who will not receive any additional
compensation for such solicitation activities. We also have hired Mellon
Investor Services to assist us in the distribution of proxy materials and
the solicitation of votes described above. We will pay Mellon a fee of
$12,500 plus customary costs and expenses for these services. We have
agreed to indemnify Mellon against certain liabilities arising out of or in
connection with its agreement. Upon request, we will also reimburse
brokerage houses and other custodians, nominees and fiduciaries for
forwarding proxy and solicitation materials to shareholders.
ATTENDANCE BY MEMBERS OF THE BOARD OF DIRECTORS AT
THE ANNUAL MEETING OF SHAREHOLDERS
We strongly encourage each member of our Board of Directors to attend
each Annual Meeting of Shareholders. All of the members of our Board of
Directors at the time attended our previous Annual Meeting of Shareholders
held on May 27, 2004.
COMMUNICATING WITH OUR BOARD OF DIRECTORS
Shareholders may communicate directly with our Board of Directors. If
you wish to do so, please send an e-mail to boardofdirectors@am.joneslang-
lasalle.com, which our Corporate Secretary will forward to all Directors.
If you wish to communicate only with our Non-Executive Directors, or
specifically with any Director individually (including our Chairman of the
Board, who serves as the Lead Independent Director), please so note on the
e-mail. Alternatively, you may send a communication by mail to any or all
of our Directors, or specifically to any or all of our Non-Executive
Directors, care of our Corporate Secretary at the address of our principal
executive office set forth above, and our Corporate Secretary will forward
it unopened to the intended recipients.
APPENDIX I
PROPOSED FORM OF AMENDMENT TO THE STOCK INCENTIVE PLAN
----------------------------------------
JONES LANG LASALLE INCORPORATED
AMENDED AND RESTATED STOCK AWARD AND INCENTIVE PLAN
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May 26, 2005
[Note for purposes of 2005 Proxy Statement: New proposed amendments are
shown in BOLD type and deleted language is indicated in [brackets].
JONES LANG LASALLE INCORPORATED
AMENDED AND RESTATED STOCK AWARD AND INCENTIVE PLAN
Jones Lang LaSalle Incorporated (the "Company") has previously
established a 1997 Stock Award and Incentive Plan, as amended (the "Stock
Award and Incentive Plan"), and a Stock Compensation Program, as amended
(the "Stock Compensation Program"). The Stock Award and Incentive Plan and
the Stock Compensation Program are referred to herein collectively as the
"Former Plans." Each of the Former Plans has been authorized by the
Company's Board of Directors and approved by the Company's stockholders.
In order to facilitate the efficient administration of the Former
Plans and the awards granted thereunder, the Company's Board of Directors
has authorized the amendment and restatement of each of the Former Plans in
order to combine the Former Plans into a single plan. The Former Plans, as
so combined, are referred to herein as the "Plan."
THIS AMENDMENT AND RESTATEMENT SHALL BECOME EFFECTIVE AS OF MAY 26,
2005 [DELETED: The Plan shall become effective as of May 14, 2002 ] and
from and after its effective date shall continue to supersede and replace
the Former Plans in their entirety, except that the adoption of the Plan
shall not be deemed to amend or modify the terms or conditions of any award
granted or election made pursuant to the Former Plans prior to the
effective date of the Plan. All awards granted and elections made pursuant
to the Former Plans prior to the effective date of the Plan shall remain in
full force and effect in accordance with their terms and shall be
administered in accordance with the terms and conditions of the Plan.
PURPOSE; TYPES OF AWARDS; CONSTRUCTION.
The purpose of the Plan is to afford an incentive to directors
(including non-employee directors), selected employees and independent
contractors of the Company, or any Subsidiary or Affiliate which now exists
or hereafter is organized or acquired, to acquire a proprietary interest in
the Company, to continue as directors, employees or independent
contractors, as the case may be, to increase their efforts on behalf of the
Company and to promote the success of the Company's business in the
interest of its stockholders. Pursuant to Section 6 of the Plan, there may
be granted Stock Options (including "incentive stock options" and
"nonqualified stock options"), stock appreciation rights and limited stock
appreciation rights (either in connection with options granted under the
Plan or independently of options), restricted stock, restricted stock
units, dividend equivalents, performance shares and other stock-or-cash-
based awards. Section 9 of the Plan contains provisions governing certain
special grants of Options to non-employee directors of the Company. The
Plan also provides the authority to make loans to purchase shares of common
stock of the Company, PROVIDED THAT SUCH LOANS DO NOT VIOLATE ANY
APPLICABLE LAW, RULE OR REGULATION. The Plan is designed to comply with the
requirements of Regulation G (12 C.F.R. Section 207) regarding the
purchase of shares on margin, the requirements for "performance-based
compensation" under Section 162(m) of the Code and the conditions for
exemption from short-swing profit recovery rules under Rule 16b-3 of the
Exchange Act, and shall be interpreted in a manner consistent with the
requirements thereof.
The terms and conditions of the Plan (exclusive of those set forth in
the Stock Compensation Program) shall govern (i) all grants and awards made
prior to the effective date of the Plan under the Stock Award and Incentive
Plan and (ii) all Awards made pursuant to the Plan from and after the
effective date of the Plan. The terms and conditions of all grants and
awards made prior to the effective date of the Plan under the Stock
Compensation Program shall govern such grants and awards, except that from
and after such date the Committee under the Plan shall be responsible for
the administration and interpretation of all such grants and awards as
provided in the Plan. New grants and awards shall not be made pursuant to
the Stock Compensation Program after the effective date of the Plan.
DEFINITIONS.
