1
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:
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
(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:
2
[ ] 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.:
(3) FILING PARTY:
(4) DATE FILED:
2
3
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 JUNE 19, 2001
You are cordially invited to attend the 2001 Annual Meeting of
Stockholders (the "Meeting") of APARTMENT INVESTMENT AND MANAGEMENT COMPANY (the
"Company") to be held on Tuesday, June 19, 2001, 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, 2001;
3. To approve the sale of an aggregate of 15,000 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 May 7, 2001,
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 June 17, 2001. 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.
3
4
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/ Joel F. Bonder
Joel F. Bonder
Secretary
May 7, 2001
4
5
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 JUNE 19, 2001
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 Tuesday, June 19, 2001, 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 May 24, 2001.
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 Corporate Investor Communications, for an estimated fee
of $4,500, 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, May 7, 2001 (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 73,523,297 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, 2001 and FOR the approval of the sale of
an aggregate of 15,000 High Performance Partnership Units of AIMCO Properties,
LP (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.
5
6
The Company's 2000 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.
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 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.
Terry Considine, Richard S. Ellwood, Peter K. Kompaniez, J. Landis Martin and
Thomas L. Rhodes were elected to the Board of Directors at the last Annual
Meeting of Stockholders. James N. Bailey was elected to the Board of Directors
on June 5, 2000 by a majority of the Board of Directors pursuant to the Bylaws
of the Company. 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, 2000, 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, 2001, subject to ratification
6
7
by the Company's stockholders. The aggregate fees billed for services rendered
by Ernst & Young LLP during the year ended December 31, 2000 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 485 entities) for the fiscal year ended December 31, 2000 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, 2000 were $6.7 million.
Financial Information Systems Design and Implementation Fees. The
aggregate fees billed for financial information systems design and
implementation services for the fiscal year ended December 31, 2000 rendered by
Ernst & Young LLP to the Company and certain of its subsidiaries and affiliates
were $5.4 million. Financial information systems design and implementation fees
consist entirely of fees billed by the Ernst &Young consulting group prior to
its sale on May 27, 2000, to Cap Gemini, a separate French public company.
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, 2000 were $15.5 million, which
includes audit-related services of $2.0 million and non-audit services of $13.5
million. Audit related services generally include fees for employee benefit plan
audits, accounting consultations and registration statements filed with the
Securities and Exchange Commission. Non-audit services consist primarily of tax
compliance (over 500 entities) and consulting services and assistance with
mergers and acquisitions.
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 ratify the selection of Ernst &
Young LLP to serve as independent auditors for the Company for the fiscal year
ending December 31, 2001.
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
7
8
Company's Independent Directors, Messrs. Martin and Rhodes and John Smith (Mr.
Smith resigned as a Director April 20, 2000 and now serves on the Company's
advisory board). The Company's Operating Partnership received $2,070,000 for
these units, which the AIMCO Board of Directors determined, based upon the
advice of an independent valuation expert, represented the fair market value of
the units on the date of issuance.
Unlike Common Stock, Partnership Common Units ("OP Units") and options
to purchase Common Stock, the Class I Units provided the following advantages to
the Company:
o AIMCO received $2,070,000 for an interest that would have been
of nominal cost to the Company unless the three year total
return to the Company's stockholders was significantly better
than the industry average (as measured by the Morgan Stanley
Dean Witter REIT Index) and at least 30%; and
o any value received by the purchasers was not readily
transferable and would constitute 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 and directors.
As of January 1, 2001, based on the three year total return to Company
stockholders of 59.24% compared to the total return of the Morgan Stanley Dean
Witter REIT Index of 0.58%, and the minimum total return of 30.00%, these units
achieved a 29.24% Excess Return (59.24% minus 30.00%) and became 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 holders of
approximately 2.4 million OP Units. The following table details the valuation of
the Class I Units:
8
9
MORGAN STANLEY
DEAN WITTER MINIMUM AVERAGE EXCESS VALUE OF HIGH
AIMCO TOTAL REIT INDEX RETURN MARKET SHAREHOLDER PERFORMANCE OP UNIT
RETURN TOTAL RETURN (THREE EXCESS CAPITALIZATION VALUE ADDED UNITS DILUTION OP UNIT
VALUATION DATE (THREE YEARS) (THREE YEARS) YEARS) RETURN (THOUSANDS) (THOUSANDS)(1) (THOUSANDS)(2) (THOUSANDS) DILUTION %
------------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 2000 59.24% 0.58% 30.00% 29.24% $2,623,000 $767,000 $115,000 2,379(3) 2.43%(4)
(1) EXCESS RETURN MULTIPLIED BY AVERAGE MARKET CAPITALIZATION
(2) EXCESS SHAREHOLDER VALUE ADDED MULTIPLIED BY 15%
(3) OP UNIT CALCULATION BASED ON TRAILING 20-DAY DAILY VOLUME WEIGHTED
AVERAGE STOCK PRICE OF $48.36
(4) BASED ON TOTAL DILUTIVE SHARES OUTSTANDING OF 97,834,000 AS OF
DECEMBER 31, 2000
The Company's Board of Directors has determined that the Class I Units
achieved their stated goals:
o Those who purchased the units had real financial risk and would have
lost their entire investment if the units had been "valued" in four out
of twelve quarters in the three year period. Similarly, for 89 out of
116 REITs in the Morgan Stanley Dean Witter REIT Index, the returns
would have resulted in a total loss.
o The Company's stockholder returns were superior over the three year
period. The Company ranked fourth out of 116 REITs in total return to
stockholders by the Morgan Stanley Dean Witter REIT Index. At the end
of the period, the value of the Company's outstanding common stock was
$767 million higher than it would have been if the total return to
stockholders had equaled the minimum return of 30%.
o As a result of the Company's performance, the units provide senior
management with a significant long-term stake in the Company.
Based on this success, the Board of Directors have determined to sell
new High Performance Units to the Company's employees. The new High Performance
Units program has been modified in the following respects:
o The minimum investment hurdle has been raised from an annual rate of 9%
to 11%.
o The maximum dilution to AIMCO's stockholders will be limited to 1% per
year (except for a three-year transition period in which total dilution
will not exceed 3% over the three years).
o The number of employee participants in the program will be increased
from 12 to more than 40 offerees and additional participants can be
added each year.
o Independent directors will not be eligible to participate in the
program, and
9
10
o The valuation period will be a rolling three-year average after an
initial transition period.
