Schedule 14A
Information Required in Proxy Statement
Reg. 240,14a-101
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Koger Equity, Inc.
(Name of Registrant as Specified in Its Charter)
Koger Equity, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(i), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rules
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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
pursuatn to Exchange Act Rule 0-11:1
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it was
determined.
[ ] 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:
KOGER EQUITY, INC.
3986 Boulevard Center Drive
Jacksonville, Florida 32207
(904) 398-3403
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------
The Annual Meeting of Shareholders of Koger Equity, Inc. (the Company) will
be held on Tuesday, May 7, 1996, at 1:00 p.m., Eastern Daylight Saving Time, at
the Omni Jacksonville, 245 Water Street, Jacksonville, Florida, for the
following purposes:
1. To elect a board of eight (8) directors to serve for the ensuing year or
until their respective successors are duly elected and qualified; and
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The close of business on February 27, 1996 was fixed as the record date for
the determination of shareholders entitled to receive notice of, and to vote at,
this meeting and any adjournment thereof. All shareholders of record at that
time are entitled to vote at this meeting and any adjournment thereof.
A copy of the Companys Annual Report for the year ended December 31, 1995,
which report contains consolidated financial statements and other information of
interest with respect to the Company and its subsidiaries, is included herewith.
SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED
PROXY. AN ENVELOPE IS ENCLOSED HEREWITH FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Directors
W. Lawrence Jenkins, Secretary
March 18, 1996
<PAGE>
KOGER EQUITY, INC.
3986 Boulevard Center Drive
Jacksonville, Florida 32207
(904) 398-3403
PROXY STATEMENT
March 18, 1996
INTRODUCTION The enclosed proxy is solicited on behalf of and by the Board
of Directors (the Board of Directors) of Koger Equity, Inc., a Florida
corporation (the Company), for use at the Companys Annual Meeting of
Shareholders to be held on Tuesday, May 7, 1996 (the Annual Meeting), and any
adjournment thereof. This Proxy Statement and the enclosed proxy have first been
mailed or otherwise given to shareholders on or about March 18, 1996.
If the enclosed proxy is executed and returned, it will be voted at the
Annual Meeting and any adjournment thereof, and where a choice has been
specified thereon, will be voted in accordance with such specifications, and
where no choice has been specified thereon, will be voted for the election of
the directors named herein. If any other matters properly come before the Annual
Meeting or any adjournment thereof, the holders of the proxies are expected to
vote in accordance with their judgement on such matters. A proxy may be revoked
at any time to the extent that it has not been exercised. A shareholder may
revoke his or her proxy by writing the Secretary of the Company a letter of
proxy revocation, executing a subsequently dated proxy, or attending the Annual
Meeting or any adjournment thereof and voting his or her Shares (as defined
below) personally.
The close of business on February 27, 1996 was fixed as the record date for
determination of the shareholders entitled to vote at the Annual Meeting and any
adjournment thereof.
The number of the Companys shares of common stock, par value $.01 per share
(the Shares), outstanding at the close of business on February 27, 1996 was
17,831,834. There is no other class of voting securities of the Company
outstanding, and each Share is entitled to one (1) vote. A majority of the
Shares issued and outstanding as of the record date represented at the Annual
Meeting or any adjournment thereof, either in person or by proxy, shall
constitute a quorum. Irvin H. Davis, Victor A. Hughes, Jr. and S. D. Stoneburner
have, and each of them has, been designated to vote the proxies solicited
hereby. The Shares are not subject to cumulative voting.
MATTERS TO BE CONSIDERED
The Companys shareholders will consider and act upon (i) a proposal to
elect eight (8) directors for the following year, and (ii) such other business
as may properly come before the Annual Meeting or any adjournment thereof.
ELECTION OF DIRECTORS
Nominees
The eight (8) nominees listed in the table below are proposed for election
as directors for the ensuing year or until their successors have been duly
elected and qualified.
While management expects that all of the nominees will be able to serve as
directors, if, at the time of the Annual Meeting or any adjournment thereof, a
situation should arise making it impossible for any nominee to serve, the
proxies will be voted in accordance with the best judgement of the holders
thereof for another person recommended by the present Board of Directors in lieu
of such original nominee.
<PAGE>
Each nominee has served in the principal occupations indicated in the table
below with the respective employers indicated in such table during the period of
five years ended on December 31, 1995. The table below also sets forth
information concerning each nominee to the Board of Directors, based on
information furnished by such nominee.
<TABLE>
The Board of Directors recommends a vote FOR the election of each of the
following nominees.
Principal Occupation Beneficial Ownership
Five-Year Employment Year First of Shares at
History and Other Became a February 27, 1996(1)
Name Directorships Director Age (Percent of Class)
- - ---------------------- ----------------------------------- ---------- --- ---------------------------
<S> <C> <C> <C><C> <C>
D. Pike Aloian(2) 1993 41 1,612 (.009%)
Managing Director of Rothschild
Realty, Inc. (a real estate
investment management and advisory
service firm); Director, Charter
Oak Group, Ltd. (a privately held
retail properties real estate
management company); former Vice
President of The Harlan Company,
Inc. (a real estate development and
advisory service firm)
Benjamin C.Bishop,Jr.(2) 1991 64 23,417 (.131%)
Chairman of the Board of Allen C.
Ewing & Co. (an investment banking
company); former Director of Grubb
& Ellis Company (a national
commercial real estate brokerage
company); former Trustee of GMR
Properties (a real estate
investment trust); former Director
of Cousins Properties, Inc. (a real
estate investment trust)
Irvin H. Davis 1991 66 161,158(3) (.896%)
Vice Chairman and Chief Executive
Officer of Koger Equity, Inc.;
former President of Koger Equity,
Inc.; former Executive Vice
President, Chief Executive Officer
pro tempore and Director of Koger
Advisors, Inc. (a former investment
advisor and a former affiliate of
Koger Equity, Inc.); former
Executive Vice President and Chief
Executive Officer pro tempore of
Koger Equity Inc.; former Senior
Vice President/ Asset Manager of
Koger Equity, Inc.; former Senior
Vice President of Koger Management,
Inc. (a former property management
company)
David B. Hiley(4)(5) 1993 57 3,417 (.019%)
Self-employed as a consultant;
former managing Director of
Berkshire Capital Corporation (an
investment banking services firm);
Director and former Senior
Executive Vice President of Thomson
McKinnon Securities, Inc. (a
securities broker-dealer);
consultant, Director and former
Executive Vice-President of Thomson
McKinnon, Inc. (a financial
services holding company); Director
of Newcity Communications, Inc. (a
communications firm)
Principal Occupation Beneficial Ownership
Five-Year Employment Year First of Shares at
History and Other Became a February 27, 1996(1)
Name Directorships Director Age (Percent of Class)
- - ---------------------- ----------------------------------- ---------- --- ---------------------------
Victor A. Hughes, Jr. 1992 60 167,993(6) (.935%)
President and Chief Financial
Officer of Koger Equity, Inc.;
former Senior Vice President of
Koger Equity, Inc.; former Vice
President and an Assistant
Secretary of Koger Equity, Inc.;
former Senior Vice President and
Chief Financial Officer of Koger
Advisors, Inc. (a former investment
advisor and a former affiliate of
Koger Equity, Inc.); former Vice
President of Koger Advisors, Inc.