For purposes of the Plan, the following terms shall be defined as set
forth below:
(a) "Affiliate" means any entity if, at the time of granting of an
Award or a Loan, (i) the Company, directly or indirectly, owns at least 20%
of the combined voting power of all classes of such entity or at least 20%
of the ownership interests in such entity or (ii) such entity, directly or
indirectly, owns at least 20% of the combined voting power of all classes
of stock of the Company.
(b) "Award" means any Option, SAR (including a Limited SAR),
Restricted Stock, Restricted Stock Unit, Dividend Equivalent, Performance
Share or Other Stock-Based Award or Other Cash-Based Award granted under
the Plan.
(c) "Award Agreement" means any written agreement, contract, or
other instrument or document evidencing an Award.
(d) "Beneficiary" means the person, persons, trust or trusts which
have been designated by a Grantee in his or her most recent written
beneficiary designation filed with the Company to receive the benefits
specified under the Plan upon his or her death, or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the
person, persons, trust or trusts entitled by will or the laws of descent
and distribution to receive such benefits.
(e) "Board" means the Board of Directors of the Company.
(f) "Change in Control" means a change in control of the Company
which will be deemed to have occurred if:
(i) any "person," as such term is used in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (A) the Company or any of its
subsidiaries, (B) any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any of its affiliates, (C) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (D) any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of Stock, or (E) any person or group as used in Rule 13d-1(b)
under the Exchange Act, is or becomes the Beneficial Owner, as such term is
defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of
securities of the Company (not including the securities beneficially owned
by such Person any securities acquired directly from the Company or its
affiliates other than in connection with the acquisition by the Company or
its affiliates of a business) representing 50% or more of the combined
voting power of the Company's then outstanding securities;
(ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board, and any new
director (other than (A) a director designated by a person who has entered
into an agreement with the Company to effect a transaction described in
clause (i), (iii), or (iv) of this Section 2(f) or (B) other than a
director whose initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously
so approved, cease for any reason to constitute at least a majority
thereof;
(iii) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation, other than (A) a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any parent
thereof) in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or any subsidiary of the Company, at least 75% of the combined voting power
of the securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation, or
(B) a merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no person (as defined above)
is or becomes the beneficial owner, directly or indirectly, of securities
of the Company (not including in the securities beneficially owned by such
person any securities acquired directly from the Company or its affiliates
other than in connection with the acquisition by the Company or its
affiliates of a business) representing 25% or more of the combined voting
power of the Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is consummated
an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets (or any transaction having a
similar effect) other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at least 75% of the
combined voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
(g) "Change in Control Price" means the higher of (i) the highest
price per share paid in any transaction constituting a Change in Control or
(ii) the highest Fair Market Value per share at any time during the 60-day
period preceding or following a Change in Control.
(h) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(i) "Committee" means the Board or the committee established by the
Board to administer the Plan.
(j) "Company" means Jones Lang LaSalle Incorporated, a corporation
organized under the laws of the State of Maryland, or any successor
corporation.
(k) "Dividend Equivalent" means a right, granted to a Grantee under
Section 6(g), to receive cash, Stock, or other property equal in value to
dividends paid with respect to a specified number of shares of Stock.
Dividend Equivalents may be awarded on a free-standing basis or in
connection with another Award, and may be paid currently or on a deferred
basis.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and as now or hereafter construed, interpreted
and applied by regulations, rulings and cases.
(m) "Fair Market Value" means, with respect to Stock or other
property, the fair market value of such Stock or other property determined
by such methods or procedures as shall be established from time to time by
the Committee. Unless otherwise determined by the Committee in good faith,
the per share Fair Market Value of Stock as of a particular date shall mean
(i) the closing sales price per share of Stock on the national securities
exchange on which the Stock is principally traded, for the last preceding
date on which there was a sale of such Stock on such exchange, or (ii) if
the shares of Stock are then traded in an over-the-counter market, the
average of the closing bid and asked prices for the shares of Stock in such
over-the-counter market for the last preceding date on which there was a
sale of such Stock in such market, or (iii) if the shares of Stock are not
then listed on a national securities exchange or traded in an over-the-
counter market, such value as the Committee, in its sole discretion, shall
determine.
(n) "Grantee" means a person who, as an employee or independent
contractor of the Company, a Subsidiary or an Affiliate, has been granted
an Award or Loan under the Plan.
(o) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
(p) "Limited SAR" means a right granted pursuant to Section 6(c)
which shall, in general, be automatically exercised for cash upon a Change
in Control.
(q) "Loan" means the proceeds from the Company borrowed by a Plan
participant under Section 8 of the Plan.
(r) "NQSO" means any Option that is designated as a nonqualified
stock option.
(s) "Option" means a right, granted to a Grantee under Section 6(b)
and Section 9, to purchase shares of Stock. An Option may be either an ISO
or an NQSO, PROVIDED THAT, ISO's may be granted only to employees of the
Company or a Subsidiary.
(t) "Other Cash-Based Award" means cash award under Section 6(h),
including cash awarded as a bonus or upon the attainment of specified
performance criteria or otherwise as permitted under the Plan.
(u) "Other Stock-Based Award" means a right or other interest
granted to Grantee under Section 6(h) that may be denominated or payable
in, valued in whole or in part by reference to, or otherwise based on, or
related to, Stock, including, but not limited to (1) unrestricted Stock
awarded as a bonus or upon the attainment of specified performance criteria
or otherwise as permitted under the Plan, and (2) a right granted to a
Grantee to acquire Stock from the Company for cash and/or a promissory note
containing terms and conditions prescribed by the Committee.
(v) "Performance Share" means an Award of shares of Stock to a
Grantee under Section 6(h) that is subject to restrictions based upon the
attainment of specified performance criteria.
(w) "Plan" means this Amended and Restated Stock Award and
Incentive Plan, as amended from time to time.
(x) "Restricted Stock" means an Award of shares of Stock to a
Grantee under Section 6(d) that may be subject to certain restrictions and
to a risk of forfeiture.
