8-KMaterial Agreements

ESSEX PROPERTY TRUST, INC. 8-K Report, Agreement Terminated (Jan 4, 2006)

Filed January 4, 2006For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) filed an 8-K on January 4, 2006, to report the termination and forgiveness of loans previously made by its Operating Partnership, Essex Portfolio, L.P., to its senior executives, Keith Guericke (CEO) and Michael J. Schall (COO). These loans, originally totaling $75,000 each to Mr. Guericke and $50,000 each to Mr. Schall in 1996, were intended to assist them with tax liabilities related to their ownership interests. The loans, with an 8% non-compounded interest rate, were due in 2006. The Compensation Committee of Essex's Board of Directors approved the cancellation and forgiveness of both principal and accrued interest, effective January 2, 2006. This action was taken as part of the compensation packages for these executives, who have since transitioned into new roles within the company. As of the forgiveness date, the outstanding principal and interest for Mr. Guericke totaled $150,000 and approximately $112,341, respectively, while for Mr. Schall, the principal was $100,000 and accrued interest was approximately $74,893.

Key Highlights

  • 1Termination and forgiveness of material loans made to senior executives (CEO and COO).
  • 2Loans originated in 1996 by Essex Portfolio, L.P. to Keith Guericke and Michael J. Schall.
  • 3Total principal forgiven: $150,000 for Mr. Guericke and $100,000 for Mr. Schall.
  • 4Total accrued interest forgiven: Approx. $112,341 for Mr. Guericke and $74,893 for Mr. Schall.
  • 5Loans carried an 8% non-compounded annual interest rate.
  • 6Forgiveness was approved by the Compensation Committee as part of executive compensation packages.
  • 7Effective date of termination and forgiveness: January 2, 2006.

Frequently Asked Questions

The 8-K filing was to report the termination and complete forgiveness of loans that Essex Portfolio, L.P. (the Operating Partnership) had made to its Chief Executive Officer, Keith Guericke, and Chief Operating Officer, Michael J. Schall, back in 1996. This action was formalized on January 2, 2006.

In 1996, two loans of $75,000 each were made to Mr. Guericke ($150,000 total principal) and two loans of $50,000 each were made to Mr. Schall ($100,000 total principal). As of January 2, 2006, the total amount forgiven included the principal plus accrued interest. For Mr. Guericke, this amounted to $150,000 in principal and approximately $112,341 in interest. For Mr. Schall, it was $100,000 in principal and approximately $74,893 in interest.

The Compensation Committee of Essex's Board of Directors approved the forgiveness as part of the compensation packages for Mr. Guericke and Mr. Schall. The loans were originally intended to assist the officers with tax liabilities related to their ownership interests in the Operating Partnership.

The loans bore interest at a rate of 8% per annum, non-compounded. They were originally due to be repaid ten years after they were made, which was in 2006.