The new High Performance Units will have the following characteristics:
o The High Performance Units will have a rolling three-year valuation
period. Initially, there will be three classes of High Performance
Units: Class II High Performance Partnership Units (the "Class II
Units"); Class III High Performance Partnership Units (the "Class III
Units"); and Class IV High Performance Partnership Units (the "Class IV
Units"), with the Class II Units having a one year determination period
ending December 31, 2001; the Class III Units having a two year
determination period ending December 31 2002; and the Class IV Units
having a three year determination period ending December 31, 2003. It
is anticipated that in 2002 and each future year a new class of High
Performance Units will be created with a three-year valuation period.
o The 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 Dean Witter
REIT Index and, at a minimum, has the following fixed total returns:
11% for the one year program (Class II Units); 23.2% for the two year
program (Class III Units); and 36.8% for the three year program (Class
IV Units). The three-year hurdle of 36.8% is an increase from 30.0% for
the 1998-2000 program.
o For each new High Performance Unit program (Classes II, III and IV),
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 For each new High Performance Unit program (Classes II, III, and IV),
Outperformance Return multiplied by AIMCO's average market
capitalization will be considered "Outperformance Value Added" for
shareholders.
o If the minimum total return hurdle is met as of the relevant valuation
date, the holders of 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 The 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 three new High
Performance Unit programs (Classes II, III and IV) will be limited to
3% in the aggregate with a limit of 0.5% for the Class II Units, 1.0%
for the Class III Units and 1.5% for the Class IV Units. In the future,
any new High Performance Units with a three year valuation period are
expected to limit dilution to 1%.
o In calculating the AIMCO total returns for the new High Performance
Unit (Classes II, III and IV) programs, the initial value of the Common
Stock will be $48.36, which is the price used to
10
11
determine the value of the recently completed Class I Units program. 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, 2000.
The Company's Board of Directors has determined, based upon the advice
of an independent valuation expert, that the fair market value of the 5,000
Class II Units, the 5,000 Class III Units and the 5,000 Class IV Units are
$1,274,854, $1,792,764 and $1,792,764, respectively, and $4,860,382 in the
aggregate. The AIMCO employees who are offered the opportunity to invest in the
new High Performance Units will do so through three senior management
partnerships, SMP 2002, L.L.C., SMP 2003, L.L.C., and SMP 2004, L.L.C.,
respectively, each a Delaware limited liability company (each, an "SMP"), which
will hold a class of High Performance Units until their valuation date. The
terms of the limited liability company agreement of each SMP will restrict the
employees' ability to transfer their interests, and provides each 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 applicable measurement
period. As with the Class I Units issued in 1998, 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 each SMP. The remaining interests in each SMP may
be owned by the other employee offerees of the Company. Accordingly, Messrs.
Considine and Kompaniez will beneficially own 50% of the High Performance Units
purchased by each SMP. The $4,860,382 aggregate purchase price to be paid by the
SMPs for their 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 then 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, 2002 (in the case of the Class II Units), January 1,
2003 (in the case of the Class III Units), or January 1, 2004 (in the case of
the Class IV Units), 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, 2001 to the
Valuation Date (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 an 11% (over one year) cumulative
11
12
Total Return, in the case of Class II Units, a 23.2% (over two years) cumulative
Total Return, in the case of Class III Units, or a 36.8% (over three years)
cumulative Total Return, in the case of Class IV Units (in each case, the
"Minimum Return"), then, on and after the Valuation Date for that class of High
Performance Units, the OP Unit Equivalent for each High Performance Unit of that
class 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 number of High Performance Units of that class
originally issued (5,000 in the case of Class II Units, Class III Units or Class
IV Units). However, the number of OP Unit Equivalents for the three classes of
High Performance Units, may not exceed 0.5%, 1.0% and 1.5% (for the Class II
Units, Class III Units and Class IV Units, respectively) of the number of shares
of Common Stock and OP Units outstanding, on a fully diluted basis, on the
relevant Valuation Date. (In the future any new High Performance Units with a
three year valuation period are expected to limit dilution to 1%.) If, on the
Valuation Date for a class of High Performance Units, the cumulative Total
Return of the Company Common Stock does not satisfy these criteria, then the OP
Unit Equivalent for that class of High Performance Units will remain at 0.01 per
High Performance 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, 2001 will be $48.36, the price used to determine
the value of the Class I Units as of December 31, 2000.
The Morgan Stanley Dean Witter 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 Dean Witter REIT Index is a capitalization-weighted
index, with dividends reinvested, of the most actively traded real estate
investment trusts. As of December 31, 2000, the Morgan Stanley Dean Witter REIT
Index was comprised of 116 real estate investment trusts selected by Morgan
Stanley Dean Witter & Co. Incorporated. The Board of Directors of the Company
has selected this index because it believes that it 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 Dean Witter REIT Index is no longer an appropriate
comparison for the Company; if the Morgan Stanley Dean Witter 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
12
13
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. Each SMP may not transfer its High Performance Units until after the
relevant Valuation Date, and then only to its participants or to one of their
family members (or a family-owned entity). Individuals may not transfer new 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 Dean Witter REIT Index and exceeds the
Minimum Return (11.0% over one year, 23.2% over two years, and 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 if one assumes that the fact of the High Performance
Units program did not have an offsetting incentive effect that resulted in
increased earnings. However, the maximum dilutive effect for the three classes
of High Performance Units will be 0.5%, 1.0% and 1.5% for the Class II Units,
Class III Units and Class IV Units, respectively, of the number of shares of
Common Stock and OP units outstanding, on a fully diluted basis, on the relevant
Valuation Date. In the future, any new High Performance Units with a three year
valuation period are expected to limit dilution to 1%.
13
14
The following table sets forth the cumulative Total Returns of the
Company Common Stock and the Morgan Stanley Dean Witter REIT Index,
respectively, for each year in the period from January 1, 1998 through December
31, 2000. However, such historical results are not necessarily indicative of
future performance.
As of December 31,
1998 1999 2000
Cumulative Total Return of Company Common Stock 7.77% 22.71% 59.24%
Cumulative Total Return of Morgan Stanley Dean Witter REIT Index (16.83)% (20.69)% 0.58%
Minimum Total Return 9.14% 19.11% 30.00%
Excess (Outperformance) Return 0.00% 3.60% 29.24%
Weighted Average Market Value of Outstanding Equity (millions) $1,926.3 $2,327.7 $2,623.0
Excess (Outperformance) Shareholder Value Added (millions) None $83.8 $767.0
Value of Class I Units (millions) None $12.6 $115.0
The tables below illustrate the value of the Class II (Table 1.), Class
III (Table 2.) and Class IV Units (Table 3.) on the relevant Valuation Date
under different circumstances. Each table demonstrates the value of that class
of 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" the
Class II, Class III and Class IV Units is calculated by multiplying (a) 5% of
the Outperformance Shareholder 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. Also 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: (i) the
Valuation Date is January 1: 2002 (for the Class II Units), 2003 (for the Class
III Units) and 2004 (for the Class IV Units); (ii) the Peer Group Index has an
annual Total Return of: 11% (for the Class II Units), 23.2% (for the Class III
Units) and 36.8% (for the Class IV Units); and (iii) the weighted average market
value of outstanding equity (Common Stock and OP Units not held by the Company)
during the Measurement Period is $3.979 billion.
The tables below are 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
Dean Witter REIT 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.
14
15
TABLE 1.