(y) "Restricted Stock Unit" means a right granted to a Grantee
under Section 6(e) to receive Stock or cash at the end of a specified
deferral period, which right may be conditioned on the satisfaction of
specified performance or other criteria.
(z) "Rule 16b-3" means Rule 16b-3, as from time to time in effect
promulgated by the Securities and Exchange Commission under Section 16 of
the Exchange Act, including any successor to such Rule.
(aa) "Stock" means of the common stock, par value $0.01 per share,
of the Company.
(bb) "SAR" or "Stock Appreciation Right" means the right, granted to
a Grantee under Section 6(c), to be paid an amount measured by the
appreciation in the Fair Market Value of Stock from the date of grant to
the date of exercise of the right, with payment to be made in cash, Stock,
or property as specified in the Award or determined by the Committee.
(cc) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if, at the time of granting of an
Award, each of the corporations (other than the last corporation in the
unbroken chain) owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in
the chain.
ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee shall
have the authority in its discretion, subject to and not inconsistent with
the express provisions of the Plan, to administer the Plan and to exercise
all the powers and authorities either specifically granted to it under the
Plan or necessary or advisable in the administration of the Plan,
including, without limitation, the authority to grant Awards and make
Loans; to determine the persons to whom and the time or times at which
Awards shall be granted and Loans shall be made; to determine the type and
number of Awards to be granted and the amount of any Loan, the number of
shares of Stock to which an Award may relate and the terms, conditions,
restrictions and performance criteria relating to any Award or Loan; and to
determine whether, to what extent, and under what circumstances an Award
may be settled, cancelled, forfeited, exchanged, or surrendered; to make
adjustments in the terms and conditions of, and the criteria and
performance objectives (if any) included in, Awards and Loans in
recognition of unusual or non-recurring events affecting the Company or any
Subsidiary or Affiliate or the financial statements of the Company or any
Subsidiary or Affiliate, or in response to changes in applicable laws,
regulations, or accounting principles; to designate Affiliates; to construe
and interpret the Plan and any Award or Loan; to prescribe, amend and
rescind rules and regulations relating to the Plan; to determine the terms
and provisions of the Award Agreements and any promissory note or agreement
related to any Loan (which need not be identical for each Grantee); and to
make all other determinations deemed necessary or advisable for the
administration of the Plan.
The Committee may appoint a chairperson and a secretary and may make
such rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings. All determinations of
the Committee shall be made by a majority of its members either present in
person or participating by conference telephone at a meeting or by written
consent. The Committee may delegate to one or more of its members or to
one or more agents such administrative duties as it may deem advisable, and
the Committee or any person to whom it has delegated duties as aforesaid
may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan. All
decisions, determinations and interpretations of the Committee shall be
final and binding on all persons, including the Company, and any
Subsidiary, Affiliate or Grantee (or any person claiming any rights under
the Plan from or through any Grantee) and any stockholder.
No member of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any
Award granted or Loan made hereunder.
ELIGIBILITY.
Subject to the conditions set forth below, Awards [DELETED: and
Loans ] may be granted to directors (including non-employee directors),
selected employees and independent contractors of the Company and its
present or future Subsidiaries and Affiliates, AND LOANS MAY BE MADE TO ANY
ELIGIBLE PERSON, EXCEPT AS MAY BE PROHIBITED BY APPLICABLE LAW, RULE, OR
REGULATION, IN EACH CASE in the discretion of the Committee. In
determining the persons to whom Awards and Loans shall be granted and the
type of any Award or the amount of any Loan (including the number of shares
to be covered by such Award), the Committee shall take into account such
factors as the Committee shall deem relevant in connection with
accomplishing the purposes of the Plan.
STOCK SUBJECT TO THE PLAN.
The maximum number of shares of Stock reserved for the grant of
Awards under the Plan shall be 12,110,000 [DELETED: 9,110,000 ] shares of
Stock, subject to adjustment as provided herein. No more than 75,000 of
the total shares available for grant may be awarded to a single individual
in a single year. Such shares may, in whole or in part, be authorized but
unissued shares or shares that shall have been or may be reacquired by the
Company in the open market, in private transactions or otherwise. If any
shares subject to an Award are forfeited, cancelled, exchanged or
surrendered or if an Award otherwise terminates or expires without a
distribution of shares to the Grantee, the shares of Stock with respect to
such Award shall, to the extent of any such forfeiture, cancellation,
exchange, surrender, termination or expiration, again be available for
Awards under the Plan; PROVIDED THAT, in the case of forfeiture,
cancellation, exchange or surrender of shares of Restricted Stock or
Restricted Stock Units with respect to which dividends or Dividend
Equivalents have been paid or accrued, the number of shares with respect to
such Awards shall not be available for Awards hereunder unless, in the case
of shares with respect to which dividends or Dividend Equivalents were
accrued but unpaid, such dividends and Dividend Equivalents are also
forfeited, exchanged or surrendered. Upon the exercise of any Award
granted in tandem with any other Awards or Awards, such related Awards or
Awards shall be cancelled to the extent of the number of shares of Stock as
to which the Award is exercised and, notwithstanding the foregoing, such
number of shares shall no longer be available for Awards under the Plan.
In the event that the Committee shall determine that any dividend or
other distribution (whether in the form of cash, Stock, or other property),
recapitalization, Stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or
other similar corporate transaction or event, affects the Stock such that
an adjustment is appropriate in order to prevent dilution or enlargement of
the rights of Grantees under the Plan, then the Committee shall make such
equitable changes or adjustments as it deems necessary or appropriate to
any or all of (i) the number and kind of shares of Stock which may
thereafter be issued in connection with Awards, (ii) the number and kind of
shares of Stock issued or issuable in respect of outstanding Awards, and
(iii) the exercise price, grant price, or purchase price relating to any
Award; PROVIDED THAT, with respect to ISOs, such adjustment shall be made
in accordance with Section 424(h) of the Code.
