SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(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:
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(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.:
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
[LOGO]
2000 SOUTH COLORADO BOULEVARD, TOWER TWO, SUITE 2-1000
DENVER, COLORADO 80222-7900
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 26, 2002
You are cordially invited to attend the 2002 Annual Meeting of
Stockholders (the "Meeting") of APARTMENT INVESTMENT AND MANAGEMENT COMPANY (the
"Company") to be held on Friday, April 26, 2002, at 9:00 a.m. at the principal
executive offices of the Company at 2000 South Colorado Boulevard, Tower Two,
Suite 2-1000, Denver, Colorado 80222-7900, for the following purposes:
1. To elect six directors, for a term of one year each, until the next
Annual Meeting of Stockholders and until their successors are elected
and qualify;
2. To ratify the selection of Ernst & Young LLP, to serve as
independent auditors for the Company for the fiscal year ending
December 31, 2002;
3. To approve the sale of an aggregate of 5,000 High Performance
Partnership Units of AIMCO Properties L.P.; and
4. To transact such other business as may properly come before the
Meeting or any adjournment(s) thereof.
Only stockholders of record at the close of business on March 15, 2002,
will be entitled to notice of, and to vote at, the Meeting or any adjournment(s)
thereof.
WHETHER OR NOT YOU EXPECT TO BE AT THE MEETING, PLEASE SIGN AND DATE
THE ENCLOSED PROXY WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. The proxy is revocable at any time
prior to the exercise thereof by written notice to the Company, and stockholders
who attend the Meeting may withdraw their proxies and vote their shares
personally if they so desire.
You may choose to vote your shares by using a toll-free telephone
number or the Internet, as described on the proxy card. You may also mark, sign,
date and mail your proxy in the envelope provided, but if you choose to vote
your shares by telephone or the Internet, there is no need for you to mail your
proxy card. Votes submitted via the Internet or by telephone must be received by
5:00 p.m. Eastern Time on April 24, 2002. The method by which you decide to vote
will not limit your right to vote at the Annual Meeting. If you later decide to
attend the Annual Meeting in person, you may vote your shares even if you
previously have submitted a proxy by telephone, the Internet or by mail.
The telephone and Internet voting procedures are designed to
authenticate stockholders' identities, to allow stockholders to give their
voting instructions and to confirm that stockholders' instructions have been
recorded properly. Stockholders voting via the Internet should understand that
there may be costs associated with electronic access, such as usage charges from
Internet access providers and telephone companies, that must be borne by the
stockholder.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Miles Cortez
Miles Cortez
Secretary
April 1, 2002
1
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
2000 SOUTH COLORADO BOULEVARD, TOWER TWO, SUITE 2-1000
DENVER, COLORADO 80222-7900
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 26, 2002
This Proxy Statement is furnished to stockholders of Apartment
Investment and Management Company ("AIMCO" or the "Company"), a real estate
investment trust ("REIT"), in connection with the solicitation of proxies in the
form enclosed herewith for use at the Annual Meeting of Stockholders of the
Company (the "Meeting") to be held on Friday, April 26, 2002, at 9:00 a.m. at
the principal executive offices of the Company at 2000 South Colorado Boulevard,
Tower Two, Suite 2-1000, Denver, Colorado 80222-7900, and at any and all
adjournments or postponements thereof, for the purposes set forth in the Notice
of Meeting. This Proxy Statement and the enclosed form of proxy are first being
mailed to stockholders on or about April 3, 2002.
This solicitation is made by mail on behalf of the Board of Directors
of the Company. Costs of the solicitation will be borne by the Company. Further
solicitation of proxies may be made by telephone, fax or personal interview by
the directors, officers and employees of the Company and its affiliates, who
will not receive additional compensation for the solicitation. The Company has
retained the services of Georgeson Shareholder, for an estimated fee of $4,000,
plus out-of-pocket expenses, to assist in the solicitation of proxies from
brokerage houses, banks, and other custodians or nominees holding stock in their
names for others. The Company will reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
sending proxy material to stockholders.
Holders of record of the Class A Common Stock of the Company ("Common
Stock") as of the close of business on the record date, March 15, 2002 (the
"Record Date"), are entitled to receive notice of, and to vote at, the Meeting.
Each share of Common Stock entitles the holder to one vote. At the close of
business on the Record Date, there were 76,728,847 shares of Common Stock issued
and outstanding.
Shares represented by proxies in the form enclosed, if the proxies are
properly executed and returned and not revoked, will be voted as specified.
Where no specification is made on a properly executed and returned proxy, the
shares will be voted: FOR the election of all nominees for director; FOR the
ratification of the selection of Ernst & Young LLP as independent auditors for
the calendar year ending December 31, 2002 and FOR the approval of the sale of
an aggregate of 5,000 High Performance Partnership Units of AIMCO Properties,
L.P. (the "Operating Partnership"). To be voted, proxies must be filed with the
Secretary of the Company prior to voting. Proxies may be revoked at any time
before voting by filing a notice of revocation with the Secretary of the
Company, by filing a later dated proxy with the Secretary of the Company or by
voting in person at the Meeting. Shares represented by proxies that reflect
abstentions or "broker non-votes" (i.e., shares held by a broker or nominee
which are represented at the Meeting, but with respect to which such broker or
nominee is not empowered to vote on a particular proposal) will be counted as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum.
The Company's 2001 Annual Report to Shareholders is being mailed with
this Proxy Statement. The principal executive offices of the Company are located
at 2000 South Colorado Boulevard, Tower Two, Suite 2-1000, Denver, Colorado
80222-7900.
2
PROPOSAL 1:
ELECTION OF DIRECTORS
Pursuant to the Company's Charter, directors are elected at each Annual
Meeting of Stockholders and hold office for one year, and until their successors
are duly elected and qualify. The Company's Bylaws currently authorize a Board
of Directors consisting of not fewer than three nor more than nine persons.
The nominees for election to the six positions on the Board of
Directors selected by the Nominating Committee of the Board of Directors to be
voted upon at the Meeting are James N. Bailey, Terry Considine, Richard S.
Ellwood, Peter K. Kompaniez, J. Landis Martin and Thomas L. Rhodes, all of whom
were elected to the Board of Directors at the last Annual Meeting of
Stockholders. Messrs. Bailey, Ellwood, Martin, and Rhodes (the "Independent
Directors") are not employed by, or affiliated with, the Company, other than by
virtue of serving as directors of the Company. Unless authority to vote for the
election of directors has been specifically withheld, the persons named in the
accompanying proxy intend to vote for the election of Messrs. Bailey, Considine,
Ellwood, Kompaniez, Martin and Rhodes to hold office as directors for a term of
one year until their successors are elected and qualify at the next Annual
Meeting of Stockholders. All nominees have advised the Board of Directors that
they are able and willing to serve as directors.
If any nominee becomes unavailable for any reason (which is not
anticipated), the shares represented by the proxies may be voted for such other
person or persons as may be determined by the holders of the proxies (unless a
proxy contains instructions to the contrary). In no event will the proxy be
voted for more than six nominees.
Directors will be elected by a favorable vote of a plurality of the
shares of voting stock present and entitled to vote, in person or by proxy, at
the Meeting. Accordingly, abstentions or broker non-votes as to the election of
directors will not affect the election of the candidates receiving the plurality
of votes. Unless instructed to the contrary in the proxy, the shares represented
by the proxies will be voted FOR the election of the six nominees named above as
directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE SIX NOMINEES.
PROPOSAL 2:
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The firm of Ernst & Young LLP, the Company's independent auditors for
the year ended December 31, 2001, was selected by the Board of Directors, upon
the recommendation of the Audit Committee, to act in the same capacity for the
fiscal year ending December 31, 2002, subject to ratification by the Company's
stockholders. The aggregate fees billed for services rendered by Ernst & Young
LLP during the year ended December 31, 2001 are as follows:
Audit Fees. The aggregate fees billed by Ernst & Young LLP to the
Company for professional services rendered for audits of the annual financial
statements of the Company and certain of its subsidiaries and affiliates
(approximately 600 entities) for the fiscal year ended December 31, 2001 and for
the review of the financial statements included in the Quarterly Reports on Form
10-Q of the Company and certain of its subsidiaries and affiliates for the
fiscal year ended December 31, 2001 were $6.8 million.
Financial Information Systems Design and Implementation Fees. For the
fiscal year ended December 31, 2001, no fees were billed to the Company by
Ernst & Young LLP for financial information systems design or implementation.
All Other Fees. The aggregate fees billed for all other services
rendered by Ernst & Young LLP to the Company and certain of its subsidiaries and
affiliates for the fiscal year ended December 31, 2001 were $10.7 million, which
includes audit-related services of $3.3 million and non-audit services of $7.4
million. Audit related services generally include fees for merger and
acquisition due diligence, employee benefit plan audits, accounting
consultations and registration statements filed with the Securities and Exchange
Commission. Non-audit services consisted of $6.5 million of tax compliance for
over 900 entities affiliated with the Company and $0.9 million of consulting
services.
Representatives of Ernst & Young LLP will be present at the Meeting and
will be given the opportunity to make a statement if they so desire and to
respond to appropriate questions.
The affirmative vote of a majority of the votes cast regarding the
proposal is required to ratify the selection of Ernst & Young LLP. Accordingly,
abstentions or broker non-votes will not affect the outcome of the vote on the
proposal. Unless instructed to the contrary in the proxy, the shares represented
by the proxies will be voted FOR the proposal to
3
ratify the selection of Ernst & Young LLP to serve as independent auditors for
the Company for the fiscal year ending December 31, 2002.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF ERNST & YOUNG LLP.
PROPOSAL 3: APPROVAL OF THE SALE OF HIGH PERFORMANCE UNITS
As an additional step in furtherance of the Company's goal of
increasing AIMCO's adjusted funds from operations, dividend income and share
price by making share ownership the primary economic motivation of its officers
and directors, in January 1998, the Operating Partnership sold an aggregate of
15,000 Class I High Performance Partnership Units (the "Class I Units") to a
joint venture formed by fourteen of the Company's officers and to three of the
Company's Independent Directors. Based on the success of the Class I Units, in
January 2001, the Board of Directors decided to sell to the Company's employees
additional High Performance Units. In 2001, upon approval of shareholders, the
Operating Partnership sold an aggregate of 15,000 of its Class II, III, and IV
High Performance Partnership Units (the "Class II Units", "Class III Units" and
"Class IV Units") to over 60 employees of the Company. Unlike Common Stock,
Partnership Common Units ("OP Units") and options to purchase Common Stock, the
High Performance Units provide the following advantages to the Company:
o the Operating Partnership receives cash consideration for an interest
that will have nominal cost to the Company unless the total return to
the Company's stockholders for the relevant measurement period
exceeds a minimum hurdle rate and is significantly better than the
industry average (as measured by the Morgan Stanley REIT Index); and
o any value received by the purchasers of the High Performance Units is
not readily transferable and constitutes a long-term investment in
the Company, providing a further substantial and enduring alignment
of the long-term economic interests of the Company and its officers.