G. Christian Lantzsch(2) 1988 71 3,837(7) (.022%)
Retired Director of Duquesne Light
Company; retired Vice Chairman of
the Board of Directors and
Treasurer of Mellon Bank Corp.;
retired Vice Chairman and Chief
Financial Officer of Mellon Bank,
N.A.
George F. Staudter(4) 1993 64 3,744 (.021%)
Managerial and financial
consultant; Director of Waterhouse
Investor Services, Inc. (a
securities broker dealer); Director
of Waterhouse Investors Cash
Management Fund, Inc. (a family of
mutual funds); former President,
Chief Executive Officer and
Director of Family Steak Houses of
Florida, Inc. (a restaurant chain);
former Principal of Douglas Capital
Management (a registered investment
advisor); former Vice President and
Treasurer of Revlon, Inc. (a
cosmetic manufacturer and marketer)
S. D. Stoneburner 1988 77 15,154(8) (.085%)
Chairman of the Board of Directors
of Koger Equity, Inc.
All Executive Officers 454,145 (9)
and Director Nominees as (2.497%)
a Group (11 persons)
</TABLE>
<PAGE>
(1) Unless otherwise noted, all Shares are owned directly, with sole voting and
dispositive power or with voting and dispositive power shared with spouse.
(2) Member of the Audit Committee.
(3) Includes 146,333 Shares which are subject to presently exercisable options,
or options which are exercisable within 60 days.
(4) Member of the Compensation Committee.
(5) Mr. Hiley was a director and executive officer of Thomson McKinnon, Inc., a
financial service holding company, and its subsidiary Thomson McKinnon
Securities, Inc. (TMSI), a broker-dealer, both of which filed for
protection under Chapter 11 of the federal bankruptcy code in 1990. In a
proceeding instituted by the State of Alabama in 1989 claiming unregistered
sales of securities by an Alabama branch of TMSI and alleging a failure of
supervision by him and other executives, Mr. Hiley consented to an order
barring him from registration as a securities dealer in Alabama. In a
related matter, TMSI admitted to a criminal violation of the Alabama
securities statute.
(6) Includes 142,667 Shares which are subject to
presently exercisable options, or options which are exercisable within 60
days.
(7) Includes 47 Shares which are subject to presently exercisable warrants to
purchase Shares.
(8) Includes 8,000 Shares which are held in a trust for which Mr. Stoneburner
is the beneficiary.
(9) Sole voting and dispositive power as to 450,308 Shares, and shared voting
and dispositive power as to 3,837 Shares. Includes 355,190 Shares which are
subject to presently exercisable options, or options which are exercisable
within 60 days. Includes 84 Shares which are subject to presently
exercisable warrants to purchase Shares.
Corporate Governance
The Board of Directors of the Company held six meetings during the last
fiscal year. The Board of Directors maintains an Audit Committee (the Audit
Committee) and a Compensation Committee (the Compensation Committee), the
members of which are elected by the Board of Directors. The Board of Directors
does not have a nominating committee.
The Audit Committee is composed exclusively of directors who are not
officers or employees of the Company. It recommends to the Board of Directors
the selection of independent auditors, reviews the scope of the audit procedures
and the results of the audit, reviews the matter of independence of the
auditors, including non-audit services provided by the auditors and considers
and makes recommendations to the Board of Directors on matters referred to it
relating to the audit function, such as financial and accounting standards and
principles and internal accounting, auditing and financial controls. The Audit
Committee held two meetings during the last fiscal year and members of the Audit
Committee consulted with the officers of the Company and the independent
auditors at various times throughout the year.
The Compensation Committee is composed exclusively of directors who are not
officers or employees of the Company. It sets the salaries of the Companys
senior executives, and reviews and recommends the adoption of compensation plans
and the granting of benefits under such plans, including the making of
contributions under the Companys 401(k) plan (the 401(k) Plan), the granting of
options pursuant to the Companys stock option plans, and the approval of
participation in the Companys Supplemental Executive Retirement Plan (the SERP).
The Compensation Committee held eight meetings during the last fiscal year.
Each of the directors attended at least 75% of the Board of Directors
meetings and meetings held by committees of the Board of Directors of which they
were members.
Directors of the Company who are not officers receive a monthly retainer of
$1,667, plus fees of $2,000 for each meeting of the Board of Directors attended
and $500 for each meeting of any committee of the Board of Directors attended,
together with expenses of attendance. The Chairman of the Board of Directors
receives an additional quarterly retainer of $5,000. Directors may elect payment
of part or all of their retainer in Shares by participation in the Stock
Investment Plan. Directors who are officers of the Company are not paid a
directors fee.
EXECUTIVE COMPENSATION Summary Compensation Table The table below sets forth
information concerning the annual and long-term compensation of the Vice
Chairman of the Board and Chief Executive Officer (the CEO) and the other named
executive officers whose salary and bonus for the fiscal year ended December 31,
1995 exceeded $100,000 (collectively with the CEO, the Executive Officers).