SPECIFIC TERMS OF AWARDS.
(a) GENERAL. The term of each Award shall be for such period as
may be determined by the Committee. Subject to the terms of the Plan and
any applicable Award Agreement, payments to be made by the Company or a
Subsidiary or Affiliate upon the grant, maturation, or exercise of an Award
may be made in such forms as the Committee shall determine at the date of
grant or thereafter, including, without limitation, cash, Stock, or other
property, and may be made in a single payment or transfer, in installments,
or on a deferred basis. The Committee may make rules relating to
installment or deferred payments with respect to Awards, including the rate
of interest to be credited with respect to such payments. In addition to
the foregoing, the Committee may impose on any Award or the exercise
thereof, at the date of grant or thereafter, such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the
Committee shall determine.
(b) OPTIONS. The Committee is authorized to grant Options to
Grantees on the following terms and conditions:
(i) TYPE OF AWARD. The Award Agreement evidencing the grant
of an Option under the Plan shall designate the Option as an ISO or an
NQSO.
(ii) EXERCISE PRICE. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee; PROVIDED
THAT, in the case of an ISO, such exercise price shall be not less than the
Fair Market Value of a share on the date of grant of such Option, and in no
event shall the exercise price for the purchase of shares be less than par
value. The exercise price for Stock subject to an Option may be paid in
cash or by an exchange of Stock previously owned by the Grantee, or a
combination of both, in an amount having a combined value equal to such
exercise price. A Grantee may also elect to pay all or a portion of the
aggregate exercise price by having shares of Stock with a Fair Market Value
on the date of exercise equal to the aggregate exercise price withheld by
the Company or sold by a broker-dealer under circumstances meeting the
requirements of 12 C.F.R. Section 220 or any successor thereof.
(iii) TERM AND EXERCISABILITY OF OPTIONS. The date on which
the Committee adopts a resolution expressly granting an Option shall be
considered the day on which such Option is granted. Options shall be
exercisable over the exercise period (which shall not exceed ten years from
the date of grant), at such times and upon such conditions as the Committee
may determine, as reflected in the Award Agreement; PROVIDED THAT, the
Committee shall have the authority to accelerated the exercisability of any
outstanding Option at such time and under such circumstances as it, in its
sole discretion, deems appropriate. An Option may be exercised to the
extent of any or all full shares of Stock as to which the Option has become
exercisable, by giving written notice of such exercise to the Committee or
its designated agent.
(iv) TERMINATION OF EMPLOYMENT, ETC. An Option may not be
exercised unless the Grantee is then in the employ of, or then maintains an
independent contractor relationship with, the Company or a Subsidiary or an
Affiliate (or a company or a parent or subsidiary company of such company
issuing or assuming the Option in a transaction to which Section 424(a) of
the Code applies), and unless the Grantee has remained continuously so
employed, or continuously maintained such relationship, since the date of
grant of the Option; PROVIDED THAT, the Award Agreement may contain
provisions extending the exercisability of Options, in the event of
specified terminations, to a date not later than the expiration date of
such Option.
(v) OTHER PROVISIONS. Options may be subject to such other
conditions including, but not limited to, restrictions on transferability
of the shares acquired upon exercise of such Options, as the Committee may
prescribe in its discretion or as may be required by applicable law.
(c) SARs AND LIMITED SARs. The Committee is authorized to grant
BOTH STAND-ALONE AND IN-TANDEM SARs and Limited SARs to Grantees on the
following terms and conditions:
(i) IN GENERAL. Unless the Committee determines otherwise,
an SAR or a Limited SAR (1) granted in tandem with an NQSO may be granted
at the time of grant of the related NQSO or at any time thereafter or
(2) granted in tandem with an ISO may only be granted at the time of grant
of the related ISO. An SAR or Limited SAR granted in tandem with an Option
shall be exercisable only to the extent the underlying Option is
exercisable.
(ii) SARs. An SAR shall confer on the Grantee a right to
receive an amount with respect to each share subject thereto, upon exercise
thereof, equal to the excess of (1) the Fair Market Value of one share of
Stock on the date of exercise over (2) the grant price of the SAR (which in
the case of an SAR granted in tandem with an Option shall be equal to the
exercise price of the underlying Option, and which in the case of any other
SAR shall be such price as the Committee may determine).
(iii) LIMITED SARs. A Limited SAR shall confer on the Grantee
a right to receive with respect to each share subject thereto,
automatically upon the occurrence of a Change in Control, an amount equal
in value to the excess of (1) the Change in Control Price (in the case of a
LSAR granted in tandem with an ISO, the Fair Market Value), of one share of
Stock on the date of such Change in Control over (2) the grant price of the
Limited SAR (which in the case of a Limited SAR granted in tandem with an
Option shall be equal to the exercise price of the underlying Option, and
which in the case of any other Limited SAR shall be such price as the
Committee determines); PROVIDED THAT, in the case of a Limited SAR granted
to a Grantee who is subject to the reporting requirements of Section 16(a)
of the Exchange Act (a "Section 16 Individual"), such Section 16 Individual
shall only be entitled to receive such amount if such Limited SAR has been
outstanding for at least six (6) months as of the date of the Change in
Control.
(d) RESTRICTED STOCK. The Committee is authorized to grant
Restricted Stock to Grantees on the following terms and conditions:
(i) ISSUANCE AND RESTRICTIONS. Restricted Stock shall be
subject to such restrictions on transferability and other restrictions, if
any, as the Committee may impose at the date of grant or thereafter, which
restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, or otherwise, as the Committee
may determine. Such restrictions may include factors relating to the
increase in the value of the Stock or to individual or Company performance
such as the attainment of certain specified individual, divisional or
Company-wide performance goals, sales volume increases or decreases in
earnings per share. Except to the extent restricted under the Award
Agreement relating to the Restricted Stock, a Grantee granted Restricted
Stock shall have all of the rights of a stockholder including, without
limitation, the right to vote Restricted Stock and the right to receive
dividends thereon.