The following table details the results of the High Performance Units
that have been previously issued and for which the relevant measurement period
has ended:
CLASS I UNITS CLASS II UNITS
------------- --------------
Measurement Period 1/1/98 - 12/31/00 1/1/01 - 12/31/01
AIMCO Total Return 59.24% 0.21%
MS REIT Index Total Return 0.58% 12.83%
Minimum Return for Measurement Period 30.00% 11.00%
Excess (Outperformance) Return 29.24% 0.00%
Weighted Average Market Value of Outstanding Equity (in millions) $2,623 $3,858
Excess (Outperformance) Shareholder Value Added (in millions, at
end of measurement period) $767 $0
Value of Units (in millions, at end of measurement period) $115 $0
As shown in the above table, the Class II Units were valued at $0, and
therefore, the allocable investment made by the holders of $1.275 million was
lost.
In addition to the Class I and Class II High Performance Partnership
Units described above, the Operating Partnership has also sold 5,000 Class III
Units and 5,000 Class IV Units, which have measurement periods of January 1,
2001 through December 31, 2002 and January 1, 2001 through December 31, 2003,
respectively.
4
The following table details the results of the High Performance Units
that have been previously issued and for which the relevant measurement periods
have not yet ended:
CLASS III UNITS CLASS IV UNITS
--------------- --------------
Measurement Period 1/1/01 - 12/31/02 1/1/01 - 12/31/03
AIMCO Total Return (for period from 1/1/01 through 12/31/01) 0.21% 0.21%
MS REIT Index Total Return (for period from 1/1/01 through 12/31/01) 12.83% 12.83%
Minimum Return for Measurement Period 23.20% 36.80%
Outperformance Return (for period from 1/1/01 through 12/31/01) 0.00% 0.00%
Weighted Average Market Value of Outstanding Equity (in millions
for the period from 1/1/01 through 12/31/01) $3,858 $3,858
Outperformance Shareholder Value Added (in millions, at 12/31/01) $0 $0
Value of Units (in millions, at 12/31/01) $0 $0
As shown in the above table, the Class III Units and Class IV Units
were valued at $0 for the period of January 1, 2001 through December 31, 2001,
however, the full measurement period for Class III Units ends on December 31,
2002 and Class IV Units ends on December 31, 2003.
This year, the Board of Directors has decided to sell a new class of
High Performance Units (Class V High Performance Partnership Units), which have
identical characteristics to the Class IV Units sold in 2001 except for the
dilutive impact limit which was reduced from 1.5% to 1% and a different three
year measurement period. The specific characteristics of the Class V High
Performance Partnership Units are shown below:
o The new High Performance Units will have a three-year measurement
period starting on January 1, 2002 and ending December 31, 2004.
o The new High Performance Units will have nominal value unless the
AIMCO total return (dividend income plus share price appreciation)
exceeds 115% of the cumulative total return of the Morgan Stanley
REIT Index and has a cumulative total return for the three year
period of at least 36.8% (equivalent to 11% per year).
o The amount, if any, by which the total return of the Common Stock
over the measurement period exceeds the applicable total return
hurdle will be considered the "Outperformance Return."
o Outperformance Return multiplied by AIMCO's average market
capitalization will be considered "Outperformance Shareholder Value
Added" for shareholders.
o If the minimum total return hurdle is met as of December 31, 2004,
the holders of the new High Performance Units will thereafter
receive distributions and allocations of income and loss at the
same time and in the same amount (subject to certain exceptions
upon liquidation of the Operating Partnership) as a number of OP
Units equal to (i) 5% of Outperformance Value Added divided by (ii)
the average volume weighted price of the Company's Common Stock
over the 20 trading days ending on the determination date (subject
to the limits on dilution described below).
o Investment in the new High Performance Units will be offered to
approximately 50 employees of the Company, and there will be no
participation by the independent board members.
o The new High Performance Units are not transferable (except to
family trusts or partnerships) until the holder of the units dies,
and are not exchangeable for Common Stock unless there is a change
of control of the Company.
o The dilutive impact to AIMCO's stockholders from the new High
Performance Units will be limited to 1.0%.
5
o In calculating the AIMCO total returns for the new High Performance
Units, the initial value of the Common Stock will be $45.19. This
was also the price used to determine the total return of the Common
Stock for purposes of valuing the Class II High Performance
Partnership Units issued in January 2001, for which the measurement
period ended December 31, 2001. It is an average of the
volume-weighted daily trading price of the Common Stock for the 20
consecutive trading days immediately preceding the end of the
period on December 31, 2001.
The Company's Board of Directors has determined, based upon the advice
of an independent valuation expert, that the fair value of the 5,000 new High
Performance Units is $1,066,000 in the aggregate. The employees who are offered
the opportunity to invest in the new High Performance Units will do so through a
senior management partnership, SMP 2005, L.L.C., a Delaware limited liability
company (the "SMP"), which will hold the new High Performance Units until their
valuation date. The terms of the limited liability company agreement of the SMP
will restrict the employees' ability to transfer their interests, and provides
the SMP with a right to repurchase the interest of any employee at the original
purchase price if such employee's employment with the Company is terminated for
any reason (other than by death or disability) before the end of the measurement
period. As with previous High Performance Units, the employees are investing
through a limited liability company to ensure that there is no opportunity to
profit from the ownership of High Performance Units before the valuation date.
A family partnership controlled by Terry Considine, the Chairman of the
Board and Chief Executive Officer of the Company, and Peter Kompaniez, the
Vice-Chairman of the Board and President of the Company, will own approximately
40% and 10%, respectively, of the SMP. The remaining interests in the SMP may be
owned by the other employees of the Company. Accordingly, Messrs. Considine and
Kompaniez will beneficially own 50% of the High Performance Units purchased by
the SMP. The $1,066,000 million aggregate purchase price to be paid by the SMP
for the High Performance Units will be funded with cash contributions from the
employees participating in the SMP. To the extent that offerees elect not to
participate, their interests will be offered to other participants on a
proportionate basis.
Holders of the new High Performance Units will not be able redeem their
High Performance Units prior to the date (the "Valuation Date") that is the
earlier of (i) January 1, 2005, or (ii) the date on which a change of control
(as defined in the Operating Partnership's Agreement of Limited Partnership)
occurs. Holders of the new High Performance Units will be entitled to receive
distributions and allocations of income and loss from the Operating Partnership
in the same amounts and at the same times (subject to certain exceptions upon
liquidation of the Operating Partnership) as would holders of a number of OP
Units (the "OP Unit Equivalent"). Prior to the relevant Valuation Date, the OP
Unit Equivalent will be 0.01 for each new High Performance Unit. If, on the
Valuation Date, the cumulative Total Return of the Company Common Stock from
January 1, 2002 to December 31, 2004 (the "Measurement Period") exceeds 115% of
the cumulative Total Return of a peer group index over the same period, and is
at least the equivalent of 36.8% cumulative Total Return over the three year
period (the "Minimum Return"), then, on and after the Valuation Date, the OP
Unit Equivalent for each new High Performance Unit will be revised to equal (i)
the product of (A) 5% of the amount by which the cumulative Total Return of the
Company Common Stock over the Measurement Period exceeds the greater of 115% of
a peer group index or the Minimum Return (such excess being the "Outperformance
Return"), multiplied by (B) the weighted average market value of the Company's
equity capitalization (including Common Stock and OP Units but not preferred
stock or preferred units), divided by (ii) the product of (A) the market value
of one share of Common Stock on the Valuation Date and (B) the 5,000 new High
Performance Units originally issued. However, the number of OP Unit Equivalents
for the 5,000 new High Performance Units may not exceed 1.0% of the number of
shares of Common Stock and OP Units outstanding, on a fully diluted basis, on
the Valuation Date. If, on the Valuation Date, the cumulative Total Return of
the Company Common Stock does not satisfy these criteria, then the OP Unit
Equivalent for the new High Performance Units will remain at 0.01 per Unit. For
purposes of determining the market value of Common Stock or OP Units as of any
date, the average of the volume-weighted daily trading price of the Common Stock
for the 20 consecutive trading days immediately preceding such date is used,
except that the value of a share of Common Stock as of January 1, 2002 will be
$45.19, the price used to determine the value of the Class II High Performance
Partnership Units as of December 31, 2001.
As with previously-issued High Performance Units, the Morgan Stanley
REIT Index will be used as the peer group index (the "Peer Group Index") for
purposes of the new High Performance Units. The Morgan Stanley REIT Index is a
capitalization-weighted index, with dividends reinvested, of the most actively
traded real estate investment trusts. As of December 31, 2001, the Morgan
Stanley REIT Index was comprised of 116 real estate investment trusts selected
by Morgan Stanley Incorporated. The Board of Directors of the Company has
selected this index because it believes that it
6
is the real estate investment trust index most widely reported and accepted
among institutional investors. The Board of Directors may select a different
index if it determines that the Morgan Stanley REIT Index is no longer an
appropriate comparison for the Company; if the Morgan Stanley REIT Index is not
maintained throughout the Measurement Period; or for any other reason that the
Board of Directors determines.
"Total Return" means, for any security and for any period, the
cumulative total return for such security over such period, as measured by (i)
the sum of (a) the cumulative amount of dividends paid in respect of such
security for such period (assuming that all cash dividends are reinvested in
such security as of the payment date for such dividend based on the security
price on the dividend payment date), and (b) an amount equal to (x) the security
price at the end of such period, minus (y) the security price at the beginning
of such period, divided by (ii) the security price at the beginning of the
measurement period; provided, however, that if the foregoing calculation results
in a negative number, the Total Return shall be equal to zero.
The new High Performance Units are subject to certain restrictions on
transfer. The SMP may not transfer its High Performance Units until after the
Valuation Date, and then only to its participants or to one of their family
members (or a family-owned entity). Individuals may not transfer High
Performance Units except to a family member (or a family-owned entity) or in the
event of death or disability. The new High Performance Units are not convertible
into Common Stock. However, in the event of a change of control of the Company,
holders of the new High Performance Units will have redemption rights similar to
those of holders of OP Units. Upon the occurrence of a change of control, any
holder of the new High Performance Units may, subject to certain restrictions,
require the Operating Partnership to redeem all or a portion of the High
Performance Units held by such party in exchange for a cash payment per unit
equal to their market value at the time of redemption. However, in the event
that any High Performance Units are tendered for redemption, the Operating
Partnership's obligation to pay the redemption price is subject to the prior
right of the Company to acquire such High Performance Units in exchange for an
equal number of shares of Common Stock (subject to certain adjustments).
