Edgar Filing: PUBLIC STORAGE INC /CA

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934

Filed by the registrant |X|
Filed by a party other than the registrant | |

PUBLIC STORAGE, INC.
--------------------
(Name of Registrant as Specified in Its Charter)

---------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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|X| No fee required.

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PUBLIC STORAGE, INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

MAY 9, 2002

The Annual Meeting of Shareholders of Public Storage, Inc., a
California corporation (the "Company"), will be held at the Hilton Glendale, 100
West Glenoaks Boulevard, Glendale, California, on May 9, 2002, at the hour of
1:00 p.m. Los Angeles time, for the following purposes:

1. To elect directors for the ensuing year.

2. To vote upon amendments to the Certificates of
Determination of various series of Preferred Stock of
the Company to reclassify the shares of each of such
series into redesignated series of Preferred Stock
upon approval by the holders of 662/3% of the shares
of an affected series.

3. To consider and act upon such other matters as may
properly come before the meeting or any adjournment
of the meeting.

The Board of Directors has determined that only holders of
record of Common Stock and Depositary Shares ("Depositary Shares") Each
Representing 1/1,000 of a Share of Equity Stock, Series A ("Equity Stock") at
the close of business on March 15, 2002 will be entitled to receive notice of,
and to vote at, the meeting or any adjournment of the meeting. Each Depositary
Share represents 1/1,000 of a share of Equity Stock, which has been deposited
with EquiServe Trust Company, N. A., as Depositary (the "Depositary").

Please mark your vote on the enclosed Proxy/Instruction Card,
then date, sign and promptly mail the Proxy/Instruction Card in the stamped
return envelope included with these materials.

Holders of record of Common Stock and Depositary Shares are
cordially invited to attend the meeting in person. If a holder of Common Stock
and/or Depositary Shares does attend and has already signed and returned the
Proxy/Instruction Card, the holder may nevertheless change his or her vote at
the meeting, in which case the holder's Proxy/Instruction Card will be
disregarded. Therefore, whether or not you presently intend to attend the
meeting in person, you are urged to mark your vote on the Proxy/Instruction
Card, date, sign and return it.

By Order of the Board of Directors

David Goldberg, Secretary

Glendale, California
April 9, 2002

PUBLIC STORAGE, INC.

701 Western Avenue
Glendale, California 91201-2349

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

May 9, 2002

GENERAL

This Proxy Statement (first mailed to shareholders on or about
April 11, 2002) is furnished in connection with the solicitation by the Board of
Directors of Public Storage, Inc. (the "Company") of proxies for use at the
Company's Annual Meeting of Shareholders to be held at the Hilton Glendale, 100
West Glenoaks Boulevard, Glendale, California at 1:00 p.m. Los Angeles time on
May 9, 2002 or at any adjournment of the meeting. The purposes of the meeting
are: (1) to elect ten directors of the Company; (2) to vote upon amendments to
the Certificates of Determination of various series of Preferred Stock of the
Company to reclassify the shares of each of such series into redesignated series
of Preferred Stock upon approval by the holders of 662/3% of the shares of an
affected series; and (3) to consider such other business as may properly be
brought before the meeting or any adjournment of the meeting.

QUORUM AND VOTING

Record Date and Quorum

Only holders of record of Common Stock and Depositary Shares
("Depositary Shares") Each Representing 1/1,000 of a Share of Equity Stock,
Series A ("Equity Stock") at the close of business on March 15, 2002 (the
"Record Date") will be entitled to vote at the meeting, or at any adjournment of
the meeting. Each Depositary Share represents 1/1,000 of one share of Equity
Stock. The Equity Stock has been deposited with EquiServe Trust Company, N. A.,
as Depositary (the "Depositary"). On the Record Date, the Company had
115,778,875 shares of Common Stock issued and outstanding and 8,776,102
Depositary Shares, representing 8,776.102 shares of Equity Stock, issued and
outstanding.

The presence at the meeting in person or by proxy of the
holders of a majority of the voting power represented by the outstanding shares
of Common Stock and Equity Stock, counted together as a single class, is
necessary to constitute a quorum for the transaction of business.

Voting of Proxy/Instruction Card

If a Proxy/Instruction Card in the accompanying form is
properly executed and is received before the voting, the persons designated as
proxies will vote the shares of Common Stock represented thereby, if any, in the
manner specified, and the Depositary will vote the Equity Stock underlying the
Depositary Shares represented thereby, if any, in the manner specified. If no
specification is made, the persons designated as proxies will vote the shares of
Common Stock represented by the Proxy/Instruction Card, if any, and the
Depositary will vote the Equity Stock underlying the Depositary Shares
represented by the Proxy/Instruction Card, if any, FOR the election as directors
of the nominees named below and for the approval of proposal (2). If any nominee
becomes unavailable to serve, the persons designated as proxies and the
Depositary will vote for the person, if any, designated by the Board of
Directors to replace that nominee. A Proxy/Instruction Card is revocable by
delivering a subsequently signed and dated Proxy/Instruction Card or other
written notice to the Company or the Depositary at any time before the voting. A
Proxy/Instruction Card may also be revoked if the person executing the
Proxy/Instruction Card is present at the meeting and chooses to vote in person.

If you participate in the PS 401(k)/Profit Sharing Plan (the
"401(k) Plan"), your Proxy/Instruction Card will also serve as a voting
instruction for the trustee of the 401(k) Plan (the "Trustee") with respect to

the amount of shares of Common Stock and/or Depositary Shares credited to your
account as of the Record Date. If you provide voting instructions via your
Proxy/Instruction Card with respect to shares in the 401(k) Plan, the Trustee
will vote those shares of Common Stock in the manner specified and/or the
Trustee will instruct the Depositary to vote the Equity Stock underlying those
Depositary Shares in the manner specified. If you execute and return the
Proxy/Instruction Card without a specific voting instruction with respect to
shares in the 401(k) Plan, the Trustee will vote those shares of Common Stock,
and will instruct the Depositary to vote the Equity Stock underlying those
Depositary Shares, FOR the election as directors of the nominees named below and
for the approval of proposal (2). If a properly executed Proxy/Instruction Card
with respect to shares in the 401(k) Plan is not received by the Trustee, the
Trustee will vote those shares of Common Stock at its discretion and/or the
Trustee at its discretion will instruct the Depositary with respect to the
voting of the Equity Stock underlying those Depositary Shares.