Class II High Performance Partnership Units -- One Year Program
Valuation Analysis as of December 31, 2001
--------------------------------------------------------------------------------
5,000 CLASS II HIGH PERFORMANCE PARTNERSHIP UNITS
$1,275 CASH PROCEEDS TO COMPANY FROM INITIAL INVESTMENT (THOUSANDS)(1)
OP Unit
115% Out- Value of Dilution as a
MSDW 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 9.84% 11.00% 0.00% $3,978,939 $ -- $ 3 -- 0.00%
12.65% 0.00% 3,978,939 -- 3 -- 0.00%
50.55 10.98% 11.00% 0.00% 3,978,939 -- 3 -- 0.00%
12.65% 0.00% 3,978,939 -- 3 -- 0.00%
51.00 11.91% 11.00% 0.91% 3,978,939 36,235 1,812 36 0.04%
12.65% 0.00% 3,978,939 -- 3 -- 0.00%
52.00 13.98% 11.00% 2.98% 3,978,939 118,512 5,926 114 0.11%
12.65% 1.33% 3,978,939 52,860 2,643 51 0.05%
54.00 18.11% 11.00% 7.11% 3,978,939 283,067 14,153 262 0.26%
12.65% 5.46% 3,978,939 217,415 10,871 201 0.20%
56.00 22.25% 11.00% 11.25% 3,978,939 447,622 22,381 400 0.40%
12.65% 9.60% 3,978,939 381,970 19,098 341 0.34%
58.00 26.39% 11.00% 15.39% 3,978,939 612,177 28,769 496 0.50%(9)
12.65% 13.74% 3,978,939 546,525 27,326 471 0.47%
60.00 30.52% 11.00% 19.52% 3,978,939 776,732 29,762 496 0.50%(9)
12.65% 17.87% 3,978,939 711,080 29,762 496 0.50%(9)
(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 $1,274,854 which is the purchase price of
5,000 Class II Units.
(2) AIMCO Total Return is calculated as follows: ((Stock Price+2001 Annual
Dividend)-$48.36)/$48.36, where 2001 Annual Dividend equals $3.12.
(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
Minimum Return or 115% of the MSDW REIT Index Total Return.
(4) Assumes the market value of outstanding equity (AIMCO Class A Common Stock
and Common OP Units) at December 31, 2000 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
Return is $0, the Value of High Performance Units is calculated by
multiplying the stock price by 50 OP Units. The initial investment of
$1,274,854 for the Class II Units will continue to be treated as
contributed equity on the balance sheet of the 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, 2000.
(9) The maximum dilution for the Class II Units is 0.50% of the total
weighted-average diluted units outstanding.
15
16
TABLE 2.
Class III High Performance Partnership Units -- Two Year Program
Valuation Analysis as of December 31, 2002
--------------------------------------------------------------------------------
5,000 CLASS III HIGH PERFORMANCE PARTNERSHIP UNITS
$1,793 CASH PROCEEDS TO COMPANY FROM INITIAL INVESTMENT (THOUSANDS)(1)
OP Unit
115% Out- Value of Dilution as a
MSDW 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 17.03% 23.20% 0.00% $3,978,939 $ 0 $ 3 -- 0.00%
26.68% 0.00% 3,978,939 -- 3 -- 0.00%
53.00 23.24% 23.20% 0.04% 3,978,939 1,403 70 1 0.00%
26.68% 0.00% 3,978,939 -- 3 -- 0.00%
56.00 29.44% 23.20% 6.24% 3,978,939 248,235 12,412 222 0.22%
26.68% 2.76% 3,978,939 109,768 5,488 98 0.10%
59.00 35.64% 23.20% 12.44% 3,978,939 495,068 24,753 420 0.42%
26.68% 8.96% 3,978,939 356,601 17,830 302 0.30%
62.00 41.85% 23.20% 18.65% 3,978,939 741,900 37,095 598 0.60%
26.68% 15.17% 3,978,939 603,433 30,172 487 0.49%
65.00 48.05% 23.20% 24.85% 3,978,939 988,733 49,437 761 0.77%
26.68% 21.37% 3,978,939 850,266 42,513 654 0.66%
68.00 54.25% 23.20% 31.05% 3,978,939 1,235,565 61,778 909 0.92%
26.68% 27.57% 3,978,939 1,097,098 54,855 807 0.81%
71.00 60.46% 23.20% 37.26% 3,978,939 1,482,398 70,436 992 1.00%(9)
26.68% 33.78% 3,978,939 1,343,931 67,197 946 0.95%
73.00 64.59% 23.20% 41.39% 3,978,939 1,646,953 72,420 992 1.00%(9)
26.68% 37.91% 3,978,939 1,508,486 72,420 992 1.00%(9)
(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 $1,792,764 which is the purchase price of
5,000 Class III Units.
(2) AIMCO Total Return is calculated as follows: ((Stock Price+2001 Annual
Dividend+2002 Annual Dividend)-$48.36)/$48.36, where 2001 Annual Dividend
equals $3.12 and 2002 Annual Dividend equals $3.48. The 2002 Annual
Dividend includes an 11.4% increase over 2001.
(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
Minimum Return or 115% of the MSDW REIT Index Total Return.
(4) Assumes the market value of outstanding equity (AIMCO Class A Common Stock
and Common OP Units) at December 31, 2000 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
Return is $0, the Value of High Performance Units is calculated by
multiplying the stock price by 50 OP Units. The initial investment of
$1,792,764 for the Class III Units will continue to be treated as
contributed equity on the balance sheet of the 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, 2000.
(9) The maximum dilution for the Class III Units is 1.00% of the total
weighted-average diluted units outstanding.
16
17
Table 3.
Class IV High Performance Partnership Units -- Three Year Program
Valuation Analysis as of December 31, 2003
--------------------------------------------------------------------------------
5,000 CLASS IV HIGH PERFORMANCE PARTNERSHIP UNITS
$1,793 CASH PROCEEDS TO COMPANY FROM INITIAL INVESTMENT (THOUSANDS)(1)
OP Unit
115% Out- Value of Dilution as a
MSDW 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)
------ --------- ------- ---------- ----------- -------------- -------------- -------------- -------------- ---------------
$53.00 31.25% 36.80% 0.00% $3,978,939 $ 0 $ 3 -- 0.00%
42.32% 0.00% 3,978,939 -- 3 -- 0.00%
56.00 37.45% 36.80% 0.65% 3,978,939 25,834 1,292 23 0.02%
42.32% 0.00% 3,978,939 -- 3 -- 0.00%
57.00 39.52% 36.80% 2.72% 3,978,939 108,111 5,406 95 0.10%
42.32% 0.00% 3,978,939 -- 3 -- 0.00%
63.00 51.92% 36.80% 15.12% 3,978,939 601,776 30,089 478 0.48%
42.32% 9.60% 3,978,939 382,139 19,107 303 0.31%
69.00 64.33% 36.80% 27.53% 3,978,939 1,095,441 54,772 794 0.80%
42.32% 22.01% 3,978,939 875,804 43,790 635 0.64%
75.00 76.74% 36.80% 39.94% 3,978,939 1,589,106 79,455 1,059 1.07%
42.32% 34.42% 3,978,939 1,369,469 68,473 913 0.92%
81.00 89.14% 36.80% 52.34% 3,978,939 2,082,771 104,139 1,286 1.30%
42.32% 46.82% 3,978,939 1,863,134 93,157 1,150 1.16%
87.00 101.55% 36.80% 64.75% 3,978,939 2,576,436 128,822 1,481 1.49%
42.32% 59.23% 3,978,939 2,356,798 117,840 1,354 1.37%
93.00 113.96% 36.80% 77.16% 3,978,939 3,070,101 138,391 1,488 1.50%(9)
42.32% 71.64% 3,978,939 2,850,463 138,391 1,488 1.50%(9)
(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 $1,792,764 which is the purchase price of
5,000 Class IV Units.