Although the Company does not believe that the sale of the new High
Performance Units will have an anti-takeover effect, the High Performance Units
could increase the potential cost of acquiring control of the Company and
thereby discourage an attempt to take control of the Company. However, the Board
of Directors is not aware of any attempt to take control of the Company and the
Board of Directors has not approved the sale of the new High Performance Units
with the intention of discouraging any such attempt.
If the Company's Total Return over the Measurement Period exceeds 115%
of the Total Return of the Morgan Stanley REIT Index and exceeds the Minimum
Return of 36.8% over three years, then the holders of new High Performance Units
could be entitled to a significant percentage of future distributions made by
the Operating Partnership. This would have a dilutive effect on future earnings
per share of Common Stock, and on the Company's equity ownership in the
Operating Partnership after the Valuation Date. However, the maximum dilutive
effect for the new class of High Performance Units will be 1.0% of the number of
shares of Common Stock and OP Units outstanding, on a fully diluted basis, on
the Valuation Date.
The following table sets forth the cumulative Total Returns of the
Company's Common Stock and the Morgan Stanley REIT Index, respectively, for each
year in the period from January 1, 1998 through December 31, 2000, which were
the returns used for the valuation of the Class I Units. However, such
historical results are not necessarily indicative of future performance.
YEAR ENDED DECEMBER 31,
1998 1999 2000
------ ------ ------
Cumulative Total Return of Company Common Stock 7.77% 22.71% 59.24%
Cumulative Total Return of Morgan Stanley REIT Index (16.83)% (20.69)% 0.58%
7
The following table sets forth the cumulative Total Returns of the
Company Common Stock and the Morgan Stanley REIT Index, respectively, for the
period from January 1, 2001 through December 31, 2001, which were the returns
used in the valuation of the Class II, Class III and Class IV Units to date.
However, such historical results are not necessarily indicative of future
performance.
YEAR ENDED DECEMBER 31,
2001
----
Cumulative Total Return of Company Common Stock 0.21%
Cumulative Total Return of Morgan Stanley REIT Index 12.83%
The table below illustrates the value of the new High Performance Units
on the Valuation Date under different circumstances. The table demonstrates the
value of the new High Performance Units at given prices for Common Stock and the
total return calculated at that price compared to both the Minimum Return and
115% of the peer group total return. For purposes of this illustration, the
"value" of the new High Performance Units is calculated by multiplying (a) 5% of
the Outperformance Return, by (b) the weighted average market value of the
Company's equity capitalization (including Common Stock and OP Units not held by
the Company) over the Measurement Period. However, this determination of value
does not represent the actual fair market value of the High Performance Units on
the Valuation Date because the High Performance Units are subject to substantial
restrictions on transfer and, in the absence of a change of control, do not
entitle the holders thereof to any redemption rights. Except as otherwise
indicated, it is assumed, for purposes of the illustration, that the Valuation
Date is January 1, 2004, the Peer Group Index has an annual Total Return of
36.8%; and the weighted average market value of outstanding equity (Common Stock
and OP Units not held by the Company) during the Measurement Period is $3.965
billion. Other important assumptions are set forth in the footnotes below the
following table.
The table below is for illustrative purposes only and there can be no
assurance that actual outcomes will be within the ranges used. Some of the
factors that could affect the results set forth in the table are the Total
Return of the Common Stock relative to the Total Return of the Morgan Stanley
Index, and the market value of the average outstanding equity of the Company
during the Measurement Period. These factors may be affected by general economic
conditions, local real estate conditions and the dividend policy of the Company.
8
Class V High Performance Partnership Units - Three Year Program
Valuation Analysis as of December 31, 2001
================================================================================
5,000 CLASS V HIGH PERFORMANCE PARTNERSHIP UNITS
$1,066,000 CASH PROCEEDS TO COMPANY FROM INITIAL INVESTMENT (1)
OP Unit
115% Out- Value of Dilution as a
MS Average performance High Percentage of
AIMCO REIT Index Out- Market Shareholder Performance OP Unit Total Diluted
Stock Total Minimum Total performance Capitalization Value Added Units Dilution Shares
Price Return(2) Return Return Return(3) (thousands)(4) (thousands)(5) (thousands)(6) (thousands)(7) Outstanding(8)
------- ---------- -------- --------- ----------- -------------- -------------- -------------- -------------- --------------
$50.00 33.57% 36.80% 0.00% $3,964,537 $ -- $ 3 -- 0.00%
40.00% 0.00% 3,964,537 -- 3 -- 0.00%
60.00% 0.00% 3,964,537 -- 3 -- 0.00%
53.00 40.21% 36.80% 3.41% 3,964,537 135,112 6,756 127 0.12%
40.00% 0.21% 3,964,537 8,247 412 8 0.01%
60.00% 0.00% 3,964,537 -- 3 -- 0.00%
56.00 46.85% 36.80% 10.05% 3,964,537 398,303 19,915 356 0.34%
40.00% 6.85% 3,964,537 271,438 13,572 242 0.23%
60.00% 0.00% 3,964,537 -- 3 -- 0.00%
59.00 53.49% 36.80% 16.69% 3,964,537 661,494 33,075 561 0.54%
40.00% 13.49% 3,964,537 534,629 26,731 453 0.44%
60.00% 0.00% 3,964,537 -- 3 -- 0.00%
62.00 60.12% 36.80% 23.32% 3,964,537 924,685 46,234 746 0.71%
40.00% 20.12% 3,964,537 797,820 39,891 643 0.62%
60.00% 0.12% 3,964,537 4,913 246 4 0.00%
65.00 66.76% 36.80% 29.96% 3,964,537 1,187,877 59,394 914 0.87%
40.00% 26.76% 3,964,537 1,061,012 53,051 816 0.78%
60.00% 6.76% 3,964,537 268,104 13,405 206 0.20%
68.00 73.40% 36.80% 36.60% 3,964,537 1,451,068 71,027 1,045 1.00%(9)
40.00% 33.40% 3,964,537 1,324,203 66,210 974 0.93%
60.00% 13.40% 3,964,537 531,295 26,565 391 0.37%
71.00 80.04% 36.80% 43.24% 3,964,537 1,714,259 74,161 1,045 1.00%(9)
40.00% 40.04% 3,964,537 1,587,394 74,161 1,045 1.00%(9)
60.00% 20.04% 3,964,537 794,487 39,724 559 0.54%
(1) If "Outperformance Shareholder Value Added" is $0, the "Cash Proceeds
to Company from Initial Investment" is calculated by subtracting the
"Value of High Performance Units" from $1,066,000 which is the purchase
price of 5,000 Class V Units.
(2) AIMCO Total Return is calculated in the above example as follows:
((Stock Price + 2002 Annual Dividend + 2003 Annual Dividend + 2004
Annual Dividend) -$ 45.19) / $45.19, where 2002 Annual Dividend equals
$3.28, 2003 Annual Dividend equals $3.45 and 2004 Annual Dividend
equals $3.63. The 2003 and 2004 Annual Dividends include a 5.13%
increase over 2002 and 2003, respectively.
(3) "Outperformance Return" is the amount, if any, by which the total
return of the AIMCO Class A Common Stock over the measurement period
exceeds the greater of the Minimum Return or 115% of the MS REIT Index
Total Return.
(4) Assumes the market value of outstanding equity (AIMCO Class A Common
Stock and Common OP Units) at December 31, 2001 throughout the
measurement period.
(5) "Outperformance Shareholder Value Added" is calculated by multiplying
the Outperformance Return by the average market capitalization.
(6) The "Value of High Performance Units" is calculated by multiplying the
Outperformance Shareholder Value Added by 5%. If Outperformance
Shareholder Value Added is $0, the Value of High Performance Units is
calculated by multiplying the stock price by 50 OP Units. The initial
investment of $1,066,000 for the Class V Units will continue to be
treated as contributed equity on the balance sheet of the Operating
Partnership.
(7) The "OP Unit Dilution" is calculated by dividing the Value of High
Performance Units by the stock price at the end of the period.
(8) "OP Unit Dilution as a Percentage of Total Diluted Shares Outstanding"
is calculated by dividing the OP Unit Dilution by the total
weighted-average diluted shares outstanding as of December 31, 2001
(104.5 million shares).
(9) The maximum dilution for the Class V Units is 1.0% of the total
weighted-average diluted units outstanding.
9
Pursuant to Section 312.03 of the New York Stock Exchange listing
requirements, the affirmative vote of a majority of the votes cast regarding the
proposal is required for approval of the sale of the new High Performance Units.
Accordingly, abstentions or broker non-votes will not affect the outcome of the
vote on the proposal. Unless instructed to the contrary in the proxy, the shares
represented by proxies will be voted FOR the proposal to approve the sale of the
new High Performance Units.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE SALE OF
THE HIGH PERFORMANCE UNITS.
BOARD OF DIRECTORS AND OFFICERS
The executive officers of the Company and the nominees for election as
directors of the Company, their ages, dates they were first elected an executive
officer or director, and their positions with the Company or on the Board of
Directors are set forth below.
NAME AGE FIRST ELECTED POSITION
---- --- ------------- --------
Terry Considine 54 July 1994 Chairman of the Board of Directors and Chief Executive Officer
Peter K. Kompaniez 57 July 1994 Vice Chairman of the Board of Directors and President
Harry G. Alcock 39 October 1999 Executive Vice President and Chief Investment Officer
Joel F. Bonder 53 December 1997 Executive Vice President - Legal and Regulatory Affairs
Miles Cortez 58 August 2001 Executive Vice President, General Counsel and Secretary
Joseph DeTuno 57 February 2001 Executive Vice President - Redevelopment
Patrick J. Foye 45 May 1998 Executive Vice President
Lance J. Graber 41 October 1999 Executive Vice President - Affordable Transactions
Paul J. McAuliffe 45 February 1999 Executive Vice President and Chief Financial Officer
Ronald D. Monson 45 February 2001 Executive Vice President and Head of Property Operations
David Robertson 36 February 2002 Executive Vice President - Affordable Properties
James N. Bailey 55 June 2000 Director, Chairman of the Nominating Committee
Richard S. Ellwood 70 July 1994 Director, Chairman of the Audit Committee
J. Landis Martin 56 July 1994 Director, Chairman of the Compensation Committee
Thomas L. Rhodes 62 July 1994 Director
The following is a biographical summary of the experience of the
current directors and executive officers of the Company for the past five years
or more.