Holders of Common Stock and holders of Equity Stock vote
together as one class. With respect to the election of directors, (i) each
holder of Common Stock on the Record Date is entitled to cast as many votes as
there are directors to be elected multiplied by the number of shares registered
in his name on the Record Date and (ii) each holder of Equity Stock is entitled
to cast as many votes as there are directors to be elected multiplied by 100
times the number of shares of Equity Stock registered in its name (equivalent to
1/10 the number of Depositary Shares registered in the holder's name). The
holder may cumulate his votes for directors by casting all of his votes for one
candidate or by distributing his votes among as many candidates as he chooses.
The ten candidates who receive the most votes will be elected directors of the
Company. In voting upon proposal (2) and any other proposal that might properly
come before the meeting, each outstanding share of Common Stock entitles the
holder to one vote and each outstanding share of Equity Stock entitles the
holder to 100 votes (equivalent to 1/10 of a vote per Depositary Share). The
number of votes required to approve proposal (2) is set forth in the description
of the proposal in this Proxy Statement.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

Ten directors, constituting the entire Board of Directors, are
to be elected at the Annual Meeting of Shareholders, to hold office until the
next annual meeting and until their successors are elected and qualified. When
the accompanying Proxy/Instruction Card is properly executed and returned before
the voting, the persons designated as proxies and the Trustee will vote the
shares of Common Stock represented thereby, if any, and the Depositary will vote
the Equity Stock underlying the Depositary Shares represented thereby, if any,
in the manner indicated on the Proxy/Instruction Card. If any nominee below
becomes unavailable for any reason or if any vacancy on the Company's Board of
Directors occurs before the election, the shares of Common Stock and/or the
shares of Equity Stock underlying Depositary Shares represented by a
Proxy/Instruction Card voted for that nominee, will be voted for the person, if
any, designated by the Board of Directors to replace the nominee or to fill the
vacancy on the Board. However, the Board of Directors has no reason to believe
that any nominee will be unavailable or that any vacancy on the Board of
Directors will occur. The following persons are nominees for director:

Name Age Director Since

B. Wayne Hughes 68 1980
Harvey Lenkin 65 1991
Marvin M. Lotz 59 1999
B. Wayne Hughes, Jr. 42 1998
Robert J. Abernethy 62 1980
Dann V. Angeloff 66 1980
William C. Baker 68 1991
Thomas J. Barrack, Jr. 54 1998
Uri P. Harkham 53 1993
Daniel C. Staton 49 1999

B. Wayne Hughes has been a director of the Company since its
organization in 1980 and was President and Co-Chief Executive Officer from 1980
until November 1991 when he became Chairman of Board and sole Chief Executive
Officer. Mr. Hughes was Chairman of the Board and Chief Executive Officer from
1990 until March 1998 of Public Storage Properties XI, Inc., which was renamed
PS Business Parks, Inc. ("PSBP"), an affiliated REIT. From 1989-90 until the
respective dates of merger, he was Chairman of the Board and Chief Executive
Officer of 18 affiliated REITs that were merged into the Company between
September 1994 and May 1998 (collectively, the "Merged Public Storage REITs").
Mr. Hughes has been active in the real estate investment field for over 30
years. He is the father of B. Wayne Hughes, Jr.

Harvey Lenkin became President and a director of the Company
in November 1991. Mr. Lenkin has been employed by the Company for 24 years. He
has been a director of PSBP since March 1998 and was President of PSBP (formerly
Public Storage Properties XI, Inc.) from 1990 until March 1998. Mr. Lenkin was
President of the Merged Public Storage REITs from 1989-90 until the respective
dates of merger and was also a director of one of those REITs, Storage
Properties, Inc. ("SPI"), from 1989 until June 1996. He is a member of the
Executive Committee of the Board of Governors of the National Association of
Real Estate Investment Trusts, Inc. (NAREIT).

Marvin M. Lotz became a director of the Company in May 1999.
Mr. Lotz has been a Senior Vice President of the Company since November 1995 and
President of the Property Management Division since 1988 with overall
responsibility for the Company's mini-warehouse operations. He had overall
responsibility for the Company's property acquisitions from 1983 until 1988.

B. Wayne Hughes, Jr. became a director of the Company in
January 1998. He has been employed by the Company since 1989 and has been Vice
President - Acquisitions of the Company since 1992. Mr. Hughes, Jr. is involved
in the coordination and direction of the Company's acquisition and development
activities and is also president of a firm that manufacturers and distributes
sweets. He is the son of B. Wayne Hughes.

Robert J. Abernethy, Chairman of the Audit Committee, has been
President of American Standard Development Company and of Self-Storage
Management Company, which develop and operate mini-warehouses, since 1976 and
1977, respectively. Mr. Abernethy has been a director of the Company since its
organization. He is a member of the board of trustees of Johns Hopkins
University, a director of Marathon National Bank, a member of the California
State Board of Education and California State Arts Council and a former
California Transportation Commissioner. Mr. Abernethy is a former member of the
board of directors of the Los Angeles County Metropolitan Transportation
Authority and the Metropolitan Water District of Southern California, a former
Planning Commissioner and Telecommunications Commissioner and the former
Vice-Chairman of the Economic Development Commission of the City of Los Angeles.

Dann V. Angeloff has been President of the Angeloff Company, a
corporate financial advisory firm, since 1976. The Angeloff Company has
rendered, and is expected to continue to render, financial advisory and
securities brokerage services for the Company. Mr. Angeloff is the general
partner of a limited partnership that owns a mini-warehouse operated by the
Company and which secures a note owned by the Company. Mr. Angeloff has been a
director of the Company since its organization. He is a director of AremisSoft
Corporation, Balboa Capital Corporation, Nicholas/Applegate Fund, ReadyPac
Produce, Inc., Royce Medical Company and xDimentional Technologies, Inc. He was
a director of SPI from 1989 until June 1996.

William C. Baker, a member of the Audit Committee and Chairman
of the Executive Equity Awards Committee, became a director of the Company in
November 1991. Since 1970, Mr. Baker has been a partner in Baker & Simpson, a
private investment entity. From August 1998 through April 2000, he was President
and Treasurer of Meditrust Operating Company, a real estate investment trust.
From April 1996 to December 1998, Mr. Baker was Chief Executive Officer of Santa
Anita Companies, which then operated the Santa Anita Racetrack. From April 1993
through May 1995, he was President of Red Robin International, Inc., an operator
and franchisor of casual dining restaurants in the United States and Canada.
From January 1992 through December 1995, Mr. Baker was Chairman and Chief
Executive Officer of Carolina Restaurant Enterprises, Inc., a franchisee of Red
Robin International, Inc. From 1991 to 1999, he was Chairman of the Board of
Coast Newport Properties, a real estate brokerage company. From 1976 to 1988,
Mr. Baker was a principal shareholder and Chairman and Chief Executive Officer

of Del Taco, Inc., an operator and franchisor of fast food restaurants in
California. He is a director of Callaway Golf Company and La Quinta, Inc.

Thomas J. Barrack, Jr. became a director of the Company in
February 1998. Since 1991, Mr. Barrack has been Chairman and Chief Executive
Officer of Colony Capital, LLC and Colony Advisors, LLC, which are international
real estate investment and management firms. Mr. Barrack is a director of
Continental Airlines, Inc., Kennedy-Wilson, Inc. and First Republic Bank.

Uri P. Harkham became a director of the Company in March 1993.
Mr. Harkham has been the President and Chief Executive Officer of the Jonathan
Martin Fashion Group, which specializes in designing, manufacturing and
marketing women's clothing, since its organization in 1976. Since 1978, Mr.
Harkham has been the Chairman of the Board of Harkham Properties, a real estate
firm specializing in buying and managing fashion warehouses in Los Angeles.

Daniel C. Staton, a member of the Audit Committee and of the
Executive Equity Awards Committee, became a director of the Company in March
1999 in connection with the merger of Storage Trust Realty, a real estate
investment trust, with the Company. Mr. Staton was Chairman of the Board of
Trustees of Storage Trust Realty from February 1998 until March 1999 and a
Trustee of Storage Trust Realty from November 1994 until March 1999. He is
President of Walnut Capital Partners, an investment and venture capital company.
Mr. Staton was the Chief Operating Officer and Executive Vice President of Duke
Realty Investments, Inc. from 1993 to 1997 and a director of Duke Realty
Investments, Inc. from 1993 until August 1999. From 1981 to 1993, Mr. Staton was
a principal owner of Duke Associates, the predecessor of Duke Realty
Investments, Inc. Prior to joining Duke Associates in 1981, he was a partner and
general manager of his own moving company, Gateway Van & Storage, Inc. in St.
Louis, Missouri. From 1986 to 1988, Mr. Staton served as president of the
Greater Cincinnati Chapter of the National Association of Industrial and Office
Parks.