<TABLE>
Annual Compensation Long-Term Compensation
----------------------------------------- ----------------------------------------
Pay All Other
Awards outs Compensation
--------------------------- --------- --------------
Name and Principal Year Salary Bonus Other Annual Restricted Securities LTIP ($)
Position ($) ($) Compensation Stock Underlying Payouts
($) Award(s) Options/SARs ($)
(1) (2) ($) (#) (3) (4)
- - ------------------------ ---- -------- ----------- -------- ----- ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Irvin H. Davis 1995 $229,200 $104,408(5) -0- -0- -0- -0- $ 26,340
Vice Chairman of 1994 $179,200 $ 57,207(5) -0- -0- 58,333 -0- $ 26,340
the Board and 1993 $175,000 $ 3,365 $ 4,500 -0- -0- -0- $ 32,626
Chief Executive Officer
Victor A. Hughes, Jr 1995 $204,200 $110,227(5) -0- -0- -0- -0- $ 35,771(7)
President and 1994 $156,200 $ 49,864(5) -0- -0- 56,667 -0- $ 18,789
Chief Financial Officer 1993 $152,000 $ 2,923 $ 4,500 -0- -0- -0- $ 26,589
J. C. Teagle(8) 1995 $141,750 $27,546 -0- -0- -0- -0- $ 28,415(7)
Senior Vice President 1994 $123,833 $ 2,366 -0- -0- 53,750 -0- $ 14,601
1993 $128,000 $ 2,462 -0- -0- -0- -0- $ 1,924
W. Lawrence Jenkins(10) 1995 $107,500 $ 20,316 -0- -0- -0- -0- $ 22,729(7)
Vice President and 1994 $103,333 $ 1,923 -0- -0- 26,807 -0- $ 12,110
Corporate Secretary 1993 $120,000 $ 2,308 -0- -0- -0- -0- $ 1,786
James L. Stephens 1995 $97,331 $ 5,219 -0- -0- -0- -0- $ 25,029(7)
Chief Accounting 1994 $86,875 $ 1,731 -0- -0- -0- -0- $ 13,179
Officer and Corporate 1993 $75,000 $ 1,442 -0- -0- -0- -0- $ 11,208
Treasurer
</TABLE>
(1) For 1995, includes an amount equal to 10% of salary paid after August 1,
1995, which amount was paid by KRSI.
(2) Includes an automobile allowance.
(3) The Company has no long-term incentive plans.
(4) For 1995, 1994, and 1993, includes the taxable portion of certain excess
life insurance premiums (as defined by the Internal Revenue Code) paid by
the Company on behalf of each qualifying employee, including the Executive
Officers (the Life Insurance Premiums).
For 1995, includes (i) a profit sharing contribution partially in the form
of cash and partially in the form of Shares made by the Company to the
account of each qualifying employee, including each Executive Officer,
under the 401(k) Plan, which contribution was equal to 7% of such employees
taxable wages, subject to certain limitations, and was based on the market
value of the Shares on December 29, 1995, which was $10.625 per Share; and
(ii) a matching contribution in the form of Shares made by the Company to
the account of each qualifying employee, including each Executive Officer,
under the 401(k) Plan, which contribution was equal to 50% of such
employees contributions to his or her account under the 401(k) Plan,
subject to a maximum of 6% of eligible compensation, and was based on the
market value of the Shares on December 29, 1995, which was $10.625 per
Share (collectively, the 1995 401(k) Contribution).
For 1994, includes a profit sharing contribution in the form of Shares made
by the Company to the account of each qualifying employee, including each
Executive Officer, under the 401(k) Plan, which contribution was equal to
10% of such employees taxable wages, subject to certain limitations, and
was based on the market value of the Shares on December 30, 1994, which was
$7.25 per Share (the 1994 401(k) Contribution, and collectively with the
1995 401(k) Contribution, the 401(k) Contributions).
For 1993, includes a contribution in the form of cash made by the Company
into an individual retirement account of each of Messrs. Davis, Hughes, and
Stephens pursuant to the Companys Simplified Employee Pension Plan (the SEP
Plan), which SEP Plan was discontinued on December 15, 1993 (the SEP
Contribution).
Each of the Life Insurance Premiums and the 401(k) Contributions were
Company benefits which did not discriminate in scope, terms or operation in
favor of the Executive Officers and were available generally to all
salaried employees of the Company.
As to Mr. Davis, represents a contribution into a SEP Plan IRA account in
the amount of $0, $0, and $26,308; Life Insurance Premiums in the amount of
$11,340, $11,340, and $6,318; and 401(k) Contributions in the amount of
$15,000, $15,000 and $0, each for the years ended 1995, 1994 and 1993,
respectively. As to Mr. Hughes, represents a contribution into a SEP Plan
IRA account in the amount of $0, $0, and $22,935; Life Insurance Premiums
in the amount of $5,911, $3,789, and $3,654; and 401(k) Contributions in
the amount of $15,000, $15,000, $0, each for the years ended 1995, 1994 and
1993, respectively. As to Mr. Teagle, represents Life Insurance Premiums in
the amount of $2,270, $1,837, and $1,924; and 401(k) Contributions in the
amount of $15,000, $12,764, and $0, each for the years ended 1995, 1994 and
1993, respectively. As to Mr. Jenkins, represents Life Insurance Premiums
in the amount of $1,613, $1,440, and $1,786; and 401(k) Contributions in
the amount of $13,686, $10,670, and $0, each for the years ended 1995, 1994
and 1993, respectively. As to Mr. Stephens, represents a contribution into
a SEP Plan IRA account in the amount of $0, $0, and $10,977; Life Insurance
Premiums in the amount of $330, $276, and $231; and 401(k) Contributions in
the amount of $11,222, $9,253 and $0, each for the years ended 1995, 1994
and 1993, respectively.
(5) Includes a cash bonus which was earned in the year reported, but which was
paid in the following calendar year.
(6) These options were granted on May 9, 1994 and became 100% exercisable six
months after the date of grant. These options terminate 10 years from the
date of grant and are exercisable at a per Share price of $7.625. For
information concerning the number and market value of Shares subject to the
Companys stock option plans as to the Executive Officers, reference is made
to the Option/Stock Appreciation Right Exercises and Year-End Values table
and the notes thereto.
(7) For 1995, includes an amount which represents the imputed income resulting
from the below value purchase of shares of common stock of KRSI by each
Executive Officer on July 28, 1995, which amount represents as to: Mr.
Hughes, $14,860; Mr. Teagle, $11,145; Mr. Jenkins, $7,430; and Mr.
Stephens, $7,430.
(8) Mr. Teagle was a Vice President of Koger Properties, Inc., and became an
officer of the Company after the Merger (as defined below).
(9) These options were granted in 1994 and become exercisable in cumulative
annual increments of 20% commencing one year from the date of grant. A
portion of these options terminate seven years from the date of grant and
the remainder portion of these options terminate ten years from the date of
grant. These options are exercisable at a per share price of $7.625. For
information concerning the number and market value of Shares subject to the
Companys stock option plans as to the Executive Officers, reference is made
to the Option/Stock Appreciation Right Exercises and Year-End Values table
and the notes thereto.