Terry Considine. Mr. Considine has been Chairman of the Board of
Directors and Chief Executive Officer since July 1994. Mr. Considine serves as
Chairman and Chief Executive Officer of American Land Lease, Inc., another
public real estate investment trust and successor to Asset Investors Corporation
and Commercial Assets, Inc. Mr. Considine devotes his time to his
responsibilities at AIMCO on a full time basis, and the balance to American Land
Lease, Inc.
Peter K. Kompaniez. Mr. Kompaniez has been Vice Chairman of the Board
of Directors since July 1994 and was appointed President in July 1997. Mr.
Kompaniez has also served as Chief Operating Officer of NHP Incorporated
("NHP"), after it was acquired by the Company in December 1997.
10
Harry G. Alcock. Mr. Alcock served as a Vice President from July 1996
to October 1997, when he was promoted to Senior Vice President-Acquisitions. Mr.
Alcock served as Senior Vice President-Acquisitions until October 1999, when he
was promoted to Executive Vice President and Chief Investment Officer. Mr.
Alcock has had responsibility for acquisition and financing activities of the
Company since July 1994.
Joel F. Bonder. Mr. Bonder was appointed Executive Vice President -
Legal and Regulatory Affairs in August 2001 and previously served as Executive
Vice President, General Counsel and Secretary from December 1997 to August 2001.
Prior to joining the Company, Mr. Bonder served as Senior Vice President and
General Counsel of NHP from April 1994 until it was acquired by the Company in
December 1997.
Miles Cortez. Mr. Cortez was appointed Executive Vice President,
General Counsel and Secretary in August 2001. Prior to joining the Company, Mr.
Cortez was the senior partner of Cortez Macaulay Bernhardt & Schuetze LLC, a
Denver law firm, from December 1, 1997 through September 30, 2001. From August
1, 1993 through November 30, 1997, Mr. Cortez was a partner at McKenna & Cuneo
LLP in Denver. He served as president of the Colorado Bar Association from 1996
to 1997 and the Denver Bar Association from 1992 to 1993.
Joseph DeTuno. Mr. DeTuno was appointed Executive Vice President -
Redevelopment in February 2001 and previously served as Senior Vice President -
Property Redevelopment from August 1997 to February 2001. Prior to joining the
Company, Mr. DeTuno was President and founder of JD Associates, his own full
service real estate consulting, advisory and project management company which he
founded in 1990.
Patrick J. Foye. Mr. Foye was appointed Executive Vice President in May
1998. He is responsible for continuous improvement, acquisitions of partnership
securities, consolidation of minority interests, and corporate and other
acquisitions. Prior to joining the Company, Mr. Foye was a Merger and
Acquisitions Partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP
from 1989 to 1998.
Lance J. Graber. Mr. Graber was appointed Executive Vice President -
Affordable Transactions in October 1999. His principal business function is
overseeing affordable housing transactions. Prior to joining the Company, Mr.
Graber was a Director at Credit Suisse First Boston from 1994 to May 1999,
during which time he supervised a staff of seven in the making of principal
investments in hotel, multi-family and assisted living properties.
Paul J. McAuliffe. Mr. McAuliffe has been Executive Vice President
since February 1999 and was appointed Chief Financial Officer in October 1999.
From May 1996 until he joined the Company, Mr. McAuliffe was Senior Managing
Director of Secured Capital Corp.
Ronald D. Monson. Mr. Monson was appointed Executive Vice President and
Head of Property Operations in February 2001. Previously, he served as Regional
Vice President from March 1997 to May 1998, when he was promoted to Senior Vice
President of the Midwest Division. Mr. Monson served as Senior Vice President of
the Midwest Division until January 1999, when he was appointed Senior Vice
President of the Far West Division. From April 1994 to February 1997, Mr. Monson
was a Regional Vice President for Great Atlantic Property Management.
David Robertson. Mr. Robertson was appointed Executive Vice President -
Affordable Properties in February 2002. He is responsible for affordable
property operations, refinancing and other value creation within the Company's
affordable portfolio. Prior to joining the Company, Mr. Robertson was a member
of the investment-banking group at Smith Barney from 1991 to 1996, where he was
responsible for real estate investment banking transactions in the western
United States, and was part of the Smith Barney team that managed AIMCO's
initial public offering in 1994. Since February 1996, Mr. Robertson has been
Chairman and Chief Executive Officer of Robeks Corporation, a privately held
chain of specialty food stores.
James N. Bailey. Mr. Bailey was appointed a Director of the Company in
June 2000 and is currently Chairman of the Nominating Committee and a member of
the Audit and Compensation Committees. Mr. Bailey is co-founder and Senior
Managing Director of Cambridge Associates, LLC, founded in 1973, and co-founder,
Treasurer and Director of: The Plymouth Rock Company, founded in 1984; Direct
Response Corporation, founded in 1996; and Homeowner's Direct Corporation,
founded in 1996; all U.S. personal lines insurance companies. In addition, he
has served as a Trustee and member of the Investment Committee of the New
England Aquarium since 1996. He has also been a member of a number of Harvard
University alumni affairs committees, including, the Overseers Nominating
Committee and, The Harvard Endowment Committee. Mr. Bailey is a member of the
Massachusetts Bar and the American Bar Associations.
11
Richard S. Ellwood. Mr. Ellwood was appointed a Director of the Company
in July 1994. Mr. Ellwood is currently Chairman of the Audit Committee and a
member of the Compensation and Nominating Committees. Mr. Ellwood is the founder
and President of R.S. Ellwood & Co., Incorporated, a real estate investment
banking firm. Prior to forming R.S. Ellwood & Co., Incorporated in 1987, Mr.
Ellwood had 31 years experience on Wall Street as an investment banker, serving
as: Managing Director and senior banker at Merrill Lynch Capital Markets from
1984 to 1987; Managing Director at Warburg Paribas Becker from 1978 to 1984;
general partner and then Senior Vice President and a director at White, Weld &
Co. from 1968 to 1978; and in various capacities at J.P. Morgan & Co. from 1955
to 1968. Mr. Ellwood currently serves as a director of Felcor Lodging Trust,
Incorporated and Florida East Coast Industries, Inc.
J. Landis Martin. Mr. Martin was appointed a Director of the Company in
July 1994 and became Chairman of the Compensation Committee on March 19, 1998.
Mr. Martin is a member of the Audit and Nominating Committees. Mr. Martin has
served as President and Chief Executive Officer of NL Industries, Inc., a
manufacturer of titanium dioxide since 1987. Mr. Martin has served as Chairman
of Tremont Corporation ("Tremont"), a holding company operating through its
affiliates Titanium Metals Corporation ("TIMET") and NL Industries, Inc. ("NL"),
since 1990 and as Chief Executive Officer and a director of Tremont since 1988.
Mr. Martin has served as Chairman of TIMET, an integrated producer of titanium
since 1987 and Chief Executive Officer since January 1995. From 1990 until its
acquisition by a predecessor of Halliburton Company ("Halliburton") in 1994, Mr.
Martin served as Chairman of the Board and Chief Executive Officer of Baroid
Corporation, an oilfield services company. In addition to Tremont, NL and TIMET,
Mr. Martin is a director of Halliburton, which is engaged in the petroleum
services, hydrocarbon and engineering industries, Crown Castle International
Corporation, a telecommunications company, and Special Metals Corporation, which
produces high-performance nickel-based alloys and super alloys.
Thomas L. Rhodes. Mr. Rhodes was appointed a Director of the Company in
July 1994 and is currently a member of the Audit, Compensation and Nominating
Committees. Mr. Rhodes has served as the President and Director of National
Review magazine since November 1992, where he has also served as a Director
since 1988. From 1976 to 1992, he held various positions at Goldman, Sachs & Co.
and was elected a General Partner in 1986 and served as a General Partner from
1987 until November 1992. Mr. Rhodes is Vice Chairman of the Board of Directors
of The Lynde and Harry Bradley Foundation and American Land Lease, Inc. and
serves as a Director of Delphi Financial Corporation and its subsidiaries. He
also serves as a Director of Delphi International, Ltd. and Oracle Reinsurance
Company.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors held four meetings during the year ended
December 31, 2001. During 2001, no director attended fewer than 75% of the total
number of meetings of the Board of Directors and any committees of the Board of
Directors upon which he served. The Board of Directors has established standing
audit, compensation and nominating committees.
Audit Committee. The Audit Committee currently consists of the four
Independent Directors: Messrs. Ellwood (Chairman), Bailey, Martin, and Rhodes.
The Audit Committee makes recommendations to the Board of Directors concerning
the engagement of independent auditors, reviews with the independent auditors
the plans and results of the audit engagement, reviews the independence of the
independent public accountants, considers the range of audit and non-audit fees
and reviews the adequacy of the Company's internal accounting controls. Each
member of the Audit Committee is independent, as that term is defined in the
listing standards of the New York Stock Exchange relating to audit committees.
The Audit Committee held four meetings during the year ended December 31, 2001.
Compensation Committee. The Compensation Committee currently consists
of the Independent Directors: Messrs. Martin (Chairman), Bailey, Ellwood, and
Rhodes. The Compensation Committee determines and reports to the Board of
Directors regarding compensation for the Company's executive officers and
administers the Company's stock option plans. The Compensation Committee met
once in 2001.
Nominating Committee. The Nominating Committee currently consists of
the Independent Directors: Messrs. Bailey (Chairman), Martin, Ellwood, and
Rhodes. The Nominating Committee makes recommendations to the Board of Directors
regarding those individuals who will be nominated to serve on the Board of
Directors. The Nominating
12
Committee will consider nominees to the Board that are recommended by
shareholders in writing, marked to the attention of the Secretary, no later than
November 28, 2002. The Nominating Committee met once in 2001.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Martin (Chairman),
Bailey, Ellwood and Rhodes. Mr. Rhodes is Vice Chairman and a Director of
American Land Lease, Inc. Mr. Considine, the Chairman of the Board and Chief
Executive Officer of the Company, is also Chairman and Chief Executive Officer
of American Land Lease, Inc.