Directors and Committee Meetings

During 2001, the Board of Directors held nine meetings (and
acted once by unanimous written consent), the Audit Committee held four meetings
and the Executive Equity Awards Committee acted once by unanimous written
consent. During 2001, each of the directors, except for Thomas J. Barrack, Jr.
and Uri P. Harkham, attended at least 75% of the meetings held by the Board of
Directors or, if a member of a committee of the Board of Directors, held by both
the Board of Directors and all committees of the Board of Directors on which he
served.

The primary functions of the Audit Committee are to meet with
the Company's outside auditors, to conduct a pre-audit review of the audit
engagement, to conduct a post-audit review of the results of the audit, to
oversee the Company's accounting and financial reporting policies, to monitor
the adequacy of internal financial controls of the Company, to review the
independence of the outside auditors and to make recommendations to the Board of
Directors regarding the appointment and retention of auditors. The Company does
not have a compensation or a nominating committee. Executive officers receive
grants of awards under the Stock Option and Incentive Plans with the approval of
the Executive Equity Awards Committee.

Security Ownership of Certain Beneficial Owners

The following table sets forth information as of the dates
indicated with respect to persons known to the Company to be the beneficial
owners of more than 5% of the outstanding shares of the Common Stock ("Common
Shares") or the Depositary Shares:

Depositary Shares Each
Representing 1/1,000 of a
Shares of Common Stock Share of Equity Stock,
Beneficially Owned Series A Beneficially Owned
--------------------------- ---------------------------
Number Percent Number Percent
Name and Address of Shares of Class of Shares of Class
----------------------------------------------- ----------- ---------- ----------- ----------

B. Wayne Hughes, B. Wayne Hughes,
Jr., Tamara Hughes Gustavson, 39,270,339 33.9% 1,282,097 14.6%
701 Western Avenue,
Glendale, California 91201-2349 (1)

Cohen Steers Capital Management, Inc. (3) (3) 877,300 10.0%
757 Third Avenue
New York, New York 10017 (2)

----------------

(1) This information is as of February 28, 2002 (except that the percent
shown in the table is based on the Common Shares outstanding at March
15, 2002). Each of the persons listed above disclaims beneficial
ownership of the shares owned by any other person listed above. For
information on share ownership of B. Wayne Hughes and B. Wayne Hughes,
Jr. see "Security Ownership of Management." (Tamara Hughes Gustavson
beneficially owns an aggregate of 17,434,260 Common Shares (exclusive
of 11,348 shares owned jointly with Mr. Hughes, Jr.) and 1,192,923
Depositary Shares (exclusive of 43 shares owned jointly with Mr.
Hughes, Jr.) or approximately 15.1% of the Common Shares and 13.6% of
the Depositary Shares outstanding as of March 15, 2002).

The above table does not include 7,000,000 shares of the Company's Class
B Common Stock which are owned by B. Wayne Hughes, Jr. and Tamara Hughes
Gustavson. The Class B Common Stock is convertible into Common Stock on
a share-for-share basis upon satisfaction of certain conditions, but in
no event earlier than January 1, 2003.

(2) This information is as of December 31, 2001 (except that the percent
shown is based on the Depositary Shares outstanding at March 15, 2002)
and is based on a Schedule 13G filed by Cohen & Steers Capital
Management, Inc. ("CSCM"), an investment adviser registered under the
Investment Advisers Act of 1940. CSCM has sole voting power of 850,500
Depositary Shares and sole dispositive power of 877,300 Depositary
Shares.

(3) Less than 5%.

Security Ownership of Management

The following table sets forth information as of February 28,
2002 concerning the beneficial ownership of the Common Shares and the Depositary
Shares of each director of the Company, the Company's Chief Executive Officer,
the four most highly compensated persons who were executive officers of the
Company on December 31, 2001 and all directors and executive officers as a
group:

Shares of Common Stock: Depositary Shares Each Representing
Beneficially Owned(1) 1/1,000 of a Share of Equity Stock,
Shares Subject to Options(2) Series A Beneficially Owned
------------------------------------------- -----------------------------------------
Name Number of Shares Percent Number of Shares Percent
------------------------------ ------------------------ --------- ------------------------ ---------

B. Wayne Hughes 20,646,824 17.8% 54,313 .6%

Harvey Lenkin 97,437(3) * 3,303(3) *
215,332(2) .2%
------- ---
312,769 .3%

Marvin M. Lotz 77,258 * 5,336 *
170,332(2) .1%
------- ---
247,590 .2%

B. Wayne Hughes, Jr. 1,189,255(4) 1.0% 34,861(4) .4%

Robert J. Abernethy 66,568 * 2,108 *
14,999(2) *
------ --
81,567 *

Dann V. Angeloff 78,500(5) * -- --
9,999(2) *
----- --
88,499 *

William C. Baker 20,000 * 455 *
14,999(2) *
------ --
34,999 *

Thomas J. Barrack, Jr. -- -- -- --
17,500(2) *
------ --
17,500 *

Uri P. Harkham 45,829(6) * 555(6) *
7,499(2) *
----- --
53,328 *

Daniel C. Staton 1,458 * 47 *
25,239(2) *
------ --
26,697 *

John Reyes 21,378 * 1,542 *
209,999(2) .2%
------- ---
231,377 .2%

W. David Ristig -- * *
83,332(2) .1%
------ ---
83,332 .1%

All Directors and Executive Officers 22,284,737(1)(3)(4)(5) 104,611(1)(3)(4)
as a Group (6)(7) 19.2% (6)(7) 1.2%

(17 persons) 1,322,725(2) 1.1%
--------- ----
23,607,462 20.4%

---------------
* Less than 0.1%
(1) Common Shares or Depositary Shares, as applicable, beneficially owned as
of February 28, 2002. Except as otherwise indicated and subject to
applicable community property and similar statutes, the persons listed
as beneficial owners of the shares have sole voting and investment power
with respect to such shares. Includes shares credited to the accounts of
the executive officers of the Company that are held in the 401(k) Plan
as of December 31, 2001.

(2) Represents vested portion as of February 28, 2002, and portion of which
will be vested within 60 days of February 28, 2002, of Common Shares
subject to options granted to the named individuals or the group under
the Company's stock option and incentive plans.

(3) Includes 3,126 Common Shares held of record or beneficially by Mrs.
Lenkin or a son as to which each has investment power.

Includes 360 Depositary Shares held of record or beneficially by Mrs.
Lenkin or a son as to which each has investment power.

(4) Includes 44,159 Common Shares, held of record or beneficially by Mrs.
Hughes, Jr. or her children as to which Mrs. Hughes, Jr. has investment
power and 11,348 Common Shares held by Mr. Hughes, Jr. and Tamara Hughes
Gustavson - Separate Property.

Includes 1,371 Depositary Shares held of record or beneficially by Mrs.
Hughes, Jr. or her children as to which Mrs. Hughes has investment power
and 43 Depositary Shares held by Mr. Hughes, Jr. and Tamara Hughes
Gustavson - Separate Property.