(10) Mr. Jenkins held the same position with Koger Properties, Inc., and became
an officer of the Company after the Merger.
OPTION/STOCK APPRECIATION RIGHT GRANTS
During the fiscal year ended December 31, 1995, no options or stock
appreciation rights were granted to any Executive Officer.
OPTION/STOCK APPRECIATION RIGHT EXERCISES AND YEAR-END VALUES
The table below sets forth information with respect to (i) the aggregate
number of options/stock appreciation rights exercised, and the values realized
in respect thereof, by the Executive Officers during the fiscal year ended
December 31, 1995 and (ii) the aggregate number of options/stock appreciation
rights, and the value of in-the-money options/stock appreciation rights, in each
case held by the Executive Officers at the end of such fiscal year.
<TABLE>
Value of Unexercised in-
Number of the-Money Options/SARs
Securities Underlying at
Unexercised FY-End
Shares Value Options/SARs at FY-End(#) ($10.625)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
- - --------------------- ------------ -------- ------------------------ ------------------------
<S> <C> <C> <C> <C>
Irvin H. Davis
Stock Option -0- -0- 75,000/ 50,000(1) $412,500 /$275,000(2)
Stock Option -0- -0- 58,333/ -0- (5) $174,999 / -0- (6)
Victor A. Hughes, Jr
Stock Option -0- -0- 64,500/ 43,000(1) $354,750 /$236,500(2)
Stock Option -0- -0- 56,667/ -0- (5) $170,001 / -0- (6)
J. C. Teagle
Stock Option -0- -0- 5,361/ 21,446(3) $ 16,083 /$ 64,338(6)
Stock Option -0- -0- 5,389/ 21,554(4) $ 16,167 /$ 64,662(6)
W. Lawrence Jenkins
Stock Option -0- -0- 5,361/ 21,446(3) $ 16,083 /$ 64,338(6)
James L. Stephens
Stock Option 1,454 $6,047 29,496/ 21,500(1) $162,228 /$118,250(2)
</TABLE>
(1) These options become exercisable in cumulative annual increments of 20%
commencing on February 5, 1993. At December 31, 1995, these options were
60% exercisable, with a per Share exercise price of $5.125.
(2) The closing price of the Shares on December 29, 1995, as reported on the
American Stock Exchange, was $10.625, which price is greater than the
exercise price of $5.125.
(3) These options become exercisable in cumulative annual increments of 20%
commencing on January 27, 1995. At December 31,1995, these options were 20%
exercisable, with a per Share exercise price of $7.625.
(4) These options become exercisable in cumulative annual increments of 20%
commencing on May 9, 1995. At December 31, 1995, these options were 20%
exercisable, with a per Share exercise price of $7.625.
(5) These options became fully exercisable on November 6, 1994 with a per Share
exercise price of $7.625.
(6) The closing price of the Shares on December 29, 1995, as reported on the
American Stock Exchange, was $10.625, which price is greater than the per
Share exercise price of $7.625.
Long-Term Incentive Plan Awards
The Company made no long-term incentive plan awards to any Executive
Officer during the fiscal year ended December 31, 1995.
Supplemental Executive Retirement Plan
During 1995, after review and recommendation by the Compensation Committee,
the Board of Directors adopted the SERP. The SERP provides additional retirement
benefits for the Executive Officers. In the case of Messrs. Davis and Hughes,
the SERP provides (i) such Executive Officer with a lifetime benefit of 50% of
final average annual base salary, less social security benefits and the
annuitized equivalent of profit sharing contributions by the Company to the
account of such Executive Officer under the 401(k) Plan, and (ii) the surviving
spouse of such Executive Officer with a lifetime benefit of 50% of such
Executive Officers benefit. The SERP also provides Messrs. Davis and Hughes and
their spouses with lifetime medical coverage (which is intended to be roughly
equivalent to that provided by the Company for the Executive Officers). In the
case of each other Executive Officer, the SERP provides a 15-year benefit
(reduced in any case in which such Executive Officer has less than 20 years of
service) equal to 40% of final average annual base salary, less social security
benefits and the annuitized equivalent of profit sharing contributions by the
Company to the account of such Executive Officer under the 401(k) Plan. Benefits
under the SERP generally vest only if the applicable Executive Officer remains
in the Companys employ for a period ranging from two to five years after
commencement of his participation in the SERP (depending upon such Executive
Officers age at the commencement of his participation in the SERP). However, if
a change of control of the Company (as defined in the SERP) occurs and an
Executive Officer leaves the employ of the Company under certain circumstances,
then (a) in the case of Messrs. Davis and Hughes, such Executive Officer would
be entitled to his benefits, commencing immediately and without regard to the
vesting requirement, and (b) in the case of each other Executive Officer, such
Executive Officer, at his option, would be entitled to either a continuation of
his base salary for a period of 18 months or his vested benefits under the SERP.
The table below sets forth information with respect to the estimated annual
benefits (determined before any reduction for social security benefits and
401(k) Plan contributions as described above) payable upon retirement based upon
specified compensation under the SERP and the years of service classifications
under the SERP.
Pension Plan Table
Years of Service
Final
Average
Annual
Remuneration 15 20 25 30 35
- - --------------------------------------------------------------
$125,000 $37,500 $50,000 $50,000 $50,000 $50,000
$125,000 $37,500 $50,000 $50,000 $50,000 $50,000
$125,000 $37,500 $50,000 $50,000 $50,000 $50,000
150,000 45,000 60,000 60,000 60,000 60,000
175,000 52,500 70,000 70,000 70,000 70,000
200,000 60,000 80,000 80,000 80,000 80,000
225,000 112,500 112,500 112,500 112,500 112,500
250,000 125,000 125,000 125,000 125,000 125,000
300,000 150,000 150,000 150,000 150,000 150,000
- - --------------------------------------------------------------
The compensation base used by the SERP is average base salary for the final
three years of employment. As of December 31, 1995, the base salary and
estimated years of service credit for each Executive Officer are listed below:
Mr. Davis $229,200 28 years
Mr. Hughes $204,200 13 years
Mr. Teagle $148,000 23 years
Mr. Jenkins $110,000 25 years
Mr. Stephens $ 99,775 9 years
Because the SERP generally provides a 50% gross benefit to Messrs. Davis
and Hughes and a 40% gross benefit to the other Executive Officers, the Pension
Plan Table above reflects a 50% benefit for salaries above $200,000 and a 40%
benefit for salaries up to and including $200,000. The benefits shown in the
Pension Plan Table above will be reduced by (i) the amount of social security
benefits received by the applicable Executive Officer and (ii) the annuitized
equivalent of profit sharing contributions made by the Company to the account of
such Executive Officer under the 401(k) Plan.