COMPENSATION OF DIRECTORS
In 2001, the Company paid the Independent Directors an annual fee of
1,500 shares of the Company's Common Stock, a fee of $1,000 for attendance at
each meeting of the Board of Directors, and $1,000 for each meeting of any
committee thereof. Compensation for the Independent Directors in 2002 will be an
annual fee of 1,500 shares of Common Stock, a fee of $1,000 for attendance at
each meeting of the Board of Directors, and $1,000 for each meeting of any
committee thereof. This amount may be modified after further review by the
Company. Directors who are not Independent Directors do not receive directors'
fees.
Pursuant to The 1994 Stock Option Plan of Apartment Investment and
Management Company and Affiliates, each Independent Director, upon joining the
Board of Directors, received an initial grant of an option to purchase up to
3,000 shares of Common Stock at the market price of the shares on the date of
grant. On June 5, 2000 Mr. Bailey was granted an option to acquire 3,000 shares
of Common Stock. Following the annual meeting of stockholders in 2000, each
Independent Director received an option to purchase up to 3,000 shares of Common
Stock. On January 24, 2001, each Independent Director received an option to
purchase up to 10,000 shares of Common Stock. Following the annual meeting of
stockholders in 2002, each Independent Director will receive an option to
purchase up to 10,000 shares of Common Stock. The options have purchase prices
equal to the market price of the shares on the day prior to the date of grant
and vest one year after the date of grant.
13
AUDIT COMMITTEE REPORT TO STOCKHOLDERS
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements. A written charter approved
by the Board of Directors governs the Audit Committee.
The Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with accounting principles generally accepted in the United
States, their judgments as to the quality, not just the acceptability, of the
Company's accounting principles. The Audit Committee also has discussed with the
independent auditors the matters required to be discussed by Statement of
Auditing Standards No. 61 relating to communication with audit committees. In
addition, the Audit Committee has received from the independent auditors the
written disclosures and letter required by Independence Standards Board Standard
No. 1 relating to independence discussions with audit committees, has discussed
with the independent auditors their independence from the Company and its
management, and has considered whether the independent auditor's provision of
non-audit services to the Company is compatible with maintaining the auditor's
independence.
The Committee discussed with the Company's independent auditors the
overall scope and plans for their audit. The Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examination, their evaluation of the Company's internal
controls, and the overall quality of the Company's financial reporting. The
Committee held four meetings during fiscal year 2001.
None of the Audit Committee members has a relationship with the Company
that might interfere with exercise of his independence from the Company and its
management.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors, and the Board has approved,
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31, 2001 for filing with the Securities and
Exchange Commission. The Committee has also determined that provision by Ernst &
Young LLP of other non-audit services is compatible with maintaining Ernst &
Young LLP's independence. The Committee and the Board have also recommended,
subject to stockholder approval, the selection of the Company's independent
auditors.
Date: April 1, 2002
RICHARD S. ELLWOOD (CHAIRMAN)
JAMES N. BAILEY
J. LANDIS MARTIN
THOMAS L. RHODES
The above report will not be deemed to be incorporated by reference
into any filing by the Company under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates the same by reference.
14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information available to the
Company, as of March 1, 2002, with respect to equity securities of the Company
or any of its subsidiaries (other than directors qualifying shares) beneficially
owned by (i) each director and nominee, the chief executive officer and the four
other most highly compensated executive officers (the "Named Executive
Officers") who were serving as of December 31, 2001, and (ii) all directors and
executive officers as a group. The table also sets forth certain information
available to the Company, as of March 1, 2002, with respect to shares of Common
Stock held by each person known to the Company to be the beneficial owner of
more than 5% of such shares. This table does not reflect options that are not
exercisable within 60 days. Unless otherwise indicated, each person has sole
voting and investment power with respect to the securities beneficially owned by
that person. The business address of each of the following directors and
executive officers is 2000 South Colorado Boulevard, Tower Two, Suite 2-1000,
Denver, Colorado 80222-7900, unless otherwise specified.
NUMBER OF PERCENTAGE OF NUMBER OF PERCENTAGE
SHARES OF COMMON STOCK PARTNERSHIP OWNERSHIP OF THE
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK(1) OUTSTANDING(2) UNITS(3) COMPANY(4)
------------------------------------ --------------- -------------- ----------- -----------------
Directors & Executive Officers:
Terry Considine............................... 4,087,041(5) 5.3% 2,430,173(6) 7.3%
Peter K. Kompaniez............................ 1,215,998(7) 1.6% 354,410(8) 1.8%
Harry Alcock.................................. 110,430(9) * 47,682(10) *
Patrick J. Foye............................... 452,487(11) * 17,484(12) *
Paul McAuliffe................................ 243,870(13) * 6,358(14) *
Richard S. Ellwood............................ 38,525(15) * -- *
J. Landis Martin.............................. 36,500(16) * 34,391(17) *
Thomas L. Rhodes.............................. 64,900(18) * 34,365(19) *
James N. Bailey............................... 14,500(20) * -- *
All directors and executive
officers as a group (15 persons)........... 6,649,745(21) 8.4% 2,931,221(22) 10.6%
5% or Greater Holders:
FMR Corp........................................ 7,283,263(23) 9.7% -- 8.3%
82 Devonshire Street
Boston, Massachusetts 02109
Stichting Pensioenfonds ABP..................... 5,300,000 7.0% -- 6.1%
Oude Lindestraat 70
Postbus 2889
6401 DL Heerlen
The Netherlands
LaSalle Investment Management (Securities), LP.. 4,979,730(24) 6.6% -- 5.7%
200 East Randolph Drive
Chicago, Illinois 60601
General Electric Capital Services, Inc.......... 4,594,300(25) 5.7% -- 5.3%
260 Long Ridge Road
Stamford, Connecticut 06927
Pacific Financial Research, Inc................. 4,318,300(26) 5.7% -- 4.9%
9601 Wilshire Blvd., Suite 800
Beverly Hills, CA 90210
Security Capital Preferred Growth
Incorporated.................................. 4,364,229(27) 5.5% -- 5.0%
11 South LaSalle Street, Second Floor
Chicago, Illinois 60603
* Less than 1.0%
(1) Excludes shares of Common Stock issuable upon redemption of OP Units or
Class I Units
(2) Represents the number of shares of Common Stock beneficially owned by
each person divided by the total number of shares of Common Stock
outstanding. Any shares of Common Stock which may be acquired by a
person within 60 days upon the exercise of options, warrants, rights or
conversion privileges are deemed to be beneficially owned by that
person and are deemed outstanding for the purpose of computing the
percentage of outstanding shares of Common Stock owned by that person,
but not any other person.
(3) Through wholly owned subsidiaries, the Company acts as general partner
of, and, as of March 1, 2002, holds approximately 87% of the interests
in the Operating Partnership. After a one-year holding period, OP Units
may be tendered for redemption and, upon tender, may be acquired by the
Company for shares of Common Stock at an
15
exchange ratio of one share of Common Stock for each OP Unit (subject
to adjustment). If all OP Units were acquired by the Company for Common
Stock (without regard to the ownership limit set forth in AIMCO's
Charter) these shares of Common Stock would constitute approximately
11% of the then outstanding shares of Common Stock. OP Units are
subject to certain restrictions on transfer. Class I Units are not
convertible into Common Stock. However, in the event of a change of
control of the Company, holders of the Class I Units will have
redemption rights similar to those of holders of OP Units.
(4) Represents the number of shares of Common Stock beneficially owned,
divided by the total number of shares of Common Stock outstanding,
assuming, in both cases, that all 9,479,338 OP Units and 2,379,084
Class I Units outstanding as of March 1, 2002, are redeemed in exchange
for shares of Common Stock (notwithstanding any holding period
requirements, AIMCO's ownership limit and, in the case of Class I
Units, the absence of a change of control). See footnote 3 above.
Excludes Partnership Preferred Units issued by the Operating
Partnership and AIMCO preferred stock.
(5) Includes 74,743 shares held by Mr. Considine's spouse, Elizabeth
Considine, for which Mr. Considine disclaims beneficial ownership,
98,963 shares held by a non-profit foundation in which Mr. Considine
has shared voting and investment power, for which Mr. Considine
disclaims beneficial ownership, and 80,000 shares held by Titaho
Limited Partnership RLLLP ("Titaho"), a Registered Limited Liability
Limited Partnership in which Mr. Considine's brother is the trustee for
the sole general partner and for which Mr. Considine disclaims
beneficial ownership. Also includes 1,222,978 shares held by Titahotwo,
RLLLP ("Titahotwo"), a Registered Limited Liability Limited Partnership
in which Mr. Considine serves as General Partner and owns 1%, and
2,268,667 shares subject to options held by Titaho that are exercisable
within 60 days for which Mr. Considine disclaims beneficial ownership.
(6) Includes 840,801 OP Units and 1,589,372 Class I Units which represent
8.9% of OP Units outstanding and 66.8% of Class I Units outstanding,
respectively. The 840,801 OP Units include 179,735 OP Units held by an
entity in which Mr. Considine has sole voting and investment power,
2,300 OP Units held by Titahotwo, and 157,698 OP Units held by Mr.
Considine's spouse, Elizabeth Considine, for which Mr. Considine
disclaims beneficial ownership. All Class I Units are held by
Titahotwo.
(7) Includes 565,000 shares subject to options that are exercisable within
60 days.
(8) Includes 36,535 OP Units and 317,875 Class I Units which represent 0.4%
of OP Units outstanding and 13.4% of Class I Units outstanding,
respectively. The Class I Units include 158,938 units held by two
trusts established by Mr. Kompaniez for his children for which he
serves as trustee and disclaims beneficial ownership.
(9) Includes 77,786 shares subject to options that are exercisable within
60 days.
(10) Represents Class I Units, which represent 2% of all Class I Units
outstanding.
(11) Includes 280,000 shares subject to options that are exercisable within
60 days and 3,300 shares of Class K Convertible Cumulative Preferred
Stock which are convertible into 1,964 shares of Common Stock and
represents less than 1% of the class outstanding.
(12) Represents Class I Units, which constitute less than 1% of the class
outstanding.
(13) Includes 126,800 shares subject to options that are exercisable within
60 days and 1,300 shares of Class P Convertible Cumulative Preferred
Stock which are convertible into 580 shares of Common Stock and
represents less than 1% of the class outstanding. The officer also
beneficially owns: 2,000 shares of Class C Cumulative Preferred Stock;
3,800 shares of Class D Cumulative Preferred Stock; and 2,000 shares of
Class G Cumulative Preferred Stock each of which represents less than
1% of the class outstanding.
(14) Represents Class I Units, which constitute less than 1% of the class
outstanding.
(15) Includes 23,500 shares subject to options that are exercisable within
60 days.
(16) Includes 19,000 shares subject to options that are exercisable within
60 days.