(2) AIMCO Total Return is calculated as follows: ((Stock Price+2001 Annual
Dividend+2002 Annual Dividend+2003 Annual Dividend)-$48.36)/$48.36, where
2001 Annual Dividend equals $3.12, 2002 Annual Dividend equals $3.48 and
2003 Annual Dividend equals $3.87. The 2002 and 2003 Annual Dividends
include an 11.4% increase over 2001 and 2002, 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
Minimum Return or 115% of the MSDW REIT Index Total Return.
(4) Assumes the market value of outstanding equity (AIMCO Class A Common Stock
and Common OP Units) at December 31, 2000 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
Return is $0, the Value of High Performance Units is calculated by
multiplying the stock price by 50 OP Units. The initial investment of
$1,792,764 for the Class IV Units will continue to be treated as
contributed equity on the balance sheet of the 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, 2000.
(9) The maximum dilution for the Class IV Units is 1.50% of the total
weighted-average diluted units outstanding.
17
18
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.
18
19
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 56 July 1994 Vice Chairman of the Board of Directors and
President
Harry G. Alcock 38 October 1999 Executive Vice President and
Chief Investment Officer
Joel F. Bonder 52 December 1997 Executive Vice President, General Counsel and
Secretary
Joseph DeTuno 55 February 2001 Executive Vice President - Redevelopment
Patrick J. Foye 44 May 1998 Executive Vice President
Lance J. Graber 40 October 1999 Executive Vice President - Acquisitions
Steven D. Ira 50 July 1994 Co-Founder and Executive Vice President -
Property Operations
Paul J. McAuliffe 44 February 1999 Executive Vice President and
Chief Financial Officer
Ronald D. Monson 44 February 2001 Executive Vice President and
Head of Property Operations
James N. Bailey 54 June 2000 Director
Richard S. Ellwood 69 July 1994 Director, Chairman of the Audit Committee
J. Landis Martin 55 July 1994 Director, Chairman of the Compensation
Committee
Thomas L. Rhodes 61 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 of the Company 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 has been and
remains involved as a principal in a variety of other business activities.
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.
19
20
Harry G. Alcock. Mr. Alcock served as a Vice President of the Company
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,
General Counsel and Secretary of the Company in December 1997. 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.
Joseph DeTuno. Mr. DeTuno was appointed Executive Vice
President-Redevelopment of the Company in February 2001. Mr. DeTuno has been
Senior Vice President-Property Redevelopment of the Company since August 1997.
Mr. DeTuno was previously 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 of the
Company in May 1998. He is responsible for 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 and was Managing Partner of the firm's Brussels, Budapest and
Moscow offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the
Long Island Power Authority and serves as a member of the New York State
Privatization Council.
Lance J. Graber. Mr. Graber was appointed Executive Vice
President-Acquisitions of the Company in October 1999. His principal business
function is acquisitions. 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.
Steven D. Ira. Mr. Ira is a Co-Founder of the Company and has served as
Executive Vice President - Property Operations since July 1994. From 1987 until
July 1994, he served as President of Property Asset Management.
Paul J. McAuliffe. Mr. McAuliffe has been Executive Vice President of
the Company since February 1999 and was appointed Chief Financial Officer in
October 1999. Prior to joining the Company, Mr. McAuliffe was Senior Managing
Director of Secured Capital Corp.
Ronald D. Monson. Mr. Monson was promoted to Executive Vice President
and Head of Property Operations in February 2001. He served as Regional Vice
President of the Company 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.
James N. Bailey. Mr. Bailey was appointed a Director of the Company in
June 2000 and is currently a member of the Audit and Compensation Committees.
Mr. Bailey is co-founder of Cambridge
20
21
Associates, LLC and co-founder, Treasurer and Director of The Plymouth Rock
Company, Direct Response Corporation, and Homeowner's Direct Corporation, all
U.S. personal lines insurance companies. In addition, he serves as a Trustee and
member of the Investment Committee of the New England Aquarium. 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.
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 Committee. 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 Committee. 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, and Crown Castle International
Corporation, a telecommunications company.
Thomas L. Rhodes. Mr. Rhodes was appointed a Director of the Company in
July 1994 and is currently a member of the Audit and Compensation 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 five meetings during the year ended
December 31, 2000. During 2000, 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 and compensation committees. There is no standing nominating committee.
21
22
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 two meetings during the year ended December 31, 2000.
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 2000.
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 2000, the Company paid the Independent Directors an annual fee of
1,000 shares of the Company's Common Stock, a fee of $1,000 for attendance at
each in-person meeting of the Board of Directors, $750 for each in-person
meeting of any committee thereof, and $750 for each telephonic meeting of the
Board of Directors or any committee thereof. Compensation for the Independent
Directors in 2001 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. Following the annual meeting of stockholders in 2001, 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.
22
23
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. A copy of this charter is
included as Appendix A hereto.
The Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Committee under generally accepted auditing standards. In addition, the
Committee has discussed with the independent auditors the auditors' independence
from management and the Company including the matters in the written disclosures
required by the Independence Standards Board and considered the compatibility of
non-audit services with the auditors' 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 2000.
None of the Audit Committee members have 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, 2000 for filing with the Securities and
Exchange Commission. The Committee has also determined that provision by Ernst &
Young LLP of financial information systems design and implementation and 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: May 7, 2001
RICHARD S. ELLWOOD (CHAIR)
JAMES N. BAILEY
J. LANDIS MARTIN
THOMAS L. RHODES
23
24
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.
24
25
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information available to the
Company, as of March 8, 2001, 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, 2000, and (ii) all directors and
executive officers as a group. The table also sets forth certain information
available to the Company, as of March 8, 2001, 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 .................................. 3,382,374(5) 4.6% 2,406,033(6) 6.9%
Peter K. Kompaniez ............................... 1,140,501(7) 1.6% 348,375(8) 1.8%
Harry Alcock ..................................... 87,245(9) * 47,682(10) *
Patrick J. Foye .................................. 293,472(11) * 17,484(12) *
Paul McAuliffe ................................... 91,295(13) * 6,358(14) *
Richard S. Ellwood ............................... 25,325(15) * -- *
J. Landis Martin ................................. 23,500(16) * 34,391(17) *
Thomas L. Rhodes ................................. 52,100(18) * 34,365(19) *
James N. Bailey .................................. 1,500 * -- *
All directors and executive
officers as a group (13 persons) ............. 5,857,064(20) 7.9% 3,164,100(21) 10.6%
5% or Greater Holders:
FMR Corp. .......................................... 5,309,975(22) 7.4% -- 6.5%
82 Devonshire Street
Boston, Massachusetts 02109
Security Capital Preferred Growth
Incorporated ................................... 5,102,410(23) 6.8% -- 6.2%
11 South LaSalle Street, Second Floor
Chicago, Illinois 60603
General Electric Capital Services, Inc. ............ 4,594,300(24) 6.0% -- 5.6%
260 Long Ridge Road
Stamford, Connecticut 06927
Cohen & Steers Capital Management, Inc. ............ 3,911,300(25) 5.5% -- 4.8%
757 Third Avenue
New York, New York 10017
LaSalle Investment Management (Securities), LP. .... 3,872,831(26) 5.4% -- 4.7%
200 East Randolph Drive
Chicago, Illinois 60601
* 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
25
26
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 8,2001, holds approximately 90% 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 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 12% 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 8,333,687 OP Units and 2,379,084 Class I Units
outstanding as of March 8, 2001, 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 114,681 shares held by entities in which Mr. Considine holds sole
voting and investment power, 74,743 shares held by Mr. Considine's spouse,
Elizabeth Considine, for which Mr. Considine disclaims beneficial
ownership, 98,955 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. Mr. Considine disclaims any current beneficial ownership
interest in Titaho, and 1,222,978 shares held by Titahotwo, RLLP
("Titahotwo"), a Registered Limited Liability Partnership in which Mr.