(ii) FORFEITURE. Upon termination of employment with or
service to the Company, or upon termination of the independent contractor
relationship, as the case may be, during the applicable restriction period,
Restricted Stock and any accrued but unpaid dividends or Dividend
Equivalents that are at that time subject to restrictions shall be
forfeited; PROVIDED THAT, the Committee may provide, by rule or regulation
or in any Award Agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from
specified causes, and the Committee may in other cases waive in whole or in
part the forfeiture of Restricted Stock.
(iii) CERTIFICATES FOR STOCK. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall determine.
If certificates representing Restricted Stock are registered in the name of
the Grantee, such certificates shall bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Restricted
Stock, and the Company shall retain physical possession of the certificate.
(iv) DIVIDENDS. Dividends paid on Restricted Stock shall be
either paid at the dividend payment date, or deferred for payment to such
date as determined by the Committee, in cash or in shares of unrestricted
Stock having a Fair Market Value equal to the amount of such dividends.
Stock distributed in connection with a stock split or stock dividend, and
other property distributed as a dividend, shall be subject to restrictions
and a risk of forfeiture to the same extent as the Restricted Stock with
respect to which such Stock or other property has been distributed.
(e) RESTRICTED STOCK UNITS. The Committee is authorized to grant
Restricted Stock Units to Grantees, subject to the following terms and
conditions:
(i) AWARD AND RESTRICTIONS. Delivery of Stock or cash, as
determined by the Committee, will occur upon expiration of the deferral
period specified for Restricted Stock Units by the Committee. In addition,
Restricted Stock Units shall be subject to such restrictions as the
Committee may impose, at the date of grant or thereafter, which
restrictions may lapse at the expiration of the deferral period or at
earlier or later specified times, separately or in combination, in
installments or otherwise, as the Committee may determine. Such
restrictions may include factors relating to the increase in the value of
the Stock or to individual or Company performance such as the attainment of
certain specified individual, divisional or Company-wide performance goals,
sales volume increases or increases in earnings per share.
(ii) FORFEITURE. Upon termination of employment or
termination of the independent contractor relationship during the
applicable deferral period or portion thereof to which forfeiture
conditions apply, or upon failure to satisfy any other conditions precedent
to the delivery of Stock or cash to which such Restricted Stock Units
relate, all Restricted Stock Units that are then subject to deferral or
restriction shall be forfeited; PROVIDED THAT, the Committee may provide,
by rule or regulation or in any Award Agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating to
Restricted Stock Units will be waived in whole or in part in the event of
termination resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of Restricted Stock Units.
(f) STOCK AWARDS IN LIEU OF CASH AWARDS. The Committee is
authorized to grant Stock as a bonus, or to grant other Awards, in lieu of
Company commitments to pay cash under other plans or compensatory
arrangements. Stock or Awards granted hereunder shall have such other
terms as shall be determined by the Committee.
(g) DIVIDEND EQUIVALENTS. The Committee is authorized to grant
Dividend Equivalents to Grantees. The Committee may provide, at the date
of grant or thereafter, that Dividend Equivalents shall be paid or
distributed when accrued or shall be deemed to have been reinvested in
additional Stock, or other investment vehicles as the Committee may
specify, provided that Dividend Equivalents (other than freestanding
Dividend Equivalents) shall be subject to all conditions and restrictions
on the underlying Awards to which they relate.
(h) PERFORMANCE SHARES AND OTHER STOCK- OR CASH-BASED AWARDS. The
Committee is authorized to grant to Grantees Performance Shares and/or
Other Stock-Based Awards or Other Cash-Based Awards as an element of or
supplement to any other Award under the Plan, as deemed by the Committee to
be consistent with the purposes of the Plan. Such Awards may be granted
with value and payment contingent upon performance of the Company or any
other factors designated by the Committee, or valued by reference to the
performance of specified Subsidiaries or Affiliates.
The Committee shall determine the terms and conditions of such Awards
at the date of grant or, to the extent permitted by Section 162(m) of the
Code, thereafter; PROVIDED THAT performance objectives for each year shall
be established by the Committee not later than the latest date permissible
under Section 162(m) of the Code. Such performance objectives may be
expressed in terms of one or more financial or other objective goals.
Financial goals may be expressed, for example, in terms of sales, earnings
per share, stock price, return on equity, net earnings growth, net
earnings, related return ratios, cash flow, earnings before interest,
taxes, depreciation and amortization (EBITDA), return on assets or total
stockholder return. Other objective goals may include the attainment of
various productivity and long-term growth objectives, including, without
limitation reductions in the Company's overhead ratio and expense to sales
ratios. Any criteria may be measured in absolute terms or as compared to
another corporation or corporations. To the extent applicable, any such
performance objective shall be determined (i) in accordance with the
Company's audited financial statements and generally accepted accounting
principles and reported upon by the Company's independent accountants or
(ii) so that a third party having knowledge of the relevant facts could
determine whether such performance objective is met. Performance
objectives shall include a threshold level of performance below which no
award payment shall be made, levels of performance above which specified
percentages of target Awards shall be paid, and a maximum level of
performance above which no additional Award shall be paid. Performance
objectives established by the Committee may be (but need not be) different
from year-to-year and different performance objectives may be applicable to
different Grantees.
CHANGE IN CONTROL PROVISIONS.