(5) Includes 2,000 Common Shares held by Mrs. Angeloff as to which she has
investment power.

(6) Includes 5,071 Common Shares owned beneficially by two of Mr. Harkham's
children as to which each has investment power.

Includes 153 Depositary Shares owned beneficially by two of Mr.
Harkham's children as to which each has investment power.

(7) Includes shares held of record or beneficially by members of the
immediate family of executive officers of the Company and shares
credited to the accounts of the executive officers of the Company that
are held in the 401(k) Plan.

As of February 28, 2002, B. Wayne Hughes, Jr. owned 3,204,758
shares of the Company's Class B Common Stock, representing 45.8% of the
outstanding shares of Class B Common Stock. For information on the Class B
Common Stock, see note (1) to the table in "Security Ownership of Certain
Beneficial Owners."

The Company has outstanding a class of preferred stock,
consisting of various series of non-voting senior preferred stock. As of
February 28, 2002, B. Wayne Hughes, Jr. owned 400 shares of preferred stock, as
to which he shared investment power, Robert J. Abernethy owned 225 shares of
preferred stock and the directors and executive officers of the Company as a
group owned a total of 625 shares of preferred stock, representing less than
0.1% of the outstanding shares.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and executive officers, and persons who own more than
10% of any registered class of the Company's equity securities ("10% owners"),
to file with the Securities and Exchange Commission ("SEC") initial reports (on
Form 3) of ownership of the Company's equity securities and to file subsequent
reports (on Form 4 or Form 5) when there are changes in such ownership. The due
dates of such reports are established by statute and the rules of the SEC. Based
on a review of the reports submitted to the Company, the Company believes that,
with respect to the fiscal year ended December 31, 2001, Uri P. Harkham, a
director of the Company, failed to file on a timely basis one report on Form 4
to report two transactions.

COMPENSATION

Compensation of Executive Officers

The following table sets forth certain information concerning
the annual and long-term compensation paid to B. Wayne Hughes, the Company's
Chief Executive Officer, and the four most highly compensated persons who were
executive officers of the Company on December 31, 2001 (the "Named Executive
Officers") for 2001, 2000 and 1999.

Summary Compensation Table
Long-Term
Annual Compensation Compensation
---------------------------------------------- ------------
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation (1) Options (#) Compensation (2)
------------------------- ------ ------------ ----------- ---------------- ------------ ----------------

B. Wayne Hughes 2001 $ 60,000(3) -- $19,300 -- $1,800
Chairman of the Board 2000 60,000(3) -- 27,400 -- 1,800
and Chief Executive 1999 60,000(3) -- 27,600 -- 1,800
Officer

Harvey Lenkin (4) 2001 265,000 $150,500 (6) -- 5,100
President 2000 257,100(5) 150,500 (6) 160,000 4,800
1999 246,700(7) 175,500 (6) 60,000 4,700

Marvin M. Lotz 2001 285,000 199,500 (6) -- 5,100
Senior Vice President 2000 279,400(8) 200,500 (6) 160,000 4,800
1999 214,600(9) 250,500 (6) 60,000 4,700

John Reyes 2001 200,000 155,500 (6) -- 5,100
Senior Vice President 2000 188,500 150,500 (6) 160,000 4,800
and Chief Financial 1999 130,000 180,500 (6) 60,000 4,700
Officer

W. David Ristig 2001 212,000 120,500 (6) -- 5,100
Senior Vice President 2000 143,800 178,500 (6) 100,000 4,800
1999 125,000 148,000 (6) 30,000 4,700

----------------

(1) Other Annual Compensation consists solely of use of a company car or a
car allowance.

(2) All Other Compensation consists solely of employer contributions to the
401(k) Plan.

(3) See "Employment Agreement" below.

(4) Does not include directors' fees of PSBP.

(5) Includes $246,700 of salary and $10,400 of directors' fees and meeting
fees.

(6) Value did not exceed 10% of the annual salary and bonus of the
individual for the years indicated.

(7) Includes $225,000 of salary and $21,700 of directors' fees and meeting
fees of the Company.

(8) Includes $269,000 of salary and $10,400 of directors' fees and meeting
fees of the Company.

(9) Includes $199,000 of salary and $15,600 of directors' fees and meeting
fees of the Company.

No options to purchase shares of Common Stock were granted to
the Named Executive Officers during 2001.

The following table sets forth certain information concerning
exercised and unexercised options held by the Named Executive Officers at
December 31, 2001.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

Number of Value of Unexercised
Shares Securities Underlying In-the-Money
Acquired on Value Unexercised Options Options at
Name Exercise(#) Realized($) at December 31, 2001 December 31, 2001(1)
-------------------- ----------- ------------- ------------------------------ -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------

B. Wayne Hughes -- -- -- -- -- --
Harvey Lenkin 10,000 $101,450 215,332 126,668 $2,302,330 $1,267,345
Marvin M. Lotz 80,000 1,125,904 170,332 126,668 1,676,205 1,267,345
John Reyes 1,667 19,687 209,999 126,668 2,095,828 1,267,345
W. David Ristig -- -- 83,332 76,668 681,865 771,510

--------------

(1) Based on closing price of $33.40 per share of Common Stock on December
31, 2001, as reported by the New York Stock Exchange. On April 5, 2002,
the closing price per share of Common Stock as reported by the New York
Stock Exchange was $37.73.

Compensation of Directors

Each of the Company's directors, other than B. Wayne Hughes,
Harvey Lenkin and Marvin M. Lotz, receives director's fees of $19,000 per year
plus $450 for each meeting attended. In addition, each of the members of the
Audit Committee (other than the chairman, who receives $1,300 per meeting)
receives $1,000 for each meeting of the Audit Committee attended. Each of the
members of the Executive Equity Awards Committee receives $500 for each meeting
of the committee attended. The policy of the Company is to reimburse directors
for reasonable expenses. Under the 2001 Stock Option and Incentive Plan, each
director who is not an officer or employee of the Company ("Outside Director")
is, upon the date of his or her initial election to serve as an Outside
Director, automatically granted non-qualified options to purchase 15,000 shares
of Common Stock. In addition, after each annual meeting of shareholders, each
Outside Director then duly elected and serving is automatically granted, as of
the date of such annual meeting, non-qualified options to purchase 2,500 shares
of Common Stock, so long as such person has attended, in person or by telephone,
at least 75% of the meetings held by the Board of Directors during the
immediately preceding calendar year.

Employment Agreement

B. Wayne Hughes, the Chairman of the Board and Chief Executive
Officer of the Company, entered into an employment agreement with the Company in
November 1995 in connection with the merger of Public Storage Management, Inc.
into the Company. This agreement was for a term of five years (which ended in
November 2000) and provided for annual compensation of $60,000.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company does not have a compensation committee. Messrs.
Hughes, Lenkin, Lotz and Hughes, Jr., who are officers of the Company, are
members of the Board of Directors.