At retirement, benefits under the SERP are paid in annuity form. Messrs.
Davis and Hughes are expected to receive benefits in lifetime 50% spousal joint
and survivor annuity form. The other Executive Officers are expected to receive
benefits in 15-year certain annuity form.
Stock Investment Plan
The Company has a Stock Investment Plan (the SIP) pursuant to which
participating employees and directors of the Company may purchase Shares. Under
the SIP, the Company is authorized to purchase up to an aggregate of 200,000
Shares on behalf of such participating employees and directors. Each
participating employee pays for his or her Shares pursuant to a monthly payroll
deduction plan established by the participating employees, and each
participating director pays for his Shares pursuant to a deduction from such
directors retainer. However, pursuant to the SIP and subject to certain
limitations, the Company contributes a portion of the purchase price of such
Shares, which contribution equals the following percentage of the aggregate
monthly deduction from such employees pay or such directors retainer: (i) 25% of
each monthly deduction less than or equal to $50; (ii) 20% of each monthly
deduction greater than $50 but less than or equal to $100; and (iii) 15% of each
monthly deduction greater than $100 but less than or equal to $1,700. The
Company also pays all commissions and related expenses of the SIP. Pursuant to
the SIP, during the year ended December 31, 1995, the Company paid approximately
$34,800 on behalf of participating employees and directors.
Compensation Committee Report on Executive Compensation
During 1995, the Compensation Committee consisted of Thomas K. Smith, Jr.
(who resigned as a director of the Company on March 7, 1996), David B. Hiley,
and George F. Staudter, all of whom were outside directors of the Company. The
Compensation Committee is responsible for setting the compensation of the CEO
and the President and Chief Financial Officer (the CFO) and for reviewing the
compensation proposed by management for all other executive officers of the
Company. It has been the practice of the Compensation Committee to have the
Board of Directors ratify the salaries and bonuses of the CEO and CFO. The
Compensation Committee is also responsible for (i) making grants under the
Companys stock option plans, (ii) making contributions, subject to approval by
the Board of Directors, under the 401(k) Plan and any other plan or plans as may
be determined by the Board of Directors, and (iii) approving participation in
the SERP.
Currently, the key elements of the Companys compensation package for the
Executive Officers are base salary, bonuses, contributions to the 401(k) Plan,
stock options, and participation in the SERP. Although the Compensation
Committee did not grant stock options to any Executive Officer during 1995, it
has granted stock options in the past and expects that in the future stock
options will continue to be an important part of executive compensation.
In determining the compensation paid to the Executive Officers in 1995, the
Compensation Committee took into consideration a number of factors, including
among others, the following: (i) the continuing impact upon the Company of the
Chapter 11 bankruptcy of Koger Properties, Inc., a Florida corporation (KPI),
particularly the high levels of indebtedness that the Company was required to
assume in connection with the merger of KPI with and into the Company (the
Merger); (ii) the improvement in the Companys operations, including increases in
percent leased rates, rental revenues, and funds from operations, and the
material reduction in the Companys indebtedness; and (iii) the results of a
survey prepared by the National Association of Real Estate Investment Trusts
(NAREIT) with respect to executive compensation and the findings of the
Consultant (as defined below).
Adverse Circumstances Resulting from KPI Bankruptcy. As a result of the
Chapter 11 bankruptcy of KPI (the KPI Bankruptcy) and the Merger, pursuant to
which the Company acquired substantially all of the assets of KPI, the Company
was required to assume approximately $190 million of restructured indebtedness
of KPI. Loan agreements governing both such former KPI indebtedness and some of
the Companys pre-Merger indebtedness contain restrictive covenants that handicap
the Company, including limitations on investments, borrowings, and capital
expenditures and requirements that proceeds of any equity offerings be devoted
in substantial part to the pro rata reduction of such indebtedness. To resolve
the uncertainties and risks to the Company arising out of the KPI Bankruptcy,
the Company accepted such covenants at the conclusion of the KPI Bankruptcy in
1993.
Improvement in Operations; Reduction in indebtedness. Since the KPI
Bankruptcy and the Merger, the Companys strategy has been to stabilize and then
improve its financial condition by increasing occupancy and revenues and
reducing indebtedness. The Company has made significant progress in these areas.
During 1995, the Company continued its program, begun in 1994, to improve
operating efficiencies. During 1995, the Company (i) increased the percent
leased rate of its buildings to approximately 91%, (ii) increased its rental
revenues by approximately $1.73 million, and (iii) increased its funds from
operations by approximately 56%, from approximately $23.9 million to
approximately $37.3 million. The Company also reduced indebtedness by
approximately $68.9 million, from approximately $323.8 million at the beginning
of 1995 to approximately $254.9 million at the end of the year. Approximately
$49 million of this reduction was attributable to amounts received from The
Koger Partnership, Ltd., a Florida limited partnership (TKP). The Companys
debt-to-book capitalization ratio improved from approximately 54% as of the end
of 1994 to 45% as of the end of 1995.
NAREIT Questionnaire; Consultant. In setting compensation for 1995, the
Compensation Committee considered a 1994 annual compensation survey prepared by
NAREIT. This survey is limited to those members of NAREIT who voluntarily
respond to an annual NAREIT questionnaire on executive compensation and,
accordingly, does not include the entire membership of NAREIT (as does the
NAREIT Total Return Index which is included in the Companys 1995 Proxy Statement
and in the graph under Shareholder Return Performance Presentation below). Thus,
in 1994 and 1995, the Company did not have available to it executive
compensation information on all of the organizations included in the NAREIT
Total Return Index.
During 1995, the Company continued to employ a nationally recognized,
independent compensation consulting firm (the Consultant) for the purpose of
obtaining additional information on compensation levels and practices for
executive positions in the real estate industry. The Consultant found that the
compensation levels for 1994 for the CEO, the CFO, and the other Executive
Officers were below the median level of those in the real estate industry for
companies similar in size to the Company. These findings were based on peer
group proxy analysis and published surveys.
While the Compensation Committee considered all of the foregoing, it did
not, and has not as yet, set any specific criteria in arriving at any particular
executives compensation. Accordingly, based on the above, the Compensation
Committee made a subjective determination in setting the compensation of the
Executive Officers.