The following provisions shall apply in the event of a Change of Control
unless otherwise determined by the Committee or the Board in writing at or
after the grant of an Award, but prior to the occurrence of such Change in
Control:
(a) any Award carrying a right to exercise that was not previously
exercisable and vested shall become fully exercisable and vested;
(b) the restrictions, deferral limitations, payment conditions, and
forfeiture conditions applicable to any other Award granted under the Plan
shall lapse and such Awards shall be deemed fully vested, and any
performance conditions imposed with respect to Awards shall be deemed to be
fully achieved; and
(c) the value of all outstanding Awards shall, to the extent
determined by the Committee at or after grant, be cased out on the basis of
the Change of Control Price as of the date the Change of Control occurs or
such other date as the Committee may determine prior the Change of Control.
LOAN PROVISIONS.
Subject to the provisions of the Plan and all applicable federal and state
laws, rules and regulations (including the requirements of Regulation G
(12 C.F.R. Section 207)) AND THE RULES AND REGULATIONS OF ANY STOCK
EXCHANGE ON WHICH STOCK IS LISTED, the Committee shall have the authority
to make Loans to Grantees (on such terms and conditions as the Committee
shall determine), to enable such Grantees to purchase shares in connection
with the realization of Awards under the Plan. Loans shall be evidenced b
a promissory note or other agreement, signed by the borrower, which shall
contain provisions for repayment and such other terms and conditions as the
Committee shall determine.
SPECIAL NON-EMPLOYEE DIRECTOR AWARDS.
(a) RESTRICTED STOCK AND RESTRICTED STOCK UNITS
(i) ANNUAL GRANTS. In addition to any other Award granted
hereunder, as of the annual meeting of shareholders scheduled for May 27,
2004, non-employee directors of the Company will be granted the Restricted
Stock Units described in clauses (I) and (II) of this Section 9(a)(i) (the
"Automatic Restricted Stock Units"). The grants will be valued using the
closing price of a share of Stock on the first business day following each
annual meeting of stockholders and will vest 20% each year over five (5)
years:
(I) Each non-employee director (a "New Director") who,
is elected to the Board for the first time, will at the time such non-
employee director is elected and duly qualified, be granted automatically,
without action by the Committee, Restricted Stock Units with a value of
$50,000.00.
(II) On the first business day following each annual
meeting of stockholders, each non-employee director (other than a New
Director) who is continuing service as a member of the Board, will be
granted automatically, without action by the Committee, Restricted Stock
Units with a value of $50,000.00.
(ii) IN LIEU OF ANNUAL RETAINER. For the calendar year
beginning January 1, 2003, non-employee directors may elect to receive, in
lieu of any or all of their annual retainer for a calendar year, Restricted
Stock in increments of 5% (i.e., 5%, 10%, 15%, etc.) as follows:
(I) Non-employee directors can elect to receive their
Restricted Stock either:
i. during the calendar year in which the annual retainer is to be
earned, in quarterly installments equal to the percent of the
annual retainer elected to be received in Restricted Stock,
divided by four, divided by the price per share of Stock on the
last day of each quarter, prorated for any partial calendar
year or quarter (for administrative purposes, the Company may,
at its discretion, determine to distribute the Restricted Stock
on a quarterly basis or after the end of the year in which the
annual retainer was earned), or
ii. on a deferred basis:
a. until they retire from the Board,
b. ten (10) years from the date they retire from the Board,
c. for a period of not less than 1 year and not more than 10
years, in increments of 1 year, or
d. until they retire from their primary employment.
(II) Any election to defer Stock shall be made prior to
the year in which the annual retainer subject to deferral shall be paid and
shall be irrevocable. Any newly elected non-employee director shall have
five (5) days from the date of their election to the Board to elect to
defer any percentage hereunder. An election shall continue in effect until
revoked. Any Stock for which receipt is deferred shall be matched by the
Company by a number of shares equal to 25% of the value of the quarterly
amount so deferred, based on the price per share of Stock on the last day
of each quarter.
(b) OPTIONS.
(i) AUTOMATIC OPTIONS. Until the calendar year beginning
January 1, 2004, at which point this provision shall no longer be
applicable, in addition to any other Award granted hereunder, non-employee
directors of the Company will be granted the Options described in
clauses (i) and (ii) of this Section 9(b)(i) (the "Automatic Options"):
(I) Each non-employee director (a "New Director") who,
after the effective date of the Plan, is elected to the Board for the first
time, will at the time such non-employee director is elected and duly
qualified, be granted automatically, without action by the Committee, an
Option to purchase 5,000 shares of Stock.
(II) On the first business day following each annual
meeting of the stockholders', each non-employee director (other than a New
Director) who is continuing service as a member of the Board, will be
granted automatically, without action by the Committee, an Option to
purchase 5,000 shares of Stock.
(ii) ELECTED OPTIONS. Until the calendar year beginning
January 1, 2003, at which point this provision shall no longer be
applicable, each non-employee director could, at any time prior to the
commencement of any calendar year during which he or she was to serve as a
member of the Board, irrevocably elect to receive, in lieu of the annual
directors' retainer payable to such non-employee director with respect to
such calendar year (prorated for any partial calendar year, an Option (an
"Elected Option") to purchase shares of Stock. The number of shares of
Stock covered by an Elected Option received in lieu of an annual retainer
for 2002 shall be the number (rounded to the nearest whole number of
shares) equal to (i) the annual, or prorated, retainer divided by (ii) the
value per share of the Elected Option, which value shall be equal to thirty
three percent (33%) of the exercise price. An Elected Option shall be
granted on January 1 of the year following the year in which the annual
retainer to which it relates is earned.
(c) TERMS AND CONDITIONS OF OPTIONS. Automatic Options and Elected
Options shall be subject to the following specific terms and conditions
(and shall otherwise be subject to all other provisions of the Plan not in
conflict with this Section 9):
(i) Each Automatic Option and each Elected Option shall be a
NQSO.