Considine serves as General Partner and owns 1%. Also includes 1,564,000
shares subject to options held by Titaho that are exercisable within 60
days for which Mr. Considine disclaims beneficial ownership.
(6) Includes 816,661 OP Units and 1,589,372 Class I Units which represent 9.8%
of OP Units outstanding and 66.8% of Class I Units outstanding,
respectively. The 816,661 OP Units include 192,374 OP Units held by
entities 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 490,600 shares subject to options that are exercisable within 60
days.
(8) Includes 30,500 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 63,000 shares subject to options that are exercisable within 60
days.
26
27
(10) Represents Class I Units, which represent 2% of all Class I Units
outstanding.
(11) Includes 165,000 shares subject to options that are exercisable within 60
days. Does not include 3,300 shares of Class K Convertible Cumulative
Preferred Stock which represent less than 1% of the class outstanding.
(12) Represents Class I Units, which constitute less than 1% of the class
outstanding.
(13) 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 10,500 shares subject to options that are exercisable within 60
days.
(16) Includes 6,000 shares subject to options that are exercisable within 60
days.
(17) Includes 26 OP Units and 34,365 Class I Units, each of which represent less
than 1% of the class outstanding.
(18) Includes 6,000 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: 11,000
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 2,591,417 shares subject to options that are exercisable within 60
days. Does not include: 13,000 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 or 3,300 shares of Class K Convertible
Cumulative Preferred Stock, owned by directors and officers, each of which
represent less than 1% of all shares of the class outstanding.
(21) Includes 943,801 OP Units and 2,220,299 Class I Units, which represent
11.3% of OP Units outstanding and 93.3% of Class I Units outstanding,
respectively.
(22) FMR Corp. has shared voting power as to 4,124,475 shares.
(23) Includes: 1,085,480 shares of Common Stock; 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; and 1,234,200 shares of Class K Convertible Cumulative Preferred
Stock which are convertible into 734,596 shares of Common Stock.
27
28
(24) 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
9,000,000 of such shares.
(25) Cohen & Steers Capital Management, Inc. has shared voting power as to
615,100 of such shares.
(26) LaSalle Investment Management (Securities) L.P. has shared voting power as
to 3,351,664 of such shares and shared dispositive power as to 3,474,767 of
such shares.
28
29
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid for each of the three
fiscal years ended December 31, 2000 to the Company's Chief Executive Officer
and each of the Named Executive Officers.
LONG TERM
COMPENSATION(1)(2)
------------------
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING STOCK
------------------------ OTHER ANNUAL STOCK OPTIONS/SARS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(3) COMPENSATION($) AWARDS($)(4) AWARDS (#) COMPENSATION($)
--------------------------- ---- ------------------------ --------------- ----------- ----------------- ---------------
Terry Considine................. 2000 $275,000 None None None 200,000 None
Chairman of the Board of 1999 $275,000 $1,275,000 None None 385,294 None
Directors and Chief 1998 275,000 1,025,000 None None 150,000 None
Executive Officer
Peter K. Kompaniez.............. 2000 $235,000 None None None 200,000 None
President and Vice Chairman 1999 $235,000 $ 985,000 None None 75,000 None
1998 235,000 735,000 None None 75,000 None
Harry Alcock.................... 2000 $200,000 None None $ 400,000 20,000 None
Executive Vice-President and 1999 $180,000 $ 280,000 None None 35,529 None
Chief Investment Officer 1998 150,000 200,000 None None 11,644 None
Patrick J. Foye(5).............. 2000 $225,000 None None $2,000,000 None
Executive Vice President 1999 $225,000 $ 400,000 None $1,000,000 29,412
1998 135,600 400,000 None None 375,000 None
Paul McAuliffe(6)............... 2000 $200,000 None None $1,200,000 20,000 None
Executive Vice President and 1999 166,667 300,000 None $1,000,000 223,529 None
Chief Financial Officer 1998 -- -- -- -- -- --
(1) Excludes 78,948 shares and 64,865 shares of Common Stock underlying options
granted to Messrs.Foye and McAuliffe, respectively, from 1998 to 1999,
which were immediately exercised to purchase shares pursuant to the
Company's leveraged stock purchase program. See "Certain Relationships and
Related Transactions - Stock Purchase Loans."
(2) Options were awarded in January 1999, 2000 and 2001, respectively, in
respect of 1998, 1999 and 2000 fiscal years.
(3) Includes all Discretionary and Incentive cash compensation earned by the
Named Executive Officers.
(4) The value of the restricted stock awards at the end of the last fiscal year
is $1,248,438, and $1,248,438 for Messrs. Foye and McAuliffe, respectively.
Such value is determined by the market price, $49.9375, for the stock at
the last day of the fiscal year. The number of restricted stock awards held
by Messrs. Foye and McAuliffe at the end of the last fiscal year is 25,000
shares, and 25,000 shares, respectively. Restrictions lapse on the second
(40%), third (20%), fourth (20%) and fifth (20%) anniversaries of the 1999
restricted stock awards of Messrs. Foye and McAuliffe and ratably over
three years for the 2000 restricted stock awards of Messrs. Alcock, Foye
and McAuliffe. The restricted stock awards in consideration of 2000 to
Messrs. Alcock, Foye and McAuliffe, 8,398 shares, 41,990 shares and 25,194
shares, respectively, will be issued on May 1, 2001. Holders of Restricted
Stock Awards are entitled to receive the dividends thereto commencing on
the date of grant.
(5) Mr. Foye was not an employee of the Company prior to May 1998.
(6) Mr. McAuliffe was not an employee of the Company prior to February 1999.
29
30
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Information on options granted in 2001 for the 2000 fiscal year to the
Named Executive Officers is set forth in the following table.