16
(17) Includes 26 OP Units and 34,365 Class I Units, each of which represent
less than 1% of the class outstanding.
(18) Includes 19,000 shares subject to options that are exercisable within
60 days and 4,900 shares held by The Rhodes Foundation for which Mr.
Rhodes disclaims beneficial ownership. The director also beneficially
owns: 15,700 shares of Class C Cumulative Preferred Stock, and 3,100
shares of Class D Cumulative Preferred Stock, each of which represents
less than 1% of the class outstanding.
(19) Represents Class I Units, which constitute less than 1% of the class
outstanding.
(20) Includes 13,000 shares subject to options that are exercisable within
60 days.
(21) Includes 3,482,298 shares subject to options that are exercisable
within 60 days, 3,300 shares of Class K Convertible Cumulative
Preferred Stock which are convertible into 1,964 shares of Common Stock
and 1,300 shares of Class P Convertible Cumulative Preferred Stock
which are convertible into 580 shares of Common Stock, each of which
represents less than 1% of the class outstanding. All directors and
executive officers as a group also beneficially own: 17,700 shares of
Class C Cumulative Preferred Stock; 13,150 shares of Class D Cumulative
Preferred Stock; 2,000 shares of Class G Cumulative Preferred Stock,
each of which represent less than 1% of all shares of each class
outstanding.
(22) Includes 877,362 OP Units and 2,053,857 Class I Units, which represent
9.3% of OP Units outstanding and 86.3% of Class I Units outstanding,
respectively.
(23) FMR Corp. has shared voting power as to 5,338,225 shares.
(24) LaSalle Investment Management (Securities) L.P. has shared voting power
as to 4,424,988 of such shares and shared dispositive power as to
4,596,266 of such shares.
(25) Includes: 5,000,000 shares of Class L Convertible Cumulative Preferred
Stock which are convertible into 2,689,500 shares of Common Stock; and
4,000,000 shares of Class N Convertible Cumulative Preferred Stock
which are convertible into 1,904,800 shares of Common Stock. General
Electric Capital Services, Inc. has shared voting and dispositive power
as to all 9,000,000 of such shares of preferred stock, which represent
100% of each class.
(26) Pacific Financial Research, Inc. has shared voting power as to 366,600
of such shares.
(27) Includes: 419,471 shares of Class B Cumulative Convertible Preferred
Stock which are convertible into 1,377,572 shares of Common Stock;
1,904,762 shares of Class O Cumulative Convertible Preferred Stock
which are convertible into 1,904,762 shares of Common Stock; 1,234,200
shares of Class K Convertible Cumulative Preferred Stock which are
convertible into 734,596 shares of Common Stock and 778,000 shares of
Class P Convertible Cumulative Preferred Stock which are convertible
into 347,299 shares of Common Stock.
17
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid for each of the
three fiscal years ended December 31, 2001 to the Company's Chief Executive
Officer and each of the Named Executive Officers.
LONG TERM
COMPENSATION(1)(2)
------------------------------
SECURITIES
RESTRICTED UNDERLYING STOCK
ANNUAL COMPENSATION OTHER ANNUAL STOCK OPTIONS/SARS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(3) COMPENSATION($) AWARDS($)(4) AWARDS (#) COMPENSATION($)
--------------------------------- ------- ------------ ----------- ---------------- ------------- ---------------- --------------
Terry Considine ................. 2001 $ 100,000 $ 857,500 None None 921,970 None
Chairman of the Board of ...... 2000 275,000 None None None 200,000 None
Directors and Chief ........... 1999 275,000 1,275,000 None None 385,294 None
Executive Officer
Peter K. Kompaniez .............. 2001 100,000 507,500 None None 437,122 None
President and Vice Chairman ... 2000 235,000 None None None 200,000 None
1999 235,000 985,000 None None 75,000 None
Harry Alcock .................... 2001 200,000 397,500 None $ 570,500 40,000 None
Executive Vice-President ...... 2000 200,000 None None 400,000 20,000 None
and Chief Investment Officer .. 1999 180,000 280,000 None None 35,529 None
Patrick J. Foye ................. 2001 225,000 382,500 None 892,500 None None
Executive Vice President ...... 2000 225,000 None None 2,000,000 None None
1999 225,000 400,000 None 1,000,000 29,412 None
Paul McAuliffe(5) ............... 2001 200,000 457,500 None 470,000 203,788 None
Executive Vice President ...... 2000 200,000 None None 1,200,000 20,000 None
and Chief Financial Officer ... 1999 166,667 300,000 None 1,000,000 223,529 None
(1) Excludes 64,865 shares of Common Stock underlying options granted to
Mr. McAuliffe in 1999, which were immediately exercised to purchase
shares pursuant to the Company's leveraged stock purchase program.
(2) Options were awarded in January 2000, 2001 and 2002, respectively, in
respect of 1999, 2000 and 2001 fiscal years.
(3) Includes all Discretionary and Incentive cash compensation earned by
the Named Executive Officers.
(4) The value of the 1999 restricted stock awards at the end of the last
fiscal year was $1,143,250, and $1,143,250 for Messrs. Foye and
McAuliffe, respectively. Such value is determined by the market price,
$45.73, for the stock at the last day of the last fiscal year. The
number of 1999 restricted stock awards held by Messrs. Foye and
McAuliffe at the end of the last fiscal year was 25,000 shares, and
25,000 shares, respectively. Restrictions lapse on the second (40%),
third (20%), fourth (20%) and fifth (20%) anniversaries of the award.
The value of the 2000 restricted stock awards at the end of the last
fiscal year was $384,041, $1,920,203 and $1,152,122 for Messrs. Alcock,
Foye and McAuliffe, respectively. Such value is determined by the
market price, $45.73, for the stock at the last day of the last fiscal
year. The number of 2000 restricted stock awards held by Messrs.
Alcock, Foye and McAuliffe at the end of the last fiscal year was 8,398
shares, 41,990 shares, and 25,194 shares, respectively. Restrictions
lapse ratably over three years from the date of the award. The
restricted stock awards in consideration of 2001 to Messrs. Alcock,
Foye and McAuliffe are, 13,085 shares, 20,470 shares and 10,780 shares,
respectively, which will be issued on May 1, 2002. Restrictions lapse
ratably over three years from the date of the award for 2,351 of the
13,085 shares, 2,122 of the 20,470 shares, and 2,752 of the 10,780
shares held by Messrs. Alcock, Foye and McAuliffe, respectively. The
restrictions on the remaining shares lapse on the second (40%), third
(20%), fourth (20%) and fifth (20%) anniversaries of the award. Holders
of restricted stock awards are entitled to receive the dividends
thereto commencing on the date of grant.
(5) Mr. McAuliffe was not an employee of the Company prior to February
1999.
18
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Information on options granted in 2002 for the 2001 fiscal year to the
Named Executive Officers is set forth in the following table.
INDIVIDUAL GRANTS(1)
--------------------------------------------------------
% OF
TOTAL
OPTIONS/
SARS POTENTIAL REALIZABLE VALUE AT
NUMBER OF GRANTED ASSUMED ANNUAL RATES OF STOCK
SECURITIES TO PRICE APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES EXERCISE OR TERM(2)
OPTIONS/SARS IN FISCAL BASE EXPIRATION ------------------------------------
NAME GRANTED(#) YEAR PRICE($/SH) DATE 5%($) 10%($)
---- ------------- ------------ ------------ ------------ --------------- -----------------
Terry Considine........... 921,970(3) 52.9% $ 43.60 1/28/2012 $25,284,474 $64,075,440
Peter K. Kompaniez........ 437,122(3) 25.1% 43.60 1/28/2012 11,987,809 30,379,280
Harry Alcock.............. 40,000(3) 2.3% 43.60 1/28/2012 1,096,976 2,779,936
Patrick J. Foye........... None -- -- -- -- --
Paul J. McAuliffe......... 203,788(3) 11.7% 43.60 1/28/2012 5,588,764 14,162,940
(1) Under the terms of the Apartment Investment and Management Company 1997
Stock Award and Incentive Plan (the "1997 Stock Plan"), the plan
administrator retains discretion, subject to certain restrictions, to
modify the terms of outstanding options. The exercise price of
incentive options granted under the 1997 Stock Plan equal the fair
market value of a share of Common Stock on the date of grant. The
exercise price of non-qualified options issued under the 1997 Stock
Plan generally equals the fair market value of a share of Common Stock
on the date of grant.
(2) Assumed annual rates of stock price appreciation are set forth for
illustrative purposes only. The amounts shown are for the assumed rates
of pre-tax appreciation only, do not constitute projections of future
stock price performance, and may not be realized.
(3) For 757,576 options, 378,788 options, 40,000 options and 196,970
options for Messrs. Considine, Kompaniez, Alcock and McAuliffe,
respectively, vesting is on the second (40%), third (20%), fourth (20%)
and fifth (20%) anniversaries of the grant date. For 164,394 options,
58,334 options and 6,818 options for Messrs. Considine, Kompaniez and
McAuliffe, respectively, vesting is ratable over three years from the
date of the grant.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
Information on option exercises during 2001 by the Named Executive
Officers, and the value of unexercised options held by Named Executive Officers
at December 31, 2001 is set forth in the following table.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
SHARES ACQUIRED VALUE FY-END(#)(1) AT FY-END($)(2)
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------------ ------------- ------------- -------------- -------------- --------------
Terry Considine........... 2,400 $57,540 1,564,000 2,753,264 $13,067,220 $15,591,052
Peter K. Kompaniez........ 200,000 2,173,800 289,000 1,113,122 2,414,595 4,889,300
Harry Alcock.............. 20,000 236,500 43,000 149,173 359,265 762,459
Patrick J. Foye........... None None 220,000 184,412 1,700,600 1,560,799
Paul J. McAuliffe......... None None None 447,317 None 2,350,183
(1) Includes: 921,970 shares, 437,122 shares, 40,000 shares and 203,788
shares subject to options granted to Messrs. Considine, Kompaniez,
Alcock and McAuliffe, respectively, in January 2002.
(2) Market value of underlying securities at fiscal year-end, less the
exercise price. Market value is determined based on the closing price
of the Common Stock on the New York Stock Exchange on December 31, 2001
of $45.73 per share.
19
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The four members of the Board of Directors who are not members of
management constitute the Compensation Committee. The Compensation Committee
determines the compensation of the Chief Executive Officer and the President;
reviews and approves compensation of other corporate officers holding the title
of Executive Vice President ("Other Senior Management" and together with the
Chief Executive Officer and the President, "Senior Management"); reviews the
general compensation and benefit practices of the Company; and administers the
Company's stock option and other stock related plans.