Certain Relationships and Related Transactions

Development Joint Venture with Affiliate. In November 1999,
the Company, through wholly owned entities ("PSA"), formed a joint venture (the
"Development JV") to develop and own approximately $100 million of
mini-warehouses and $100 million of shares of the Company's Equity Stock, Series
AAA. The partners of the Development JV are PSA and a limited liability company
(the "Investor LLC"). The members of the Investor LLC are a state pension plan
(the "Investor") and B. Wayne Hughes. The Development JV is being capitalized
with approximately $200 million; PSA is contributing approximately $102 million
and has a 51% ownership interest and the Investor LLC is contributing
approximately $98 million and has a 49% ownership interest. The term of the
Development JV is 15 years. The Investor LLC has the right at the end of the
sixth year to cause an early termination of the Development JV. Operating cash
flow (as defined) from the Development JV is distributed as follows: (1) during
the first through sixth years of the Development JV, (a) 100% to the Investor
LLC until the Investor LLC has received cumulative distributions equal to a 10%
compounded return on its investment and (b) then, 100% to be reinvested by the
Development JV; and (2) during the seventh through the 15th years of the
Development JV, (a) 100% to the Investor LLC until the Investor LLC has received
cumulative distributions equal to a 10% compounded return on its investment as
determined through the first six years, (b) then, 100% to PSA until PSA has
received cumulative distributions equal to a 10% compounded return on its
investment as determined through the first six years and (c) then, 49% to the
Investor LLC and 51% to PSA. Of the total capitalization of the Investor LLC of
approximately $98 million, Mr. Hughes contributed $64.084 million and the
balance was contributed by the Investor. Operating cash flow (as defined) from
the Investor LLC is distributed as follows: (1) 100% to Mr. Hughes until he has
received cumulative distributions equal to a 7.9972% compounded annual return on
his unreturned investment and (2) then, 99% to the Investor and 1% to Mr. Hughes
(his 1% interest is estimated to be less than $50,000 per year). If the Investor
does not elect to cause an early termination, Mr. Hughes' 1% interest can
increase to up to 10%. During 2001, distributions from the Investor LLC to Mr.
Hughes were $4,845,757. He invested in the Investor LLC at the request of the
Investor, and the transaction was approved by the Company's disinterested
directors based on advice from a financial advisor.

SALES OF SHARES TO COMPANY. In January 2001, a corporation
wholly-owned by Uri P. Harkham, a director of the Company, sold to the Company
in a privately negotiated transaction 10,000 shares of the Company's Common
Stock for an aggregate of $251,875.

In March 2001, a limited liability company of which Thomas J.
Barrack, Jr., a director of the Company, is a controlling member, sold to the
Company in a privately negotiated transaction 2,619,893 shares of the Company's
Common Stock for an aggregate of $68,064,820.

ACQUISITION OF PSIC. On December 31, 2001, the Company
acquired, in a tax-free reorganization, all of the capital stock of PS Insurance
Company, Ltd. ("PSIC") from B. Wayne Hughes, B. Wayne Hughes, Jr. and Tamara
Hughes Gustavson in exchange for an aggregate of 1,439,756 shares of the
Company's Common Stock. PSIC owned 301,032 shares of the Company's Common Stock,
which continue to be owned by PSIC.

PSIC is engaged in the business of reinsuring risks relating
to damage, destruction or other loss of goods stored by tenants in the
mini-warehouses owned and operated by the Company in the United States and to a
much lesser extent by affiliates of the Hughes family in Canada. In 1995, the
Company acquired, in a tax-free reorganization, substantially all of the
entities owned by B. Wayne Hughes (and members of his family) that were engaged
in the ownership and operation of mini-warehouses and related activities in the
United States. However, the federal and state income tax laws applicable to real
estate investment trusts (such as the Company) imposed restrictions that
effectively prevented the Company from owning PSIC or engaging in that business.
As a result, PSIC was retained by and was continued to be operated by the Hughes
family until December 31, 2001. In the 1995 transaction, the Company was granted
a right of first refusal pertaining to any transfer of the capital stock or
business of PSIC. Changes to the federal income tax laws that became effective
January 1, 2001 and conforming changes to California's tax laws that were
adopted in 2001 now permit the Company to own the capital stock of PSIC.

Due principally to the interrelationship of the businesses of
the Company and PSIC, the Company believes that it is in its best interest to
own and operate PSIC as a wholly-owned taxable REIT subsidiary. The transaction
was approved by the Company's disinterested directors. A financial advisor
issued a fairness opinion to the Company's Board on the transaction.

ACQUISITION OF VOTING STOCK OF PSOI. On December 31, 2001,
following the acquisition of the capital stock of PSIC by the Company, the
Company acquired the voting common stock of PS Orangeco, Inc. ("PSOI"),
representing 5% of the equity of PSOI, from the Hughes family for $554,000, a
price representing the Hughes family's original cost in the voting common stock
of PSOI. The Company owns the non-voting preferred stock of PSOI, representing
95% of the equity of PSOI.

PSOI has an interest in the portable self-storage business and
sells at the Company's properties a variety of items such a locks and boxes to
assist in the moving and storage of goods and rents trucks. The Company and the
Hughes family acquired their interests in PSOI in the Company's 1995
reorganization. Because PSOI'S revenues are nonqualifying income under the REIT
tax laws, the voting common stock of PSOI was owned by the Hughes family. Recent
changes in federal and California tax laws now permit the Company to own the
voting common stock of PSOI. The Company's acquisition of the voting common
stock of PSOI was approved by the Company's disinterested directors.

ACQUISITION OF PARTNERSHIP INTERESTS. On December 31, 2001,
the Company acquired B. Wayne Hughes' approximately 1/10 of 1% general partner
interest in four limited partnerships that own mini-warehouses. The purchase
price was $232,770, representing Mr. Hughes original cost for these partnership
interests. The Company owns the remaining general partnership interest, and all
of the limited partnership interest, in these partnerships. The acquisition of
Mr. Hughes' general partner interest was approved by the Company's disinterested
directors.

REPORT OF THE BOARD OF DIRECTORS AND THE AUDIT COMMITTEE
ON EXECUTIVE COMPENSATION

Subject to certain considerations applicable to the Chief
Executive Officer as discussed below, the Company pays its executive officers
compensation deemed appropriate in view of the nature of the Company's business,
the performance of individual executive officers, and the Company's objective of
providing incentives to its executive officers to achieve a level of individual
and Company performance that will maximize the value of shareholders' investment
in the Company. To those ends, the Company's compensation program consists of
payment of a base salary and, potentially, bonus compensation, and making
incentive awards of options to purchase Common Stock. During 2001, grants of
options to executive officers (other than the named executive officers) were
made under the 2001 Stock Option and Incentive Plan (the "2001 Plan").

CASH COMPENSATION. Base salary levels are based generally
(other than in the case of the Chief Executive Officer) on market compensation
rates and each individual's role in the Company. The Company determines market
compensation rates by reviewing public disclosures of compensation paid to
executive officers by other REITs of comparable size and market capitalization.
Some of the REITs whose executive compensation the Company considered in
establishing the compensation it pays to executive officers are included in the
NAREIT Equity Index referred to below under the caption "Stock Price Performance
Graph." Generally, the Company seeks to compensate its executives at levels
consistent with the middle of the range of amounts paid by REITs deemed
comparable by the Company. Individual salaries may vary based on the experience
and contribution to overall corporate performance by a particular executive
officer.

For the year 2001, the Chief Executive Officer's base
compensation was established with reference to his employment agreement (which
expired in November 2000) at $60,000. The compensation paid to the Chief
Executive Officer is less than that paid to the chief executive officers of
other publicly traded REITs and reflected the judgment of the Board of Directors
and the Chief Executive Officer that the Chief Executive Officer's performance
was rewarded primarily through his significant equity stake in the Company.