INDIVIDUAL GRANTS(1)
-----------------------------------
% OF
TOTAL
OPTIONS/
SARs POTENTIAL REALIZABLE VALUE AT
NUMBER OF GRANTED ASSUMED ANNUAL RATES OF STOCK
SECURITIES TO PRICE APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES EXERCISE OR TERM(2)
OPTIONS/SARs IN FISCAL BASE EXPIRATION ------------------------------
NAME GRANTED(#) YEAR PRICE($/SH) DATE 5%($) 10%($)
---- ------------ --------- ----------- ---------- ----------- -----------
Terry Considine........... 200,000 27.4% $ 47.63 1/24/2011 $3,016,489 $10,445,817
Peter K. Kompaniez........ 200,000 27.4% 47.63 1/24/2011 3,016,489 10,445,817
Harry Alcock.............. 20,000 2.7% 47.63 1/24/2011 301,649 1,044,582
Patrick J. Foye........... None None None None None None
Paul J. McAuliffe......... 20,000 2.7% 47.63 1/24/2011 301,649 1,044,582
(1) Unless otherwise specified, options vest over three years. Under the terms
of the Apartment Investment and Management Company 1997 Stock Award and
Incentive Plan (the "1997 Stock Plan"), the plan administrator retains
discretion, subject to certain restrictions, to modify the terms of
outstanding options. The exercise price of incentive options granted under
the 1997 Stock Plan equal the fair market value of a share of Common Stock
on the date of grant. The exercise price of non-qualified options grouped
under the 1997 Stock plan generally equals the fair market value of a share
of common stock on the date of grant
(2) Assumed annual rates of stock price appreciation are set forth for
illustrative purposes only. The amounts shown are for the assumed rates of
appreciation only, do not constitute projections of future stock price
performance, and may not be realized.
30
31
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
Information on option exercises during 2000 by the Named Executive
Officers, and the value of unexercised options held by Named Executive Officers
at December 31, 2000 is set forth in the following table.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
FY-END(#)(1) AT FY-END($)(2)
SHARES ACQUIRED VALUE --------------------------- ----------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- --------------
Terry Considine........... 89,600 $1,286,400 1,016,000 2,381,694 $12,763,500 $27,145,525
Peter K. Kompaniez........ 2,400 70,350 326,800 839,800 4,118,825 8,032,138
Harry Alcock.............. 6,069 158,688 42,000 130,473 527,625 1,354,267
Patrick J. Foye........... None None None 404,412 None 4,962,962
Paul J. McAuliffe......... None None None 243,529 None 2,856,613
(1) Includes: 200,000 shares, 200,000 shares, 20,000 shares and 20,000 shares
subject to options granted to Messrs. Considine, Kompaniez, Alcock and
McAuliffe, respectively, in January 2001.
(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, 2000 of $49.9375 per
share.
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 Senior Vice President or above ("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,
Discretionary Compensation and Incentive 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 Discretionary Compensation, generally cash and in an amount not more
than Base Compensation, to reward specific achievements; and to make the chief
financial reward Incentive Compensation which is tied directly to the creation
of shareholder value. The comparable
31
32
companies reviewed by the Compensation Committee are among those included in the
SNL indices used in the stock price performance graph on page 36 of this Proxy
Statement.
Base Compensation. The Compensation Committee determined 2000 Base
Compensation for the Chief Executive Officer and for the President; reviewed and
approved 2000 Base Compensation for Other Senior Management based upon the
recommendation of the Chief Executive Officer and President; and considered such
2000 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.
Discretionary Compensation. For 2000, the Compensation Committee
considered, among other things:
o AFFO and FFO per share increased to $4.37 and $4.81, respectively, an
increase of 17% and 18%, respectively, over the prior year's results.
Dividends per share increased from $2.80 to $3.12, an increase of 11%
from the prior year.
o Total market capitalization increased to approximately $9.6 billion
($5.0 billion in equity capitalization) as of December 31, 2000
compared to approximately $7.2 billion ($3.8 billion in equity
capitalization), as of December 31, 1999, an increase of 33%.
o 2000, acquisitions, in whole or in part, included approximately 179
properties, $1 billion invested, including 39,779 units.
o Property sales activity totaled approximately $573.5 million for the
year, consisting of 64 apartment communities, 11 commercial properties
and 4 land parcels.
o AIMCO's 2000 Total Return of 34.08% exceeded the Morgan Stanley Dean
Witter REIT Index which had a return of 26.81%. On the basis of Total
Return for 2000, AIMCO ranked fifth among apartment REITs of similar
size.
o AIMCO Total Return for the last five years is 256.10%, or 29.08% on an
annualized basis, exceeding the Morgan Stanley Dean Witter REIT Index
of 62.07%, which is 10.13% annualized. For the same period AIMCO ranked
first among its peer group.
The Compensation Committee considered 2000 to be a year of strong
performance by the Company. Recognizing Senior Management's contribution to this
performance, the Compensation Committee approved Incentive Compensation
consisting of options to purchase 200,000 shares of Common Stock each to Mr.
Considine and to Mr. Kompaniez, and approved additional Discretionary
Compensation of approximately $5.1 million to other Senior Management. The
Incentive Compensation paid to Messrs. Considine and Kompaniez consisted
entirely of 200,000 options each to purchase Common Stock at $47.63 per share,
the closing price of the Company's Common Stock on January 23, 2001, the date
prior to the award. The Compensation Committee valued the options at
approximately $5.00 per underlying share, based on the advice of a nationally
recognized independent investment bank that
32
33
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), and the likely dividend rate on the underlying stock.
Incentive Compensation. Beginning in 1997, the Compensation Committee
decided to determine Incentive Compensation primarily by reference to "Excess
Value Added", calculated as the amount, if any, by which the Company's Total
Return exceeded that achieved by other real estate investment trusts (as
measured by Morgan Stanley Dean Witter REIT Index), multiplied by the weighted
average market value of the Company's stock and OP Units outstanding during the
measurement period. Up to 15% of Excess Value Added is available for cash or
stock option awards (valued using a modified Black Scholes formula applied by an
investment banking firm).
In 2000, the Company's Total Return was 34.08% which exceeded the
26.81% Total Return of the Morgan Stanley Dean Witter REIT Index; the Company's
weighted average equity market value was approximately $3.2 billion; and Excess
Value Added was approximately $234 million. The pool available for Incentive
Compensation for 2000 was approximately $35 million (15% of the Excess Value
Added).
The Compensation Committee approved Senior Management receiving
approximately $5.1 million in 2000 Incentive Compensation, $3.6 million paid in
restricted stock grants vesting over the next three years (1/3 per year), and
$1.5 million in options to acquire 690,000 shares, on the same terms and with
the same pricing as those issued to Mr. Considine and Mr. Kompaniez.
33
34
Chief Executive Officer and President. Terry Considine, the Company's
Chief Executive Officer, and Peter Kompaniez, the Company's President, received
the following compensation in 1997 through 2000:
TERRY CONSIDINE PETER KOMPANIEZ
-------------------------------------------- -----------------------------------------
1997 1998 1999 2000 1997 1998 1999 2000
---------- -------- ---------- -------- -------- -------- -------- --------
Base Compensation .......... $ 275,000 $275,000 $ 275,000 $275,000 $235,000 $235,000 $235,000 $235,000
Discretionary
Compensation ............. 275,000 275,000 275,000 None 235,000 235,000 235,000 None
Incentive Compensation
Cash ..................... 1,785,000 750,000 1,000,000 None 565,000 500,000 750,000 None
Options to purchase(1) ... 2,740,000 150,000 385, 294 200,000 815,000 75,000 75,000 200,000
(1) Reflects the number of shares underlying options. Excludes shares of common
stock underlying options granted in 1997 through 2000, that were immediately
exercised to purchase shares of common stock pursuant to the Company's
leveraged stock purchase program.