In conducting its review and in making its determination and granting
approvals, the Committee considers various factors: the alignment of management
financial awards with shareholder objectives for Total Return (dividend income
plus share price appreciation); reasonability of compensation in consideration
of all the facts, including Total Return, the size and complexity of the
Company, and practices of other real estate investment trusts; and recruitment
and retention of the Company's management.
Compensation of Senior Management is comprised of Base Compensation,
Bonus Compensation and Long Term Incentive Compensation (collectively "Total
Compensation"). The policy of the Compensation Committee is to set Base
Compensation at or below the median paid by comparable companies to executive
officers with comparable responsibilities; to utilize Bonus Compensation with a
mixture of cash and stock options and/or restricted stock to reward specific
achievements with reference to the median levels of the peer group; and to
utilize Long Term Incentive Compensation (which is a mixture of stock options
and restricted stock), at levels dependant upon the Company's performance. In
years when the Company's financial performance is superior to its peer group,
(REITs with market capitalization of greater than $4 billion), it is the policy
of the Compensation Committee to set Total Compensation at levels which reward
such performance. If Company performance is not superior to the peer group it is
the Compensation Committee's policy to maintain aggregate Total Compensation of
Senior Management at levels equal to or below the median level of the peer
group, balanced by individual performance. The comparable companies reviewed by
the Compensation Committee are among those included in the SNL indices used in
the stock price performance graph on page 23 of this Proxy Statement. Among the
factors considered by the Compensation Committee, in addition to Total Return,
are various metrics of the Company, measured against the peer group, such as
Adjusted Funds From Operations, and the scale of the business.
Base Compensation. The Compensation Committee determined 2001 Base
Compensation for the Chief Executive Officer and for the President; reviewed and
approved 2001 Base Compensation for Other Senior Management based upon the
recommendation of the Chief Executive Officer and President; and considered such
2001 Base Compensation reasonable and in line with Company policy. The Base
Compensation for Messrs. Considine and Kompaniez has been set to be equal or
below the median compensation paid to executives with similar responsibilities
at comparable companies reviewed by the Compensation Committee.
Bonus and Long Term Incentive Compensation. In assessing Bonus and Long
Term Incentive Compensation for 2001, the Compensation Committee considered,
among other things:
o AFFO and FFO per share increased to $4.63 and $5.21, respectively, an
increase of 6% and 8%, respectively, over the prior year's results.
Annual dividends per share increased from $3.12 to $3.28, an increase
of 5% from the prior year.
o Total market capitalization increased to approximately $9.9 billion
($4.0 billion in equity capitalization) as of December 31, 2001,
compared to approximately $9.6 billion ($4.0 billion in equity
capitalization), as of December 31, 2000, an increase of 3%.
o Property sales activity totaled approximately $420 million for the
year, consisting of 73 apartment communities, three commercial
properties and one land parcel, containing 10,628 units.
o The Company completed the merger of OTEF and acquired 5 apartment
communities containing 2,673 units for approximately $120 million.
20
o AIMCO's 2001 Total Return of (1.8)% was less than that of the Morgan
Stanley REIT Index, which had a return of 12.83%, and less than that of
the peer group.
o AIMCO Total Return for the last five years is 123.7%, or 17.47% on an
annualized basis, exceeding the Morgan Stanley REIT Index of 34.57%,
which is a difference of 6.12% on an annualized basis. For the same
period, AIMCO ranked first in total return to stockholders among REITs
with a market capitalization of over $2 billion.
o AIMCO agreed to the Casden Properties transactions (completed March 11,
2002), which have made Southern California AIMCO's largest market and
improved the Company's overall asset quality, and which transactions
closed on March 11, 2002.
While there were a number of significant accomplishments by the Company
during 2001, the Company's financial performance was not considered superior by
the Compensation Committee. Thus, the Compensation Committee approved Total
Compensation to Mr. Considine and Mr. Kompaniez as follows:
BASE BONUS LONG TERM INCENTIVE TOTAL
NAME COMPENSATION COMPENSATION COMPENSATION COMPENSATION
---- ------------ ------------ ------------------- ------------
Terry Considine........... $100,000 $1,400,000 $2,500,000 $4,000,000
Peter K. Kompaniez........ $100,000 $700,000 $1,250,000 $2,050,000
Mr. Considine's and Mr. Kompaniez' Total Compensation is comprised of
$957,500 and $607,500 in cash and $3,042,500 and $1,442,500 in stock options,
respectively.
The Compensation Committee approved $8,325,000 in Total Compensation to
eight other members of Senior Management, consisting of $4,077,500 in cash and
$4,247,500 in stock options and restricted stock. Restricted stock was valued at
$43.60 per share, the closing price of the Company's Common stock on January 25,
2002, which is also the price at which the options may be exercised. The
Compensation Committee valued the options at approximately $3.30 per underlying
share, based on the advice of a nationally recognized independent investment
bank that considered the exercise price, the terms of the options, the lack of
transferability of the options, the vesting provisions (1/3 per year over three
years for that portion paid as Bonus Compensation and over 5 years for that
portion paid as Long Term Incentive Compensation), and the likely dividend rate
on the underlying stock.
The aggregate amount of Total Compensation of $9,350,000, consisting of
$2,830,000 in cash and $6,520,000 in options and Restricted Stock, for the
Company's four most highly compensated executive officers is below the average
amount paid to the four most highly compensated executive officers of REITs
having market capitalization rates of $4 billion or greater.
Date: April 1, 2002
J. LANDIS MARTIN (CHAIRMAN)
JAMES N. BAILEY
RICHARD S. ELLWOOD
THOMAS L. RHODES
The above report will not be deemed to be incorporated by reference
into any filing by the Company under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates the same by reference.
21
EMPLOYMENT ARRANGEMENTS
Each of Messrs. Considine and Kompaniez receive annual cash
compensation pursuant to employment contracts with the Company. The initial
two-year term of each of these contracts expired in July 1996 but the contracts
are automatically renewed for successive one-year terms unless the officer is
terminated by the Company. The base salary payable under the employment
contracts is subject to annual review and adjustment by the Compensation
Committee. The base annual salaries of Messrs. Considine and Kompaniez were
$100,000 each for 2001. Each of Messrs. Considine and Kompaniez are also
eligible for a bonus set by the Compensation Committee. See "Compensation
Committee Report to Stockholders."
The employment contracts provide that upon a change in control of the
Company or a termination of employment under certain circumstances, the employee
will be entitled to a payment equal to three times the average annual salary for
the previous three years. The contracts provide that during the term of the
contract and for one year thereafter in no event will the employees engage in
the acquisition, development, operation or management of other multifamily
rental apartment properties outside of the Company. In addition, the contracts
provide that the employees will not engage in any active or passive investment
in property relating to multifamily rental apartment properties, with the
exception of the ownership of up to 1% of the securities of any publicly-traded
company involved in those activities.
Effective in January 2002, the Company entered into certain
non-competition and non-solicitation agreements with a number of employees,
including Messrs. Considine, Kompaniez, Alcock, Foye and McAuliffe. Pursuant to
the agreements, in consideration for payment of certain bonus and restricted
stock as disclosed herein on the Summary Compensation Table and Option/SAR
Grants in Last Fiscal Year table, each of these executives agreed that during
the term of his employment with the Company and for a period of two (2) years
following the termination of his employment, except in circumstances where there
was a change in control of the Company, he could not (i) be employed by a
competitor of the Company named on a schedule to the agreement, (ii) solicit
other AIMCO employees to leave the Company's employ or (iii) solicit customers
of AIMCO to terminate their relationship with the Company. The agreements
further required that the executives protect the Company's trade secrets and
confidential information.
The agreements provide that in order to enforce the above-noted
non-competition condition following the executive's termination of employment by
the Company without cause, each of Messrs. Considine, Kompaniez, Alcock, Foye
and McAuliffe will receive, for a period not to exceed the earlier of
twenty-four (24) months following such termination or the date of acceptance of
employment with a non-competitor, (i) severance pay in an amount, if any, to be
determined by the Company in its sole discretion, and (ii) following payment of
such severance, a monthly payment equal to two-thirds (2/3) of such executive's
monthly base salary at the time of termination.
For purposes of these agreements, "cause" is defined to mean, among
other things, the executive's (i) breach of the agreement, (ii) failure to
perform required employment services, (iii) misappropriation of Company funds or
property, (iv) indictment, conviction, plea of guilty or plea of no contest to a
crime involving fraud or moral turpitude, or (v) negligence, fraud, breach of
fiduciary duty, misconduct or violation of law.
STOCK PRICE PERFORMANCE GRAPH
The following graph compares cumulative total returns for the Company's
Common Stock ("AIMCO"), the Standard & Poor's 500 Total Return Index (the "S&P
500"), the NASDAQ, the SNL Residential REIT Index and the Morgan Stanley REIT.
The SNL Residential REIT Index was prepared by SNL Securities, an independent
research and publishing firm specializing in the collection and dissemination of
data on the banking, thrift and financial services industries. The Morgan
Stanley REIT Index is published by Morgan Stanley Incorporated, an investment
banking company. The indices are weighted for all companies that fit the
definitional criteria of the particular index and are calculated
22
to exclude companies as they are acquired and add them to the index calculation
as they become publicly traded companies. All companies of the definitional
criteria in existence at the point in time presented are included in the index
calculations. The graph assumes the investment of $100 in the Company's Common
Stock and in each index on December 31, 1996, and that all dividends paid have
been reinvested.
[GRAPH]
PERIOD ENDING
--------------------------------------------------------------------
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
--------- --------- -------- -------- -------- --------
AIMCO......................... $ 100.00 $ 138.19 $ 150.88 $ 171.93 $ 230.34 $ 226.20
S&P 500....................... 100.00 133.37 171.44 207.52 188.62 166.22
NASDAQ - Total US*............ 100.00 122.48 172.68 320.89 193.01 153.15
SNL Residential REITs......... 100.00 116.02 106.61 115.98 155.11 171.50
Morgan Stanley REIT Index**... 100.00 118.38 98.54 94.05 119.27 134.57
* Source: CRSP, Center for Research in Security Prices, Graduate School of
Business, The University of Chicago, 2002.
** Morgan Stanley ("MS")REIT Index
The Stock Price Performance Graph will not be deemed to be incorporated
by reference into any filing by the Company under the Securities Act of 1933 or
the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates the same by reference.
23
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From time to time, the Company has entered into various transactions
with certain of its executive officers and directors. The Company attempts to
price such transactions based on fair market value, and believes that the
transactions are on terms that are as favorable to the Company as could be
achieved with unrelated third parties.