The Company bases its payment of annual bonuses on corporate,
business unit and individual performance. In establishing individual bonuses,
the Company takes into account the Company's overall profitability, the
Company's internal revenue growth, the Company's revenue growth due to
acquisitions, and the executive officer's contribution to the Company's growth
and profitability.

EQUITY-BASED COMPENSATION. The Company believes that its
executive officers should have an incentive to improve the Company's performance
by having an ongoing stake in the success of the Company's business. The Company
seeks to create this incentive by granting to appropriate executive officers
stock options that have an exercise price of not less than 100% of the fair
market value of the underlying stock on the date of grant, so that the executive
officer may not profit from the option unless the price of the Common Stock
increases. Options granted by the Company also are designed to help the Company
retain executive officers in that options are not exercisable at the time of
grant, and achieve their maximum value only if the executive remains in the
Company's employ for a period of years. During 2001, the Company did not grant
any options to the Chief Executive Officer or to the other named executive
officers.

The 2001 Plan also authorizes the Company to compensate its
executive officers and other employees with grants of restricted stock.
Restricted stock would increase in value as the value of the Common Stock
increased, and would vest over time provided that the executive officer remained
in the employ of the Company. Accordingly, awards of restricted stock would
serve the Company's objectives of retaining its executive officers and other
employees and motivating them to advance the interests of the Company and its
shareholders. The Company did not grant any shares of restricted stock during
2001.

BOARD OF DIRECTORS AUDIT COMMITTEE

B. Wayne Hughes Robert J. Abernethy (Chairman)
Harvey Lenkin William C. Baker
Marvin M. Lotz Daniel C. Staton
B. Wayne Hughes, Jr.
Robert J. Abernethy
Dann V. Angeloff
William C. Baker
Thomas J. Barrack, Jr.
Uri P. Harkham
Daniel C. Staton

STOCK PRICE PERFORMANCE GRAPH

The graph set forth below compares the yearly change in the
Company's cumulative total shareholder return on its Common Stock for the
five-year period ended December 31, 2001 to the cumulative total return of the
Standard and Poor's 500 Stock Index ("S&P 500 Index") and the National
Association of Real Estate Investment Trusts Equity Index ("NAREIT Equity
Index") for the same period (total shareholder return equals price appreciation
plus dividends). The stock price performance graph assumes that the value of the
investment in the Company's Common Stock and each index was $100 on December 31,
1996 and that all dividends were reinvested. The stock price performance shown
in the graph is not necessarily indicative of future price performance.

Comparison of Cumulative Total Return
Public Storage, Inc., S&P 500 Index and NAREIT Equity Index
December 31, 1996 - December 31, 2001

[PERFORMANCE GRAPH APPEARS HERE]

MEASUREMENT PERIOD PUBLIC NAREIT
(FISCAL YEAR COVERED) STORAGE, INC. S&P 500 EQUITY
--------------------- ------------- ------- ------

Measurement Pt. 12/31/96 $100.00 $100.00 $100.00

FYE 12/31/97 97.64 133.36 120.26

FYE 12/31/98 92.81 171.48 99.21

FYE 12/31/99 80.56 207.56 94.63

FYE 12/31/00 94.33 188.66 119.58

FYE 12/31/01 136.61 166.24 136.24

AUDIT COMMITTEE REPORT

The Audit Committee of the Public Storage Board of Directors
is composed of three directors who qualify as independent under the rules of the
New York Stock Exchange. The Audit Committee operates under a written charter
adopted by the Board of Directors in May 2000 (Exhibit A). The members of the
Audit Committee are Robert J. Abernethy (Chairman), William C. Baker and Daniel
C. Staton. The Audit Committee recommends to the Board of Directors the
selection of the Company's independent auditors.

Management is responsible for the Company's internal controls
and the financial reporting process. The independent auditors are responsible
for performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards and for
issuing a report thereon. The Audit Committee's responsibility is to monitor and
oversee these processes.

In this context, the Audit Committee has met with management
and the independent auditors and has reviewed and discussed with them the
audited consolidated financial statements. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles. The Audit Committee
discussed with the independent auditors matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees).

The Company's independent auditors also provided to the Audit
Committee the written disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the Audit
Committee discussed with the independent auditors that firm's independence. In
addition, the Audit Committee has considered whether the independent auditors'
provision of non-audit services to the Company is compatible with the auditors'
independence.

Based on the Audit Committee's discussions with management and
the independent auditors, the representation of management and the report of the
independent auditors, the Audit Committee recommended to the Board of Directors,
and the Board has approved, that the audited consolidated financial statements
be included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2001 filed with the Securities and Exchange Commission.

AUDIT COMMITTEE

Robert J. Abernethy (Chairman)
William C. Baker
Daniel C. Staton

INDEPENDENT AUDITORS

The Audit Committee has recommended, and the Board of
Directors has selected, Ernst & Young LLP, independent auditors, to audit the
accounts of the Company for the fiscal year ending December 31, 2002.

It is anticipated that representatives of Ernst & Young LLP,
which has acted as the independent auditors for the Company since the Company's
organization, will be in attendance at the Annual Meeting of Shareholders and
will have the opportunity to make a statement if they desire to do so and to
respond to any appropriate inquiries of the shareholders or their
representatives.

Fees Billed to the Company by Ernst & Young LLP for 2001:

Audit Fees:

Audit fees billed (or expected to be billed) to the Company by
Ernst & Young LLP for the audit of the Company's annual financial statements for
the 2001 fiscal year and review of the quarterly financial statements included
in the Company's quarterly reports on Form 10-Q for the 2001 fiscal year totaled
$239,000.

Financial Information Systems Design and Implementation Fees:

The Company did not engage Ernst & Young LLP to provide advice
to the Company regarding financial information systems design and implementation
during the 2001 fiscal year.

All Other Fees:

Fees billed (or expected to be billed) to the Company by Ernst
& Young LLP for the Company's 2001 fiscal year for all other non-audit services
(primarily for income tax return preparation) rendered to the Company totaled
$755,000.

PROPOSAL NO. 2

Amendment to Terms of preferred Stock

Under the Company's restated articles of incorporation, the
Board of Directors is authorized without further shareholder action to provide
for the issuance of up to 50,000,000 shares of preferred stock, in one or more
series, with such rights as are set forth in resolutions adopted by the Board of
Directors.

The Company has outstanding 15 series of Preferred Stock,
which were created by resolutions adopted by the Board of Directors at various
dates between 1992 and 2002. The terms of each outstanding series of Preferred
Stock are set forth briefly in the notes to the financial statements included in
the Company's annual report to shareholders and in detail in the Certificates of
Determination creating these series.

