Since Timothy H. Callahan's sudden resignation for "personal reasons" in April, chairman Sam Zell has been serving as president and chief executive officer, indicating during Equity Office Properties' second-quarter conference call Tuesday he may continue to hold down those jobs through the end of the year.

"From the very beginning, I've been a one-man band saying what these companies (including Equity Residential Trust) are turning into are major operating companies," Zell says.

Equity Office Properties has no shortage of real estate talent and experience, Zell says, but the REIT needs a top manager who can harness it into a team that gets a greater return out of the 127-million-sf office portfolio.

"We need the right kind of leadership, the right kind of experience in grooming and making a large entity function," Zell adds.The REIT's search committee has been impressed with the number of candidates from within and outside the industry, Zell says, but he may be presiding over at least one more quarterly earnings report. "Our focus is on finding the right person and the critical qualities we're looking for," Zell explains. "We intend to take whatever time is necessary to satisfy ourselves that we've gotten the right person."

Meanwhile, Equity Office Properties and Callahan signed a severance agreement calling for him to be paid one year's salary and bonus as well an additional year of vesting for stock options. The REIT paid out $900,000 to Callahan in the second quarter, reports chief operating officer Richard D. Kincaid, as well as $3.4 million to two acquisitions executives who left with the former boss.

"We're very happy that this situation is resolved," Zell says. "We're very happy that our focus is on going forward."

Zell already observes more teamwork in action. "I'm seeing the senior people in the company working together like they haven't before," he notes.

Instant Insights /

Zell to Hold Equity Office Reins a Bit Longer

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