In arriving at the compensation paid the CEO, the Compensation Committee
has considered the CEOs long experience in the development and management of
suburban office parks and his proven ability to maintain high occupancy rates as
compared to those that are found in other office parks in markets in which the
Company competes. It should be noted that during 1995, the Company, under the
CEOs leadership, was able to maintain above average percent leased rates
(approximately 91% of net rentable square feet at December 31, 1995), and to
increase the average annual rent per square foot leased by approximately 2.8%,
from $13.35 at December 31, 1994 to $13.72 at December 31, 1995. In order to
recognize the CEOs outstanding performance during 1995, the Compensation
Committee awarded him a bonus of $100,000 (43.6% of his base salary of
$229,200). In addition, to bring the CEOs salary more in line with the industry
standards, the Compensation Committee increased his base annual salary from
$179,200 in 1994 to $229,200 in 1995.
The CFO has made significant contributions to the operations of the
Company, particularly in the reduction of indebtedness and the improvement of
the Companys financial structure. The CFO also has certain shared
responsibilities for the overall management of the Company with the CEO.
Accordingly, the Compensation Committee awarded the CFO a bonus of $100,000
(49.0% of his base salary of $204,200) for his outstanding performance during
1995. In addition, to bring the CFOs salary more in line with the industry
standards, the Compensation Committee increased his base annual salary from
$156,200 in 1994 to $204,200 in 1995.
Subject to general oversight by the Compensation Committee, the CEO has
been granted authority by the Compensation Committee to set the compensation of
all other officers of the Company, including the other Executive Officers.
The foregoing report has been furnished by the Compensation Committee.
Thomas K. Smith, Jr., Chairman
David B. Hiley
George F. Staudter
<PAGE>
Shareholder Return Performance Presentation
The line graph below sets forth the cumulative total shareholder return on
the Shares as compared with the cumulative total return of each of the American
Stock Exchange Market Value Index and the NAREIT Total Return Index, in each
case (i) on an annual basis for the period commencing December 31, 1990 and
ending December 31, 1995 and (ii) assuming that $100 was invested on December
31, 1990 and that all dividends were reinvested.
1990 1991 1992 1993 1994 1995
KE $100 $54 $62 $114 $98 $143
AMEX $100 $128 $130 $155 $141 $178
NAREIT $100 $136 $152 $180 $182 $215
As the Nareit Total Return Index contains companies on which compensation
data similar to that provided the Compensation Committee by the Consultant is
not available, the Company has used a different industry group for compensation
comparisons from that used for its shareholder return performance presentation.
Compensation Committee Interlocks and Insider Participation
David B. Hiley, a director who is not an officer or employee of the Company,
served on the Compensation Committee during 1995. Beginning in 1996, the Company
entered into a consulting agreement with Mr. Hiley, pursuant to which Mr. Hiley
provides advice with respect to the financial aspects of the Companys strategic
plan. Under such agreement, Mr. Hiley is being paid (i) $32,100 for his services
from January through mid-March, 1996, and (ii) $12,000 a month thereafter,
subject to periodic evaluation by the Board of Directors.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
From its organization in 1988, the Companys business involved the
acquisition from KPI and its affiliates of completed and substantially leased
commercial office buildings and the operation of such properties for the
production of rents. As of December 31, 1995, the Company owned 216 commercial
properties in 13 metropolitan areas in the southeastern and southwestern United
States. A total of 126 buildings were acquired from KPI or its affiliates
through 1990. During 1993, an additional 93 buildings were acquired from KPI as
the result of the Merger, which was consummated on December 21, 1993 as part of
the Plan of Reorganization in the KPI Bankruptcy. As a result of the Merger, the
Company also assumed property management agreements to manage (i) 20 office
buildings owned by Centoff Realty Company, Inc., a subsidiary of Morgan Guaranty
Trust Company of New York, and (ii) 92 office buildings owned by TKP.
Prior to the Merger, KPI was the managing general partner of TKP, and in
connection with the Merger, KPI transferred all of its debt and equity interests
in TKP to a newly formed wholly owned subsidiary of the Company, Southeast
Properties Holding Corporation, Inc., a Florida corporation (Southeast), which
became the managing general partner of TKP. The Board of Directors of Southeast
consists of the following Directors of the Company: S.D. Stoneburner, who is
Chairman of the Board of Southeast, Irvin H. Davis, who is President and Chief
Executive Officer of Southeast, and Victor A. Hughes, Jr., who is Senior Vice
President and Chief Financial Officer of Southeast.
Pursuant to a Management Agreement between TKP and Southeast, as successor
to KPI, Southeast, in its capacity as Managing General Partner of TKP, generally
had responsibility for all aspects of TKPs operations. However, Southeast
delegated to the Company the responsibility of managing TKPs operations. As
compensation for its services, the Company received a management fee of
approximately $1.7 million for the year ended December 31, 1995.
During 1995, the Company acquired approximately $32.3 million of promissory
notes issued by TKP to third parties (the TKP Notes) for an aggregate purchase
price of approximately $18.2 million.
During 1995, TKP sold its 92 buildings and parcels of related land to Koala
Miami Realty Holding, Inc., Koala Norfolk Realty Holding, Inc., Koala Raleigh
Realty Holding, Inc., Koala Richmond Realty Holding, Inc., and Koala Tampa
Realty Holding, Inc. (each a Koala Entity), all of which are wholly owned
subsidiaries of a co-mingled pension trust for which Morgan Guaranty Trust
Company of New York is the trustee and J.P. Morgan Investment Management Inc. is
the investment manager, for an aggregate gross sales price of approximately $154
million.
In connection with the sale by TKP of its properties, the Company waived
its right to receive all incentive fees pursuant to an Incentive Fee Agreement
between TKP and the Company.
The Company and Southeast collectively received approximately $49 million
of the proceeds received by TKP upon the sale of its properties in partial
payment of approximately $76.8 million of indebtedness owed by TKP to the
Company and Southeast. As part of such payment, TKP paid approximately $31.3
million to the Company to retire the TKP Notes and approximately $17.7 million
to Southeast to partially repay an unsecured note issued by TKP to KPI (and
subsequently transferred to Southeast in connection with the Merger) in an
original principal amount of approximately $31 million. All of the assets of TKP
having been sold, TKP was dissolved on December 26, 1996 pursuant to an Order of
the United States Bankruptcy Court for the Middle District of Florida entered on
December 4, 1996.