The Certificates of Determination of the Preferred Stock
provide, in the case of each series, for a specified dividend rate and a date on
or after which the Company may (but is not obligated to) redeem the series of
Preferred Stock. The Company believes that it is in its interest, in the case of
14 of the series of Preferred Stock, to have the flexibility to, from time to
time, reduce the dividend rate to reflect market conditions, to extend the date
on or after which the Company may (but is not obligated to) redeem the series of
Preferred Stock, and make other adjustments that the Board of Directors deems
appropriate. Accordingly, the Board of Directors has proposed amendments to the
Certificates of Determination of 14 series of Preferred Stock to provide for the
reclassification of the shares of these 14 existing series (the "Existing
Series") into shares of redesignated series (the "Redesignated Series") of
Preferred Stock. Upon the effectiveness of a redesignation, each share of an
Existing Series would be reclassified into a share of the corresponding
Redesignated Series as reflected in the following table:

----------------------------- ----------------------------- ------------------- ---------------- ----------------------
Aggregate Date on or After
Liquidation Dividend Rate Which the Existing
Preference of the of Existing Series May be
Name of Existing Series Name of Redesignated Series Existing Series Series Redeemed
----------------------------- ----------------------------- ------------------- ---------------- ----------------------

Series B Preferred Stock Series B-1 Preferred Stock $ 59,650,000 9.200% 3/31/2003
Series C Preferred Stock Series C-1 Preferred Stock 30,000,000 Variable 6/30/1999
Series D Preferred Stock Series D-1 Preferred Stock 30,000,000 9.500% 9/30/2004
Series E Preferred Stock Series E-1 Preferred Stock 54,875,000 10.000% 1/31/2005
Series F Preferred Stock Series F-1 Preferred Stock 57,500,000 9.750% 4/30/2005
Series J Preferred Stock Series J-1 Preferred Stock 150,000,000 8.000% 8/31/2002
Series K Preferred Stock Series K-1 Preferred Stock 115,000,000 8.250% 1/19/2004
Series L Preferred Stock Series L-1 Preferred Stock 115,000,000 8.250% 3/10/2004
Series M Preferred Stock Series M-1 Preferred Stock 56,250,000 8.750% 8/17/2004
Series Q Preferred Stock Series Q-1 Preferred Stock 172,500,000 8.600% 1/19/2006
Series R Preferred Stock Series R-1 Preferred Stock 510,000,000 8.000% 9/28/2006
Series S Preferred Stock Series S-1 Preferred Stock 143,750,000 7.875% 10/31/2006
Series T Preferred Stock Series T-1 Preferred Stock 150,000,000 7.625% 1/18/2007
Series U Preferred Stock Series U-1 Preferred Stock 150,000,000 7.625% 2/19/2007
----------------------------- ----------------------------- ------------------- ---------------- ----------------------

The dividend rate or rates of the Redesignated Series, the
date on or after which the Company may (but is not obligated to) redeem the
shares of the Redesignated Series and other terms of the Redesignated Series
would be set forth in resolutions adopted by the Board of Directors creating the
Redesignated Series. The reclassification of the shares of one of the Existing
Series into a Redesignated Series would require approval by the holders of
662/3% of the outstanding shares of that Existing Series, but would not be
conditioned on the reclassification of the shares of any other Existing Series
nor would it require any further vote of the holders of shares of Equity Stock
and Common Stock. The Company would seek the approval of the holders of an
Existing Series at a later date when the Board of Directors sets the terms of
the corresponding Redesignated Series. The decision of the Board of Directors to
create a Redesignated Series to implement a reclassification will depend on
market conditions and other factors the Board of Directors considers appropriate
and there can be no assurance that any of the reclassifications will be
implemented.

The affirmative vote of the holders of a majority of the
voting power represented by the outstanding shares of Equity Stock and Common
Stock, voting together as a single class, is required to approve the amendments
to the Certificates of Determination of the Existing Series. For these purposes,
an abstention or broker non-vote will have the effect of a vote against the
proposal. The officers and directors of the Company intend to vote their shares
in favor of the amendment. The affirmative vote of the holders of 662/3% of the
outstanding shares of an Existing Series will also be required to amend the
Certificate of Determination of that Existing Series.

The Board of Directors recommends that you vote FOR this
amendment.

EXPENSES OF SOLICITATION

The Company will pay the cost of soliciting Proxy/Instruction
Cards. In addition to solicitation by mail, certain directors, officers and
regular employees of the Company and its affiliates may solicit the return of
Proxy/Instruction Cards by telephone, telegram, personal interview or otherwise.
The Company may also reimburse brokerage firms and other persons representing
the beneficial owners of the Company's stock for their reasonable expenses in
forwarding proxy solicitation materials to such beneficial owners. Shareholder
Communications Corporation, New York, New York may be retained to assist the
Company in the solicitation of Proxy/Instruction Cards, for which Shareholder
Communications Corporation would receive normal and customary fees and expenses
from the Company.

DEADLINES FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR
CONSIDERATION AT 2003 ANNUAL MEETING

Any proposal that a holder of Common Stock or Depositary
Shares wishes to submit for inclusion in the Company's Proxy Statement for the
2003 Annual Meeting of Shareholders ("2003 Proxy Statement") pursuant to
Securities and Exchange Commission Rule 14a-8 must be received by the Company no
later than December 16, 2002. In addition, notice of any proposal that a holder
of Common Stock or Depositary Shares wishes to propose for consideration at the
2003 Annual Meeting of Shareholders, but does not seek to include in the
Company's 2003 Proxy Statement pursuant to Rule 14a-8, must be delivered to the
Company no later than February 28, 2003 if the proposing holder of Common Stock
or Depositary Shares wishes for the Company to describe the nature of the
proposal in its 2003 Proxy Statement as a condition to exercising its
discretionary authority to vote proxies on the proposal. Any shareholder
proposals or notices submitted to the Company in connection with the 2003 Annual
Meeting of Shareholders should be addressed to: David Goldberg, Secretary,
Public Storage, Inc., 701 Western Avenue, Glendale, California 91201-2349.

OTHER MATTERS

The management of the Company does not intend to bring any
other matter before the meeting and knows of no other matters that are likely to
come before the meeting. If any other matters properly come before the meeting,
the persons designated as proxies in the accompanying Proxy/Instruction Card and
the Trustee will vote the shares of Common Stock represented thereby, if any,
and the Depositary will vote the Equity Stock underlying the Depositary Shares
represented thereby, if any, in accordance with their best judgment on such
matters.

You are urged to vote the accompanying Proxy/Instruction Card
and sign, date and return it in the enclosed stamped envelope at your earliest
convenience, whether or not you currently plan to attend the meeting in person.

By Order of the Board of Directors

DAVID GOLDBERG, Secretary

Glendale, California
April 9, 2002

Exhibit A

PUBLIC STORAGE, INC.

CHARTER OF AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Adopted by the Board of Directors on May 1, 2000

1. The Audit Committee of the Board of Directors (the "Board") shall consist of
at least three directors, none of whom shall have any relationship to the
Company that may interfere with the exercise of their independence from
management and the Company, each of whom shall be financially literate, as such
qualification is interpreted by the Board in its business judgment, and at least
one of whom shall have accounting or related financial management expertise, as
the Board interprets such qualification in its business judgment, all in
accordance with the requirements of the New York Stock Exchange.

2. The purposes of the Audit Committee are:

o to oversee the Company's accounting and financial reporting policies and
practices and its internal controls;

o to oversee the quality and appropriateness of accounting processes and
qualitative aspects of the Company's financial statements and the audit
thereof; and

o to act as a liaison between the Company's outside auditor and the Board.

3. The function of the Audit Committee is oversight; it is the responsibility of
the Company to maintain appropriate systems for accounting and internal control,
and the auditor's responsibility to plan and carry out a proper audit. To this
end, the Audit Committee shall have unrestricted access to the Board, the
outside auditor and the executive and financial management of the Company. The
outside auditor shall be ultimately accountable to the Audit Committee and the
Board, and therefore the Audit Committee and the Board shall have the ultimate
authority and responsibility to select, evaluate and, where appropriate, replace
the outside auditor.