In 2001, the Operating Partnership sold to three limited liability
companies owned by members of senior management and other employees of the
Company (40% by a Considine family partnership, 10% by Mr. Kompaniez and 50% by
other employees) an aggregate of 5,000 Class II Units, 5,000 Class III Units and
5,000 Class IV Units for $1,274,854, $1,792,764, and $1,792,764, respectively.
The sale was approved by the Company's stockholders at the 2001 Annual
Stockholders' Meeting.
Based upon the total return of the Company's Common Stock during 2001,
compared to the Morgan Stanley REIT Index, and an 11% minimum return, the Class
II Units were valued at $0 as of January 1, 2002 and the allocable investment
made by the holders of $1,274,854 was lost.
Based upon the total return of the Company's Common Stock during 2001,
compared to the Morgan Stanley REIT Index, and a 23.2% minimum return, the Class
III Units were valued at $0 for the period of January 1, 2001 through December
31, 2001, however, the full measurement period ends on December 31, 2002. Based
on the total return of the Company's Common Stock during 2001, compared to the
Morgan Stanley REIT Index, and a 36.8% minimum return, the Class IV Units were
valued at $0 for the period of January 1, 2001 through December 31, 2001,
however, the full measurement period ends on December 31, 2003
The Company is currently proposing to issue 5,000 Class V High
Performance Partnership Units to a limited liability company expected to be
owned by members of senior management and other employees of the Company (40% by
a Considine family partnership, 10% by Mr. Kompaniez, and 50% by other
employees) for $1,066,000. See "Proposal 3: Approval of the Sale of High
Performance Units".
STOCK PURCHASE LOANS
From time to time, the Company makes loans to its executive officers to
finance their purchase of shares of Common Stock from the Company. During 2001,
the Company sold 62,317 shares of Common Stock to Mr. Cortez and 9,379 shares of
Common Stock to Mr. Monson for purchase prices of $3,000,045 and $400,014,
respectively. In each case, the purchase price was equal to the closing price of
the Common Stock on the New York Stock Exchange on the date of sale. In payment
for such shares, Messrs. Cortez, and Monson executed notes payable to the
Company bearing interest at 7.25% per annum, payable quarterly, and due in 2011.
The following table sets forth certain information with respect to these loans
to executive officers.
HIGHEST AMOUNT AMOUNT REPAID
INTEREST OWED DURING SINCE INCEPTION MARCH 1, 2002
NAME RATE 2001 (THRU 3/01/02) BALANCE
----------- -------- -------------- -------------- --------------
Terry Considine ......... 7.25% $ 15,797,963 $ 20,038,112 $ 15,797,879
Peter K. Kompaniez ...... 7.25% 1,944,941 4,055,416 1,944,584
Harry G. Alcock ......... 7.00% 777,609 131,217 755,789
Joel F. Bonder .......... 7.00% 1,321,832 44,975 1,315,041
Miles Cortez ............ 7.25% 3,000,045 None 3,000,045
Joseph DeTuno ........... 7.00% 464,725 249,791 250,203
Patrick J. Foye ......... 6.25% 2,613,701 410,221 2,589,803
Paul J. McAuliffe ....... 7.00% 2,036,531 396,242 2,003,764
Ron D. Monson ........... 7.25% 1,094,475 319,842 886,370
Lance Graber ............ 7.00% 1,925,000 None 1,925,000
-------------- -------------- --------------
$ 30,976,822 $ 25,645,816 $ 30,468,478
============== ============== ==============
24
OTHER MATTERS
Section 16(a) Compliance. Section 16(a) of the Exchange Act requires
the Company's executive officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
reports (Forms 3, 4 and 5) of stock ownership and changes in ownership with the
SEC and the New York Stock Exchange. Officers, directors and beneficial owners
of more than ten percent of the Company's stock are required by SEC regulations
to furnish the Company with copies of all such forms that they file.
Based solely on the Company's review of the copies of Forms 3, 4 and 5
and the amendments thereto received by it for the year ended December 31, 2001,
or written representations from certain reporting persons that no Forms 5 were
required to be filed by those persons, the Company believes that during the
period ended December 31, 2001, all filing requirements were complied with by
its executive officers, directors and beneficial owners of more than ten percent
of the Company's stock.
Stockholders' Proposals. Proposals of stockholders intended to be
presented at the Company's Annual Meeting of Stockholders to be held in 2003,
must be received by the Company, marked to the attention of the Secretary, no
later than November 28, 2002 to be included in the Company's Proxy Statement and
form of proxy for that meeting. Proposals must comply with the requirements as
to form and substance established by the SEC for proposals in order to be
included in the proxy statement. Proposals of stockholders submitted to the
Company for consideration at the Company's Annual Meeting of Stockholders to be
held in 2003 outside the processes of Rule 14a-8 (i.e., the procedures for
placing a shareholder's proposal in the Company's proxy materials) will be
considered untimely if received by the Company after February 17, 2003.
Other Business. The Company knows of no other business that will come
before the Meeting for action. As to any other business that comes before the
Meeting, the persons designated as proxies will have discretionary authority to
act in their best judgment.
Available Information. The Company files annual, quarterly and current
reports, proxy statements and other information with the Securities and Exchange
Commission (the "SEC"). You may read and copy any reports, statements or other
information that the Company files at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. The
Company's public filings are also available to the public from commercial
document retrieval services and at the Internet World Wide Web site maintained
by the SEC at "http://www.sec.gov." Reports, proxy statements and other
information concerning the Company also may be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005.
The SEC allows the Company to "incorporate by reference" information
into this Proxy Statement, which means that the Company can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
Proxy Statement, except for any information superseded by information contained
directly in the Proxy Statement. This Proxy Statement incorporates by reference
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001 (Commission file No. 1-13232). This document contains important information
about the Company and its financial condition.
The Company incorporates by reference additional documents that the
Company may file with the SEC between the date of this Proxy Statement and the
date of the Meeting. These include periodic reports, such as Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as proxy statements. The Company has mailed all information contained or
incorporated by reference in this Proxy Statement to stockholders.
25
If you are a stockholder, the Company may have sent you some of the
documents incorporated by reference, but you can obtain any of them through the
Company or the SEC or the SEC's Internet World Wide Web site described above.
Documents incorporated by reference are available from the Company without
charge, excluding all exhibits unless specifically incorporated by reference as
exhibits in the Proxy Statement. Stockholders may obtain documents incorporated
by reference in this Proxy Statement by requesting them in writing from the
Company at the following address:
Apartment Investment and Management Company
2000 South Colorado Boulevard, Tower Two
Suite 2-1000
Denver, Colorado 80222-7900
If you would like to request documents from the Company, please do so
by April 10, 2002 to receive them before the Meeting. If you request any
incorporated documents, they will be mailed to you by first-class mail, or other
equally prompt means, within one business day of receipt of your request.
You should rely only on the information contained or incorporated by
reference in this Proxy Statement to vote your shares at the Annual Meeting of
Stockholders. The Company has not authorized anyone to provide you with
information that is different from what is contained in this Proxy Statement.
This Proxy Statement is dated April 1, 2002. You should not assume that the
information contained in the Proxy Statement is accurate as of any date other
than that date.
THE BOARD OF DIRECTORS
April 1, 2002
Denver, Colorado
26
PROXY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED
FOR EACH OF THE SIX NOMINEES
FOR DIRECTOR AND THE PROPOSALS REFERRED TO IN 2 AND 3 BELOW
The undersigned hereby appoints Terry Considine and Peter K. Kompaniez and
each of them the undersigned's true and lawful attorneys and proxies (with full
power of substitution in each) to vote all Common Stock of Apartment Investment
and Management Company (the "Company"), standing in the undersigned's name, at
the Annual Meeting of Stockholders of the Company to be held at 2000 South
Colorado Boulevard, Tower Two, Suite 2-1000, Denver, Colorado 80222-7900, on
April 26, 2002 at 9:00 a.m., Denver time (including any adjournments or
postponements thereof, the "Stockholders' Meeting"), upon those matters as
described in the Proxy Statement for the Stockholders' Meeting and such other
matters as may come before such meeting.
A vote FOR the following proposals described in the Proxy Statement for the
Stockholders' Meeting is recommended:
1. Election of the following nominees for director: Terry Considine, Peter K.
Kompaniez, James N. Bailey, Richard S. Ellwood, J. Landis Martin, and Thomas L.
Rhodes.
[ ] FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY for [ ] WITHHOLD AUTHORITY for any Individual Nominee(s)
all Nominees (Write the name(s) of the nominee(s) in the space below)
1.
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2.
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3.
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4.
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5.
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6.
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2. Ratification of the selection of Ernst & Young LLP as independent auditors
for the calendar year ending December 31, 2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the sale of High Performance Units.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued, and to be dated and signed on the reverse side.)
AIMCO encourages you to take advantage of new and convenient ways by which you
can vote your shares on matters to be covered at the Annual Meeting of
Stockholders. Please take the opportunity to use one of the three voting methods
outlined below to cast your ballot.
TO VOTE OVER THE INTERNET:
o Have your proxy card in hand when you access the web site.
o Log onto the Internet and go to the web site, www.eproxyvote.com/aiv, 24
hours a day, 7 days a week.
o You will be prompted to enter your control number printed in the box above.
o Follow the instructions provided.
TO VOTE OVER THE TELEPHONE:
o Have your proxy card in hand when you call.
o On a touch-tone telephone call 1-877-779-8683, 24 hours a day, 7 days a
week.
o You will be prompted to enter your control number printed in the box above.
o Follow the recorded instructions.
TO VOTE BY MAIL:
o Mark, sign and date your proxy card.
o Return your proxy card in the postage-paid envelope provided.
Your electronic vote authorizes the named proxies in the same manner as if you
signed, dated and returned the proxy card. If you choose to vote your shares
electronically, there is no need for you to mail back your proxy card. Proxies
submitted by telephone or the Internet must be received by 5:00 p.m. eastern
time on April 24, 2002.
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PROXY FOR COMMON STOCK
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF
STOCKHOLDERSON APRIL 26, 2002
If any other business is transacted at the Stockholders' Meeting, the Proxy
shall be voted in accordance with the best judgment of the above-named attorneys
and proxies.
Dated: , 2002
(Signature of Stockholder)
(Signature of Stockholder)
Please sign your name exactly as it appears
hereon. If acting as attorney, executor,
trustee, or in other representative capacity,
please sign name and title. If stock is held
jointly, each joint owner should sign.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
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