(ii) The exercise price of Automatic Options shall be equal to
the Fair Market Value of the shares of Stock subject to such Automatic
Options on the date of grant. The exercise price of Elected Options shall
be equal to (i) the average closing price of the Stock on the national
securities exchange on which the Stock is principally traded on the last
trading day in March, June, September and December of the year in which the
annual retainer is earned, or (ii) if the shares of Stock are then traded
in an over-the-counter market, the average of the closing bid and asked
prices for the shares of Stock in such over-the-counter market on the last
trading day on which a trade occurs in March, June, September and December
of the year in which the annual retainer is earned, or (iii) if the shares
of Stock are not then listed on a national securities exchange or traded in
an over-the-counter market, such value as the Committee, in its sole
discretion, shall determine.
(iii) Automatic Options shall be exercisable as to twenty
percent (20%) of the Stock subject thereto on the first anniversary of the
date of grant, and shall become exercisable as to an additional twenty
percent (20%) of such shares on each of the second, third, fourth and fifth
anniversaries of such date of grant. Automatic Options shall be
exercisable for a period of ten (10) years from the date of grant of such
Option; PROVIDED THAT, the exercise period shall be subject to earlier
termination in accordance with the provisions of Section 6(b)(iv) hereof.
Elected Options shall be exercisable for a period ending ten (10) years
from the December 31st of the year in which the retainer was earned.
GENERAL PROVISIONS.
(a) APPROVAL [DELETED: BY BOARD ]. The Plan shall take effect
upon its adoption by the Board, SUBJECT TO APPROVAL BY THE STOCKHOLDERS OF
THE COMPANY IN THE MANNER AND TO THE DEGREE REQUIRED BY APPLICABLE LAW AND
REGULATIONS, INCLUDING THE RULES AND REGULATIONS OF ANY STOCK EXCHANGE ON
WHICH THE STOCK IS LISTED.
(b) NONTRANSFERABILITY. Awards shall not be transferable by a
Grantee except by will or the laws of descent and distribution or, if then
permitted under Rule 16b-3, pursuant to a qualified domestic relations
order as defined under the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder, and shall
be exercisable during the lifetime of a Grantee only by such Grantee or his
guardian or legal representative.
(c) NO RIGHT TO CONTINUED EMPLOYMENT, ETC. Nothing in the Plan or
in any Award or Loan granted or any Award Agreement, promissory note or
other agreement entered into pursuant hereto shall confer upon any Grantee
the right to continue in the employ of or to continue as an independent
contractor of the Company, any subsidiary or any Affiliate or to be
entitled to any remuneration or benefits not set forth in the Plan or such
Award Agreement, promissory note or other agreement or to interfere with or
limit in any way the right of the Company or any Subsidiary or Affiliate to
terminate such Grantee's employment or independent contractor relationship.
(d) TAXES. The Company or any Subsidiary or Affiliate is
authorized to withhold from any Award granted, any payment relating to an
Award under the Plan, including from a distribution of Stock, or any other
payment to a Grantee, amounts of withholding and other taxes due in
connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and
Grantees to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Grantee's tax obligations.
(e) AMENDMENT AND TERMINATION OF THE PLAN. The Board may at any
time and from time-to-time alter, amend, suspend, or terminate the Plan in
whole or in part. Notwithstanding the foregoing, no amendment shall affect
adversely any of the rights of any Grantee, without such Grantee's consent,
under any Award or Loan theretofore granted under the Plan.
THE COMPANY SHALL OBTAIN STOCKHOLDER APPROVAL OF ANY PLAN AMENDMENT
TO THE EXTENT NECESSARY OR DESIRABLE TO COMPLY WITH APPLICABLE LAW, RULE,
OR REGULATION. ADDITIONALLY, NOTWITHSTANDING ANYTHING IN THE PLAN TO THE
CONTRARY, THE BOARD MAY NOT, WITHOUT APPROVAL OF THE COMPANY'S
STOCKHOLDERS:
(i) MATERIALLY INCREASE THE NUMBER OF SHARES OF STOCK
ISSUABLE UNDER THE PLAN, EXCEPT FOR PERMISSIBLE ADJUSTMENT AS PROVIDED FOR
HEREIN; OR
(ii) REPRICE OPTIONS ISSUED UNDER THE PLAN BY LOWERING THE
EXERCISE PRICE OF A PREVIOUSLY GRANTED AWARD, BY CANCELING OUTSTANDING
OPTIONS AND ISSUING REPLACEMENTS, OR BY OTHERWISE REPLACING EXISTING
OPTIONS WITH SUBSTITUTE OPTIONS WITH A LOWER PRICE.
(f) NO RIGHTS TO AWARDS OR LOANS; NO STOCKHOLDER RIGHTS. No
Grantee shall have any claim to be granted any Award or Loan under the
Plan, and there is no obligation for uniformity of treatment of Grantees.
Except as provided specifically herein, a Grantee or a transferee of an
Award shall have no rights as a stockholder with respect to any shares
covered by the Award until the date of the issuance of a stock certificate
to him for such shares.
(g) UNFUNDED STATUS OF AWARDS. The Plan is intended to constitute
an "unfunded" plan for incentive and deferred compensation. With respect
to any payments not yet made to a Grantee pursuant to an Award, nothing
contained in the Plan or any Award shall give any such Grantee any rights
that are greater than those of a general creditor of the Company.
(h) NO FRACTIONAL SHARES. No fractional shares of Stock shall be
issued or delivered pursuant to the Plan or any Award. The Committee shall
determine whether cash, other Awards, or other property shall be issued or
paid in lieu of such fractional shares or whether such fractional shares or
any rights thereto shall be forfeited or otherwise eliminated.
(i) REGULATIONS AND OTHER APPROVALS.