4. To carry out its purposes, the Audit Committee shall have the following
responsibilities:

o to recommend to the Board the selection, engagement and replacement of the
outside auditor;

o to require the outside auditor to submit to the Audit Committee, on a
periodic basis, a formal written statement delineating all relationships
between the auditor and the Company, to engage in a dialogue with the
outside auditor with respect to any disclosed relationship or services
that may impact the objectivity and independence of the outside auditor,
and to recommend that the Board take appropriate action in response to the
outside auditor's report to satisfy itself of the outside auditor's
independence;

o to meet with the Company's outside auditor, including private meetings, as
necessary (i) to review the arrangements for, procedures to be utilized,
and scope of the annual audit and any specific audits, (ii) to discuss any
matters of concern relating to the Company's financial statements,
including any adjustments to such statements recommended by the auditor,
disagreements with management or other significant issues encountered in
connection with the audit work, (iii) to review the annual financial
statements of the Company and significant accounting policies underlying
the statements and their presentation to the public in the annual or other
reports, (iv) to consider the auditor's comments and recommendations with
respect to the Company's financial policies, procedures and adequacy of
internal accounting controls and the Company's responses thereto, and (v)
to review the form of opinion the auditor proposes to render;

A-1

o to consider the appropriateness of and effect upon the Company of any
significant changes in accounting principles or practices proposed by the
Company or the auditor;

o to review legal and regulatory matters that may have a material impact on
the financial statements of the Company, including company compliance
policies and procedures;

o to review the fees charged by the auditor for audit or non-audit services;

o to investigate improprieties or suspected improprieties in the Company's
financial operations;

o to perform such other functions as required by law, the Company's bylaws
or the Board; and

o to report activities to the Board on a regular basis and to make such
recommendations with respect to the above and other matters as the Audit
Committee may deem necessary or appropriate.

5. The Audit Committee shall have a chairman, who shall be elected by a majority
vote of the Board, shall meet on a regular basis, and shall hold special
meetings as circumstances require. The Audit Committee shall act by majority
vote of its members.

6. The Audit Committee shall meet regularly with the financial officers of the
Company, with the internal auditor, if any, and with other officers as it deems
appropriate.

7. The Audit Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to retain special
counsel and other experts or consultants at the expense of the Company.

8. The Audit Committee shall prepare a report for inclusion in the Company's
proxy statement for its annual meeting of shareholders in accordance with
applicable requirements of the U.S. Securities and Exchange Commission.

9. The Audit Committee shall review and reassess the adequacy of this Charter on
an annual basis and recommend any changes to the Board.

A-2

PROXY/INSTRUCTION CARD

PUBLIC STORAGE, INC.

701 Western Avenue
Glendale, California 91201-2349

This Proxy/Instruction Card is Solicited on Behalf of the
Board of Directors

The undersigned, a record holder of Common Stock of Public
Storage, Inc. and/or a record holder of Depositary Shares ("Depositary Shares")
Each Representing 1/1,000 of a Share of Equity Stock, Series A ("Equity Stock")
of Public Storage, Inc. and/or a participant in the PS 401(k)/Profit Sharing
Plan (the "401(k) Plan"), hereby (i) appoints B. Wayne Hughes and Harvey Lenkin,
or either of them, with power of substitution, as Proxies, to appear and vote,
as designated below, all the shares of Common Stock held of record by the
undersigned on March 15, 2002, at the Annual Meeting of Shareholders to be held
on May 9, 2002 (the "Annual Meeting"), and any adjournments thereof, and/or (ii)
authorizes and directs EquiServe Trust Company, N. A. (the "Depositary"),
through its nominee(s), to vote or execute proxies to vote, as instructed below,
all Equity Stock underlying the Depositary Shares held of record by the
undersigned on March 15, 2002, at the Annual Meeting and any adjournments
thereof, and/or (iii) authorizes and directs the trustee of the 401(k) Plan (the
"Trustee") to vote or execute proxies to vote, as instructed below, all the
shares of Common Stock credited to the undersigned's account under the 401(k)
Plan on March 15, 2002, at the Annual Meeting and any adjournments thereof,
and/or (iv) authorizes and directs the Trustee to instruct (in person or by
proxy) the Depositary to vote or execute proxies to vote, as instructed below,
all Equity Stock underlying the Depositary Shares credited to the undersigned's
account under the 401(k) Plan on March 15, 2002, at the Annual Meeting and any
adjournments thereof. In their discretion, the Proxies and/or the Depositary
and/or the Trustee are authorized to vote upon such other business as may
properly come before the meeting.

THE PROXIES, THE DEPOSITARY AND/OR THE TRUSTEE WILL VOTE ALL
SHARES OF COMMON STOCK AND EQUITY STOCK TO WHICH THIS PROXY/INSTRUCTION CARD
RELATES, IN THE MANNER DIRECTED BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN
WITH RESPECT TO COMMON STOCK AND/OR DEPOSITARY SHARES HELD OF RECORD BY THE
UNDERSIGNED, THE PROXIES WILL VOTE SUCH COMMON STOCK, AND/OR THE DEPOSITARY WILL
VOTE THE EQUITY STOCK UNDERLYING SUCH DEPOSITARY SHARES, FOR THE ELECTION OF ALL
NOMINEES LISTED ON THE REVERSE AND IN FAVOR OF ITEM 2. IF NO DIRECTION IS GIVEN
WITH RESPECT TO COMMON STOCK AND/OR DEPOSITARY SHARES CREDITED TO THE
UNDERSIGNED'S ACCOUNT UNDER THE 401(k) PLAN, THE TRUSTEE WILL VOTE SUCH COMMON
STOCK, AND/OR THE TRUSTEE WILL INSTRUCT THE DEPOSITARY TO VOTE THE EQUITY STOCK
UNDERLYING SUCH DEPOSITARY SHARES, FOR THE ELECTION OF ALL NOMINEES LISTED ON
THE REVERSE AND IN FAVOR OF ITEM 2.

CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-----------

X Please mark votes as in this example.
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PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY/INSTRUCTION CARD IN THE ENCLOSED
ENVELOPE TO EQUISERVE, SHAREHOLDER SERVICES DIVISION, P.O. BOX 43068,
PROVIDENCE, RI 02940.

1. Election of Directors

Nominees: B. Wayne Hughes, Harvey Lenkin, Marvin M. Lotz, B. Wayne
Hughes, Jr., Robert J. Abernethy, Dann V. Angeloff, William C. Baker,
Thomas J. Barrack, Jr., Uri P. Harkham and Daniel C. Staton.

FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
--- ---
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For all nominees except as noted above

2. Approval of amendments to the Certificates of Determination of various
series of Preferred Stock to reclassify the shares of each of such
series into redesignated series of Preferred Stock upon approval by the
holders of 662/3% of the shares of an affected series.

FOR AGAINST ABSTAIN
--- --- ---
3. Other matters: In their discretion, the Proxies and/or the Depositary
and/or the Trustee are authorized to vote upon such other business as
may properly come before the meeting.

MARK HERE FOR ADDRESS CHANGE AND
NOTE AT LEFT
-----

The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement dated April 9, 2002.

Please sign exactly as your name appears. Joint owners should each sign.
Trustees and others acting in a representative capacity should indicate the
capacity in which they sign.

Signature: Date: Signature: Date:
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