Simultaneously with the sale by TKP of its properties, the Company sold to
certain Koala Entities three buildings and certain parcels of related land
located in or contiguous to office centers substantially owned by TKP, for an
aggregate gross purchase price of approximately $25.3 million. As a result of
this transaction, the Company was able to discharge indebtedness of
approximately $21 million on the three buildings. A certain Koala Entity
continues to hold an option to purchase from the Company two additional parcels
of land in Miami, Florida.
In connection with the acquisition by the Koala
Entities from TKP and the Company of the properties described above, Koala
entered into a Management Agreement with Koger Realty Services, Inc., a Delaware
corporation (KRSI), in which the Company has a significant economic interest,
pursuant to which KRSI will manage such properties for five years.
KRSI was incorporated to provide, among other things, leasing and property
management services to owners of commercial office buildings. The Company
acquired all of the preferred stock of KRSI, which currently represents in
excess of 95% (by value) of the outstanding equity of KRSI. Such preferred stock
is nonvoting stock and is convertible. All of the outstanding common stock of
KRSI was acquired by officers and employees of KRSI, including: Victor A.
Hughes, Jr., a Director and the President and Chief Executive Officer of the
Company, James C. Teagle, the Senior Vice President of the Company, W. Lawrence
Jenkins, the Vice President/Administration and Corporate Secretary of the
Company, James L. Stephens, the Chief Financial Officer and Corporate Treasurer
of the Company, and certain other employees of KRSI who are not employed by the
Company. In addition to serving as officers of KRSI, Messrs. Hughes, Teagle and
Jenkins comprise the Board of Directors of KRSI. In the event that any of the
foregoing persons leaves the employ of KRSI, KRSI has the right to reacquire any
shares of common stock of KRSI held by such officer or employee.
Although KRSI is not operated so as to qualify as a real estate investment
trust (a REIT) under the federal tax law and its operations are not consolidated
with the Company for tax purposes, its operations are consolidated for financial
reporting purposes pursuant to generally accepted accounting principles because
of the Companys significant economic interest in KRSI. During 1995, KRSI
received approximately $1.98 million in management fees from the Koala Entities
and other entities for which it performs management services.
With the funds received from TKP, the discharge of indebtedness in
connection with the sale by the Company to certain Koala Entities of the
properties described above, and the application by the Company of additional
funds, during 1995 the Company was able to reduce its indebtedness by
approximately $68.9 million. Consequently, the Companys debt-to-book
capitalization ratio improved from approximately 54% at the beginning of 1995 to
45% at the end of the year.
Beginning in 1996, the Company entered into a consulting agreement with
David B. Hiley, a director and a member of the Compensation Committee, pursuant
to which Mr. Hiley provides advice with respect to the financial aspects of the
Companys strategic plan. Under such agreement, Mr. Hiley is being paid (i)
$32,100 for his services from January through mid-March, 1996 and (ii) $12,000 a
month thereafter, subject to periodic evaluation by the Board of Directors.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Companys directors and executive officers file with the Securities and Exchange
Commission (the SEC) and the American Stock Exchange initial reports of
ownership and reports of changes in ownership of the Companys equity securities.
Directors and executive officers are required by regulations of the SEC to
furnish the Company with copies of all Section 16(a) forms they file.
To the Companys knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports not previously reported were required, during the fiscal year ended
December 31, 1995, its directors and executive officers complied with all
Section 16(a) filing requirements, except for a Form 4 report for the month of
December 1995 reflecting certain purchases for the account of Mr. Hiley pursuant
to automatic deductions from his directors retainer in accordance with the SIP,
which report was filed late.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Beneficial Owners
The table below sets forth certain information with respect to the
beneficial ownership of Shares as of March 14, 1996 by each person known to the
Company to be the beneficial owner of more than 5% of the Shares. Except as
noted below, each of the persons listed has sole dispositive and voting power
with respect to the Shares indicated.
Name and Address of Number of Shares
Beneficial Owner Percent of Class Beneficially Owned
Turkey Vulture Fund XIII, Ltd. 5.0% 889,200(1)
7001 Center Street
Mentor, Ohio 44060
Wellington Management Company 5.8% 1,029,300(2)
75 State Street
Boston, Massachusetts 02109
Resource Group International, Inc.(3) 13.8% 2,452,571(4)
1420 Fifth Avenue, 42nd Floor
Seattle, Washington 98101-2333
(1) Includes 23,700 Shares which the holder has the right to acquire upon the
exercise of currently exercisable warrants.
(2) Has shared voting and dispositive power with respect to the Shares.
(3) Resource Group International, Inc. (RGI International) has a direct,
wholly-owned subsidiary, RGI Realty, Inc. (RGI Realty). RGI Realty is the
beneficial owner of, and has shared voting and dispositive power over,
2,450,571 Shares. RGI International may be deemed to beneficially own, and
have dispositive power over, the Shares owned by RGI Realty.
RGI International is a direct wholly-owned subsidiary of RGI (Denmark
ApS)(RGI Denmark) and an indirect wholly-owned subsidiary of each of RGI
(Europe) B.V. (RGI Europe) and RGI (Antilles) N.V. (RGI Antilles). Kjell I.
Rokke is the majority shareholder of RGI Antilles. Each of RGI Denmark, RGI
Europe, RGI Antilles and Mr. Rokke may be deemed to beneficially own, and
have shared voting and dispositive power over, the Shares beneficially
owned by RIG International and RGI Realty. Each of RGI Denmark, RGI Europe,
RGI Antilles and Mr. Rokke disclaims beneficial ownership of the Shares
beneficially owned by RGI International and RGI Realty.
The information with respect to RGI International, RGI Realty, RGI Denmark,
RGI Europe, RGI Antilles and Mr. Rokke is contained in a Schedule 13D filed
with the SEC on or about January 26, 1996.
(4) Includes 2,450,571 Shares owned by RGI Realty.
On March 4, 1996, the Company filed suit in the United States District
Court for the Middle District of Florida against RGI International, Kjell I.
Rokke, a foreign national, and other affiliated entities, alleging a violation
of Section 13(d) of the Securities Exchange Act of 1934. In particular, the suit
claims that RGI International and Mr. Rokke made false and misleading statements
in their Schedule 13D filing with the SEC with respect of their ownership of 5%
or more of the Shares. The Company is requesting that the Court require that RGI
International and the other defendants correct their misleading disclosures.