(i) The obligation of the Company to sell or deliver Common
Stock with respect to any Award granted under the Plan shall be subject to
all applicable laws, rules and regulations, including all applicable
federal and state securities laws, and the obtaining of all such approvals
by governmental agencies as may be deemed necessary or appropriate by the
Committee.
(ii) Each Award is subject to the requirement that, if at any
time the Committee determines, in its absolute discretion, that the
listing, registration or qualification of Common Stock issuable pursuant to
the Plan is required by any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of, or in connection with, the
grant of an Award or the issuance of Common Stock, no such Award shall be
granted or payment made or Common Stock issued, in whole or in part, unless
listing, registration, qualification, consent or approval has been effected
or obtained free of any conditions not acceptable to the Committee.
(iii) In the event that the disposition of Common Stock
acquired pursuant to the Plan is not covered by a then current registration
statement under the Securities Act and is not otherwise exempt from such
registration, such Common Stock shall be restricted against transfer to the
extent required by the Securities Act or regulations thereunder, and the
Committee may require a Grantee receiving Common Stock pursuant to the
Plan, as a condition precedent to receipt of such Common Stock, to
represent to the Company in writing that the Common Stock acquired by such
Grantee is acquired for investment only and not with a view to
distribution.
(j) GOVERNING LAW. The Plan and all determinations made and
actions taken pursuant hereto shall be governed by the laws of the State of
Maryland without giving effect to the conflict of laws principles thereof.
APPENDIX II
PROPOSED FORM OF AMENDMENT TO THE ARTICLES OF INCORPORATION
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
JONES LANG LASALLE INCORPORATED
Jones Lang LaSalle Incorporated, a Maryland corporation having its
principal office in the City of Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by striking
out Article 5(c) and Article 5(f) of the Articles of Incorporation and
inserting in lieu thereof the following:
FIFTH:
(c) Except with respect to directors who may be elected by the
holders of any class or series of Common Stock or Preferred Stock, at
the 2006 annual meeting of stockholders, the successors of the
directors whose terms expire at that meeting shall be elected for a
term expiring at the 2007 annual meeting of stockholders; at the 2007
annual meeting of stockholders, the successors of the directors whose
terms expire at that meeting shall be elected for a term expiring at
the 2008 annual meeting of stockholders; and at each annual meeting
of stockholders thereafter, the directors shall be elected for terms
expiring at the next annual meeting of the stockholders.
(f) Subject to the terms of any one or more other classes or
series of Common Stock or Preferred Stock, any vacancy on the Board
of Directors that results from an increase in the number of directors
may be filled by a majority of the entire Board of Directors and any
other vacancy occurring on the Board of Directors may be filled by a
majority of the remaining Directors, even if less than a quorum, or
by a sole remaining director. Any vacancy on the Board of Directors
which results from the removal of a director may also be filled by
the stockholders. Any director of any class elected by the
stockholders to fill a vacancy resulting from the removal of a
director of such class shall serve for the balance of the term of the
removed director. Any director elected by the Board of Directors to
fill a vacancy shall serve until the next annual meeting of
stockholders and until his successor is elected and qualifies.
Notwithstanding the foregoing, whenever the holders of any one or
more classes or series of Preferred Stock or one or more other
classes or series of Common Stock shall have the right, voting
separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office,
filling of vacancies and other features of such directorships shall
be governed by the terms of this Charter applicable thereto.
SECOND: The charter of the Corporation is hereby amended by
adding the following Article 5(h):
FIFTH:
(h) Subject to the rights, if any, of the holders of shares of
Preferred Stock or shares of any other class or series of Common
Stock then outstanding, any director of the Corporation may be
removed from office at any time, but only for cause (as such term
would be construed under Section 2-406(a) of the MGCL, or any
successor provision) and only by affirmative vote of the holders of
at least two-thirds (2/3) of the voting power of the Corporation's
then outstanding capital stock entitled to vote generally in the
election of directors.
THIRD: The charter of the Corporation is hereby amended by striking
out Article 14 of the Articles of Incorporation and inserting in lieu
thereof the following:
FOURTEENTH: The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Charter in
the manner now or hereafter prescribed in this Charter, the Bylaws of
the Corporation or the MGCL, and all rights herein conferred upon the
stockholders are granted subject to such reservation; provided,
however, that notwithstanding anything else in this Charter to the
contrary, the affirmative vote of the holders of at least eighty
percent (80%) of the then outstanding shares of Common Stock shall be
required to change Article FIFTH paragraph (h), Article SIXTH,
Article SEVENTH, Article NINTH, Article TWELFTH, Article THIRTEENTH
or this Article FOURTEENTH and, to the extent permissible under the
MGCL, the affirmative vote of the holders of at least a majority of
the then outstanding shares of Common Stock voting as a single class
shall be required to change any other provision contained in this
Charter.
FOURTH: The amendment of the charter of the Corporation as
hereinabove set forth has been duly advised by the board of directors and
approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, Jones Lang LaSalle Incorporated has caused these
Articles of Amendment to be signed in its name and on its behalf as of the
___ day of ____________________, 2005.
JONES LANG LASALLE INCORPORATED
By:
------------------------------
Its: Executive Vice President
ATTEST:
By:
------------------------------
Its: Secretary
THE UNDERSIGNED, in connection with the foregoing Articles of
Amendment, of which this certificate is made a part, hereby acknowledge, in
the name and on behalf of the Corporation, the foregoing Articles of
Amendment, of which this certificate is made a part, to be the corporate
act of the Corporation and further certify that, to the best of their
knowledge, information, and belief, the matters and facts set forth therein
with respect to the approval thereof are true in all material respects,
under the penalties of perjury.
------------------------------ ------------------------------
Vice President Assistant Secretary
JONES LANG
LASALLE
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