BEDFORD PROPERTY INVESTORS INC/MD - Proxy Statement (definitive) (DEF 14A) Compensation of Directors

Compensation of Directors

During 2004 and prior to March 23, 2005, members of the Board who were not employees of the Company were paid an annual retainer fee of $20,000 and an additional fee of $2,500 for each board meeting attended. Any non-employee director attending in person a duly constituted meeting of a committee of the Board of which such director was a member received, in addition to any other fees to which he may have been entitled, a separate meeting attendance fee equal to $1,000 for his attendance in person at any such committee meeting not held on the same day, the day preceding or the day following a

regular or special meeting of the Board. Any non-employee member of the Board who participated in a regular or special meeting of the Board by conference telephone or similar communications equipment received $600 for each such meeting. The chairman of the Audit Committee received an additional $8,000 annually for work on that committee. The chairman of the Compensation Committee received an additional $3,000 annually for work on that committee. The chairman of the Nominating and Corporate Governance Committee received an additional $3,000 annually for work on that committee. On March 23, 2005, the Compensation Committee recommended, and the Board approved, effective as of March 23, 2005, the following revised cash payments to non-employee members of the Board and its committees: (i) members of the Board who are not employees of the Company will be paid an annual retainer of $25,000 and an additional fee of $2,500 for each regular Board meeting attended and $1,000 for each special Board meeting attended (in each case, whether attended in person or by telephone); (ii) each member of the Audit Committee, Compensation Committee and Investment Committee will be paid an attendance fee of $1,000, and each member of the Nominating and Corporate Governance Committee will be paid an attendance fee of $500, for each committee meeting attended (whether by person or by telephone) by such member, including for attendance at committee meetings held on the same day as a regularly scheduled Board meeting; and (iii) the chairman of each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee will receive an additional annual payment of $10,000, $5,000 and $3,000, respectively, for their work on those committees. Non-employee directors are reimbursed for out-of-pocket expenses in connection with attendance of meetings. If a non-employee director travels to conduct a site inspection of a property to be acquired by the Company, such director is paid $1,000 per day and reimbursed for related travel expenses. Non-employee directors receive no other cash compensation for their services on behalf of the Company.

Pursuant to the Company’s Amended and Restated 2002 Directors’ Stock Plan, all directors (whether or not employed by the Company) receive annual grants of 1,000 shares of restricted Common Stock upon reelection, and newly elected members receive 2,000 shares of restricted Common Stock upon their election to the Board. These shares vest in equal installments over a five year period, subject to the director’s continued service with the Company. In addition, under this plan directors may defer receipt of all or part of their annual retainer and meeting fees and convert them into either phantom cash amounts or phantom stock units, or both, which are credited to such director’s account with the Company. During 2004, Messrs. Frank, Linneman and McCoy elected to have their annual retainer and meeting fees deferred pursuant to this plan and converted into phantom stock units representing 6,717, 1,642 and 1,338 shares of Common Stock, respectively. The number of phantom stock units credited to a director’s account is determined by dividing the amount of the deferred fees by the fair market value of a share of Common Stock as of the date of crediting. Phantom stock units are settled by the delivery to the director of a corresponding number of shares of Common Stock on the payment date selected by the director at the time of deferral of the fees .

During 2004, for the reasons set forth in the Compensation Committee Report on Executive Compensation (the “Compensation Committee Report”) below, the Board determined that directors should be permitted to exchange their vested options to acquire shares of Common Stock for restricted shares of Common Stock, pursuant to the Company’s option exchange program, on the same basis as the employees of the Company. All of the directors holding vested options elected to exchange those options for restricted stock. The number of options surrendered by, and the number of restricted shares issued to, such directors in the exchange are set forth in the table below.

Director	Number of Shares of Common Stock Underlying Options Surrendered		Number of Shares of Restricted Common Stock Issued in Option Exchange
Peter Bedford ⁽¹⁾		135,000		45,240
Anthony Frank		80,000		28,692
Thomas Nolan		30,000		6,796
Martin Zankel		20,000		2,806

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(1)

Mr. Bedford exchanged vested options awarded under the Amended and Restated 2002 Directors’ Stock Plan and under the 2003 Employee Stock Plan.

The terms of the option exchange program, including the vesting schedule applicable to the shares of restricted stock, are discussed in the Compensation Committee Report, below.