Date: May 7, 2001
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.
34
35
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
$275,000 and $235,000, respectively, for 2000. 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.
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, the Morgan Stanley Dean Witter
REIT Index and the Total Return of the Dow Jones Industrial Average from
December 31, 1995 to December 31, 2000. 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 Dean Witter REIT Index is
published by Morgan Stanley Dean Witter & Co. Incorporated, an investment
banking company. The indices are weighted for all companies that fit the
definitional criteria of the particular index and are calculated 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, 1995, and that all dividends paid have been
reinvested.
35
36
TOTAL RETURN PERFORMANCE
[CHART]
PERIOD ENDING
---------------------------------------------------------------
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
-------- -------- -------- -------- -------- --------
AIMCO .......................... $100.00 $158.06 $218.43 $238.49 $271.75 $364.07
S&P 500 ........................ 100.00 122.86 163.86 210.64 254.97 231.74
NASDAQ ......................... 100.00 123.04 150.69 212.51 394.94 237.68
SNL Residential REIT Index ..... 100.00 130.89 151.86 139.55 151.81 203.03
Morgan Stanley Dean Witter
REIT Index ..................... 100.00 135.90 161.15 133.91 127.81 162.08
Dow Jones ...................... 100.00 126.01 154.54 179.43 224.68 210.80
* Source: CRSP, Center for Research in Security Prices, Graduate School of
Business, The University of Chicago, 2000.
** Morgan Stanley Dean Witter ("MSDW")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.
36
37
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.
High Performance Units. Effective January 1, 1998, the Operating
Partnership sold to a limited liability company then owned by fourteen members
of Senior Management (70% by a Considine family partnership, 14% owned by Mr.
Kompaniez and 16% owned by twelve members of Senior Management) and then
directors J. Landis Martin, Thomas Rhodes and John Smith, the Class I Units. The
sale of Class I Units was ratified by stockholder vote at the Company's 1998
Annual Stockholders Meeting.
Based upon the Company's actual 1998-2000 performance versus the Morgan
Stanley Dean Witter REIT Index, and a 30% minimum return the Class I Units were
valued at $115 million as of January 1, 2001 and thereafter entitled the holders
thereof to receive distributions equal to those paid on approximately 2.4
million OP Units.
Transactions with Management Companies. From time to time the Company
has formed corporations (the "Management Companies") in which the Operating
Partnership holds non-voting preferred stock and 100% of the voting stock is
owned by certain of the executive officers of the general partner of the
Operating Partnership and AIMCO (or entities controlled by them), including
Messrs. Considine and Kompaniez. The Management Companies were formed to engage
in businesses generally not permitted under the REIT provisions of the Internal
Revenue Code. Although transactions between the Company and the Management
Companies are not at arm's length, the Company believes that such transactions
are at fair market value.
After January 1, 2000, Messrs. Considine and Kompaniez, collectively,
owned 1% of the outstanding stock (100% of the voting stock) of the following
Management Companies: AIMCO/NHP Holdings, Inc. ("ANHI"), NHP Management Company
("NHPMC"), AIMCO/NHP Properties, Inc. ("ANPI") and NHP A&R Services, Inc.
("NHPAR"). All of Mr. Considine's ownership interests in these Management
Companies are held through Tebet, L.L.C., a Colorado limited liability company
of which he is the managing member ("Tebet") and Considine Investment Company
("CIC") which is wholly owned by Mr. Considine.
Effective January 1, 2000, the Operating Partnership offset debt owed
to NHPMC and ANHI, against amounts receivable from NHPMC and ANHI in the
aggregate amounts of $255,510 and $619,336, respectively. In addition, the
Operating Partnership repaid all of its debt owed to NHPAR and ANPI in the
amounts of $1,894,326 and $538,621, respectively.
Effective January 1, 2000, the Operating Partnership also contributed
its 99% preferred stock holding in each of ANPI and NHPAR to NHPMC, and Messrs.
Considine and Kompaniez contributed their collective 1% common stock holding in
each of ANPI and NHPAR to NHPMC. As a result, NHPMC became the sole stockholder
of both ANPI and NHPAR.
37
38
Effective January 1, 2000, after NHPMC became the sole stockholder of
ANPI, NHPMC paid the Operating Partnership a dividend of all of the stock of
TAHF Funding Corp., a wholly owned subsidiary of ANPI, and all the stock of
NHP-HDV Eleven, Inc., NHP-HDV Eighteen, Inc., and NHP-HDV Nineteen, Inc., three
general partners of general partners of property owning partnerships.
For the year ended December 31, 2000, Tebet and CIC, and Mr. Kompaniez
have received dividends of approximately $23,800 and $6,000, respectively, on
their shares of common stock of the Management Companies, and the Company has
received dividends of $2,947,300 on its shares of preferred stock of the
Management Companies.
As of January 1, 2001, Tebet and Mr. Kompaniez each transferred to the
Operating Partnership the remainder of their common stock holdings in ANHI; and
CIC and Mr. Kompaniez each transferred to the Operating Partnership the
remainder of their common stock holdings in NHPMC. As a result, the Operating
Partnership increased its ownership interest in each of ANHI and NHPMC from 99%
to 100%, and Tebet, CIC and Mr. Kompaniez eliminated their ownership interests
in each of ANHI and NHPMC. The purchase price paid by the Operating Partnership
for the interests in these companies acquired from Tebet and CIC was $1,303,800
and for the interests in NHPMC acquired from Mr. Kompaniez was $325,950. These
purchase prices were determined by AIMCO's independent directors, based on a
valuation done by an independent appraiser. In consideration for the transfers,
the Operating Partnership assumed $98,305 of promissory notes that Tebet and CIC
had issued to purchase their interests in NHPMC, and $24,575 of promissory notes
that Mr. Kompaniez had issued to purchase his interests in NHPMC. In
considerations for the transfers, the Operating Partnership also issued to Tebet
and CIC 24,140 OP Units, and to Mr. Kompaniez 6,035 OP 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 2000,
the Company sold 12,000 shares of Common Stock to Mr. Alcock and 13,148 shares
of Common Stock to Mr. Monson for purchase prices of $462,000 and $506,198,
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. Alcock, and Monson executed notes payable to the
Company bearing interest at 7.25% per annum, payable quarterly, and due in 2010.
The following table sets forth certain information with respect to these loans
to executive officers.