Security Ownership of Management
The table below sets forth certain information with respect to the
beneficial ownership of Shares as of March 14, 1996 (i) individually by each
Executive Officer and each director of the Company and (ii) by all Executive
Officers and directors of the Company. Except as noted below, each of the
persons listed below has (a) sole dispositive and voting power or (b) shared
dispositive and voting power with a spouse, in each case with respect to the
Shares indicated. The address of each Executive Officer and director listed
below is c/o the Company.
Number of Shares
Name of Percent Beneficially Owned
Beneficial Owner of Class (1) (2)
----------------------- -------- ------------------
D. Pike Aloian .009 1,612
Benjamin C. Bishop, Jr. .131% 23,417
Irvin H. Davis .896 161,158
David B. Hiley .019 3,417
Victor A. Hughes, Jr .935 167,993
G. Christian Lantzsch .022 3,837
George F. Staudter .021 3,744
S. D. Stoneburner .085 15,154
J. C. Teagle .104 18,642
W. Lawrence Jenkins .072 12,885
James L. Stephens .237 42,286
(1) Includes for Messrs. Davis, Hughes, Teagle, Jenkins and Stephens 146,333,
142,667, 16,111, 10,723, and 39,356 Shares, respectively, which such
executive officers have the right to acquire pursuant to the exercise of
the options held by them under the 1988 and 1993 Stock Option Plans. Also
includes 37 Shares which Mr. Stephens has the right to acquire upon the
exercise of warrants.
(2) Includes for Messrs. Davis, Hughes, Teagle, Jenkins and Stephens 2,825,
2,826, 2,531, 2,162 and 1,839 Shares, respectively, allocated to the
participants account under the 401(k) Plan.
INDEPENDENT PUBLIC ACCOUNTANTS
During the year ended December 31, 1995, the Company engaged Deloitte &
Touche LLP to provide certain audit services. These services included the audit
of the annual financial statements, a review of the quarterly data furnished by
the Company to the SEC for the quarters ended March 31, June 30, and September
30, 1995, services performed in connection with filing of this Proxy Statement
and the Annual Report on Form 10-K by the Company with the SEC, attendance at
meetings with the Audit Committee, and consultation on matters relating to
accounting, tax and financial reporting. The Audit Committee approved all
services performed by Deloitte & Touche LLP in advance of their performance.
Deloitte & Touche LLP has acted as independent public accountants for the
Company since its organization on June 21, 1988. Neither Deloitte & Touche LLP
nor any of its associates has any relationship to the Company or any of its
subsidiaries except in its capacity as auditors.
It is expected that representatives of the independent public accountants
will attend the Annual Meeting and be available to respond to appropriate
questions and be permitted to make a statement concerning the Company should
they desire.
As of the date hereof, the Board of Directors has not selected independent
public accountants to audit the books and accounts of the Company for the fiscal
year ending December 31, 1996. It is anticipated that auditors will be selected
later in the fiscal year.
OTHER BUSINESS
It is not anticipated that there will be presented to the Annual Meeting
any business other than the election of directors. A reasonable time before this
solicitation of proxies, the Board of Directors was not aware of any other
matters to be presented for action at the Annual Meeting or any adjournment
thereof. If any other business should properly come before the Annual Meeting or
any adjournment thereof, the persons named on the enclosed proxy will have
discretionary authority to vote such proxy in accordance with their best
judgment.
SHAREHOLDER PROPOSALS
Proposals of shareholders to be presented at the 1997 Annual Meeting of
Shareholders of the Company must be received at the Companys executive offices
by November 20, 1996, to be considered for inclusion in the Companys proxy
materials relating to such meeting. Such proposals must comply with the SEC
proxy rules relating to shareholder proposals in order to be included in the
Companys proxy material.
GENERAL
The Company will bear the costs of solicitation of proxies. In addition to
the use of the mails, proxies may be solicited by personal interview, telephone
and telegram by directors, officers, and employees of the Company, and no
additional compensation will be paid to such individuals. The Company also has
retained Morrow & Co., Inc., 345 Hudson Street, New York, New York 10014 to
solicit proxies by mail, personal interview, telephone, or telegraph, for which
service the Company anticipates a cost not in excess of $5,000 plus reasonable
out-of-pocket expenses. Arrangements may also be made with the stock transfer
agent and with brokerage houses and other custodians, nominees, and fiduciaries
who are record holders of Shares for the forwarding of solicitation material to
the beneficial owners of Shares. The Company will, upon the request of any such
entity, pay such entitys reasonable expenses for completing the mailing of such
material to such beneficial owners.
Consistent with state law and pursuant to the Companys by-laws, a majority
of the Shares entitled to vote on a particular matter, present in person or
represented by proxy, constitutes a quorum as to such matter.
The eight nominees for election as directors at the Annual Meeting who
receive the greatest number of votes properly cast for the election of directors
shall be elected directors. A majority of the votes properly cast is necessary
to approve any other matter which comes before the Annual Meeting, except as
otherwise required by law, the Articles of Incorporation, or the Companys
by-laws.
The Company will count the total number of votes cast for approval of
proposals, other than the election of directors, for purposes of determining
whether sufficient affirmative votes have been cast. The Company will count
Shares represented by proxies that withhold authority to vote for a nominee for
election as a director or that reflect abstentions and broker non-votes (i.e.,
shares represented at the Annual Meeting held by brokers or nominees as to which
(i) instructions have not been received from the beneficial owners or persons
entitled to vote and (ii) the broker or nominee does not have the discretionary
voting power) only as Shares that are present and entitled to vote on the matter
for purposes of determining the presence of a quorum, but neither abstentions
nor broker non-votes will have any effect on the outcome of voting on the
matter.
The Companys Annual Report to Shareholders for the fiscal year ended
December 31, 1995, which contains financial statements and other information, is
being mailed to shareholders with this Proxy Statement, but is not to be
regarded as proxy soliciting material.
AN ADDITIONAL COPY OF THE COMPANYS ANNUAL REPORT ON FORM 10-K FILED WITH
THE SEC MAY BE OBTAINED, WITHOUT CHARGE, BY ANY SHAREHOLDER UPON WRITTEN REQUEST
TO THE CORPORATE SECRETARY, KOGER EQUITY, INC., 3986 BOULEVARD CENTER DRIVE,
JACKSONVILLE, FLORIDA 32207; PROVIDED, HOWEVER, THAT A COPY OF THE EXHIBITS TO
SUCH ANNUAL REPORT ON FORM 10-K, FOR WHICH THERE MAY BE A REASONABLE CHARGE,
WILL NOT BE SUPPLIED TO SUCH SHAREHOLDER UNLESS SPECIFICALLY REQUESTED.