HIGHEST AMOUNT AMOUNT REPAID
OWED DURING SINCE INCEPTION 1/31/01
NAME INTEREST RATE 2000 (THRU 1/31/01) BALANCE
---- ------------- -------------- --------------- -----------
Terry Considine ............ 7.25% $16,215,777 $20,039,112 $15,797,879
Peter K. Kompaniez ......... 7.25% 3,761,392 4,055,059 1,944,941
Steven D. Ira .............. 7.25% 2,886,620 3,093,710 None
Harry G. Alcock ............ 7.25% 883,034 257,602 777,609
Joel F. Bonder ............. 7.00% 1,329,731 38,184 1,321,832
Joseph DeTuno .............. 7.00% 469,863 35,268 460,725
Patrick J. Foye ............ 6.25% 2,859,682 386,323 2,613,701
Paul J. McAuliffe .......... 7.00% 2,163,917 363,475 2,036,531
Ron D. Monson .............. 7.00% 776,783 111,737 694,461
Lance Graber ............... 6.25% 1,925,000 None 1,925,000
----------- ----------- -----------
$33,271,799 $28,380,470 $27,572,679
=========== =========== ===========
38
39
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, 2000,
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, 2000, 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 2002,
must be received by the Company, marked to the attention of the Secretary, no
later than January 24, 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 2002 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 March 4, 2002.
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,
2000 (Commission file No. 1-13232). This document contains important information
about the Company and its financial condition.
39
40
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.
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
If you would like to request documents from the Company, please do so
by June 5, 2001 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 May 7, 2001. 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
May 7, 2001
Denver, Colorado
40
41
APPENDIX A
CHARTER
OF THE
AUDIT COMMITTEE
OF THE
BOARD OF DIRECTORS
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
AS ADOPTED BY THE BOARD ON APRIL 19, 2000
AUTHORITY
The Audit Committee (the "Committee") of the Board of Directors (the "Board") of
Apartment Investment and Management Company (the "Corporation") has been
established pursuant to Section 3.01 of the Corporation's Amended and Restated
Bylaws and Section 2-411 of the Maryland General Corporation Law. The presence
in person or by telephone of a majority of the Committee's members shall
constitute a quorum for any meeting of the Committee. All actions of the
Committee will require the vote of a majority of its members present at a
meeting of the Committee at which a quorum is present.
COMPOSITION AND EXPERTISE OF MEMBERS
The Committee shall be comprised of three or more directors as determined from
time to time by resolution of the Board. The members of the Committee shall be
elected by the Board in a manner consistent with the appointment of members of
other Board committees. The Chairman of the Committee shall be designated by the
Board or, if the Board does not so designate a Chairman, the members of the
Committee, by majority vote, may designate a Chairman. Each member of the
Committee shall be a director:
o who has no relationship to the Corporation that may interfere with the
exercise of his or her independence from management and the
Corporation; and
o who is financially literate, as such qualification is interpreted by
the Board in its business judgment, or who becomes financially literate
within a reasonable period of time after appointment to the Committee.
At least one member of the Committee will have accounting or related financial
management expertise, as the Board interprets such qualification in its business
judgment. In addition to the foregoing, the following restrictions shall apply
to every Committee member:
o EMPLOYEES. A director who is an employee (including non-employee
executive officers) of the Corporation or any of its affiliates may not
serve on the Committee until three years following the termination of
his or her employment.
41
42
o BUSINESS RELATIONSHIP. A director who (i) is a partner, controlling
shareholder, or executive officer of an organization that has a
business relationship with the Corporation, (ii) has a direct business
relationship with the Corporation (e.g., a consultant) or (iii) is a
partner, officer or employee of an organization that has such a
relationship may serve on the Committee only if the Corporation's Board
determines in its business judgment that the relationship does not
interfere with the director's exercise of independent judgment.
o CROSS COMPENSATION COMMITTEE LINK. A director who is employed as an
executive of another corporation where any of the Corporation's
executives serves on that corporation's compensation committee may not
serve on the Committee.
o IMMEDIATE FAMILY. A director who is an immediate family member of an
individual who is an executive officer of the Corporation or any of its
affiliates cannot serve on the Committee until three years following
the termination of such employment relationship.
PURPOSE AND RESPONSIBILITIES
The Committee's purpose is to assist the Board in fulfilling its
responsibilities with respect to matters involving the accounting, auditing,
financial reporting and internal control functions of the Corporation and its
subsidiaries. In carrying out its duties and responsibilities, the Committee's
policies and procedures should remain flexible, so that it may be in a position
to best react or respond to changing circumstances or conditions. The Committee
shall meet with such frequency and at such intervals as it shall determine is
necessary to carry out its duties and responsibilities. In discharging its
duties and responsibilities, the Committee is empowered to investigate any
matter and shall have full access to all books, records, facilities and
personnel of the Corporation and the power to retain outside counsel, auditors
or other experts to assist it.
The Committee's role is oversight and it and the Board recognize that the
Corporation's management is responsible for preparing the Corporation's
financial statements and that the independent auditor ("Auditor") is responsible
for auditing those financial statements. The following functions shall be common
recurring activities of the Committee in carrying out its oversight function:
o The Committee shall review and reassess the adequacy of the Committee's
Charter on an annual basis.
o The Committee and the Board shall have the ultimate authority and
responsibility to select (or nominate for shareholder approval),
evaluate and, where appropriate, replace the Corporation's Auditor. The
Auditor is ultimately accountable to the Board and the Committee.
o The Committee shall request from the Auditor annually, a formal written
statement delineating all relationships between the Auditor and the
Corporation, which statement shall satisfy the requirements of
Independence Standards Board Standard No. 1 (as modified or
supplemented). The Committee shall discuss with the Auditor any such
disclosed relationships or services that may impact the Auditor's
objectivity and independence. The Committee shall recommend that the
Board take appropriate
42
43
action in response to the Auditor's report to satisfy itself of the
Auditor's independence.
o The Committee shall discuss with the Auditor the matters required to be
discussed by Statements on Auditing Standards No. 61 and No. 71 (as
modified or supplemented).
o The Committee shall request that the Auditor review the Corporation's
interim financial statements to be included in quarterly reports on
Form 10-Q, and shall review and discuss with management and the Auditor
such interim financial statements, prior to filing such reports with
the Securities and Exchange Commission.
o The Committee shall review and discuss with management and the Auditor
the Corporation's audited financial statements. Based on the foregoing
reviews and discussions, the Committee shall determine whether or not
to recommend to the Board that the Corporation's audited financial
statements be included in the Corporation's Annual Report on Form 10-K
for the last fiscal year for filing with the Securities and Exchange
Commission.
o The Committee shall prepare a report to be included in each annual
proxy statement of the Corporation commencing after December 15, 2000,
which satisfies the requirements of the Securities and Exchange
Commission and the New York Stock Exchange.
While the Committee has the duties and responsibilities set forth in this
Charter, the Committee is not responsible for planning or conducting the audit
or for determining whether the Corporation's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles. Similarly, it is not the responsibility of the Committee to resolve
disagreements, if any, between management and the Auditor or to ensure that the
Corporation complies with all laws and regulations.
43
44
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
June 19, 2001 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 meeting and such other matters as may
properly 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.
-----------------------------------------------------
2.
-----------------------------------------------------
3.
-----------------------------------------------------
4.
-----------------------------------------------------
5.
-----------------------------------------------------
6.
-----------------------------------------------------
2. Ratification of the selection of Ernst & Young LLP as independent auditors
for the calendar year ending December 31, 2001.
[ ] 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.)
45
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. ET on June
17, 2001.
46
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PROXY FOR COMMON STOCK
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS
ON JUNE 19, 2001
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: , 2001
(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