SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
MID-AMERICA APARTMENT COMMUNITIES, INC.
(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)(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
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE>
MID-AMERICA APARTMENT COMMUNITIES, INC.
6584 POPLAR AVENUE
SUITE 340
MEMPHIS, TENNESSEE 38138
April 30, 1998
TO THE SHAREHOLDERS OF
MID-AMERICA APARTMENT COMMUNITIES, INC.
In connection with the Annual Meeting of Shareholders of your
company to be held on June 4, 1998, we enclose a Notice of Annual
Meeting of Shareholders, a Proxy Statement and a form of Proxy.
At the meeting you will be asked to elect three Class I directors
to serve until the annual meeting of shareholders of the Company in
2001 and one Class III director to serve until the annual meeting of
shareholders of the Company in 2000 or until their successors are duly
elected and qualified. You will also be asked to ratify the selection
of KPMG Peat Marwick LLP as the Company's independent auditors for
1998. Information about these matters is contained in the attached
Proxy Statement.
Detailed information relating to the Company's activities and
operating performance during 1997 is contained in the Annual Report to
Shareholders of the Company, which is being mailed to you with this
Proxy Statement, but is not a part of the proxy soliciting material.
If you do not receive or have access to the 1997 Annual Report, please
notify Mark S. Martini, Secretary, Mid-America Apartment Communities,
Inc., 6584 Poplar Avenue, Suite 340, Memphis, Tennessee 38138.
You are cordially invited to attend the Annual Meeting of
Shareholders in person. We would appreciate your completing the
enclosed form of proxy so that your shares can be voted in the event
you are unable to attend the meeting. If you are present at the
meeting and desire to vote your shares personally, your form of proxy
will be withheld from voting upon your request prior to balloting. We
urge you to return your proxy card to us in the stamped envelope as
soon as possible.
Very truly yours,
/s/ GEORGE E. CATES
George E. Cates
CHIEF EXECUTIVE OFFICER
<PAGE>
MID-AMERICA APARTMENT COMMUNITIES, INC.
6584 POPLAR AVENUE
SUITE 340
MEMPHIS, TENNESSEE 38138
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 4, 1998
------------------------
Notice is hereby given that the annual meeting of shareholders (the
"Annual Meeting") of Mid-America Apartment Communities, Inc. (the "Company")
will be held on June 4, 1998, at 5:00 P.M., local time, at Lincoln on the Green
at Southwind, 8345 Championship Drive, Memphis, Tennessee 38125, for the
following purposes:
1. To elect three Class I directors to serve until the annual meeting
of shareholders of the Company in 2001 and one Class III director to serve
until the annual meeting of shareholders of the Company in 2000 or until
their successors have been duly elected and qualified.
2. To ratify the selection of KPMG Peat Marwick LLP as the Company's
independent auditors for 1998.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on April 13, 1998 has been fixed as the record date
for the determination of shareholders entitled to notice of, and to vote at, the
annual meeting of shareholders. The stock transfer books of the Company were
closed at that time.
There is enclosed, as a part of this Notice, a Proxy Statement which
contains further information regarding the Annual Meeting, the nominees for
election to the Board of Directors of the Company, and the independent auditors
of the Company.
By Order of the Board of Directors
/s/ MARK S. MARTINI
Mark S. Martini
SECRETARY
IMPORTANT
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
SHAREHOLDERS WHO ATTEND THE MEETING MAY VOTE IN PERSON EVEN IF THEY HAVE ALREADY
SENT IN A PROXY.
<PAGE>
MID-AMERICA APARTMENT COMMUNITIES, INC.
6584 POPLAR AVENUE
SUITE 340
MEMPHIS, TENNESSEE 38138
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 4, 1998
------------------------
GENERAL INFORMATION
This statement is furnished in connection with the solicitation of proxies
to be used at the annual meeting of shareholders (the "Annual Meeting") of
Mid-America Apartment Communities, Inc. (the "Company") to be held on June 4,
1998 at 5:00 P.M., local time, at Lincoln on the Green at Southwind, 8345
Championship Drive, Memphis, Tennessee 38125 and at any adjournment or
adjournments thereof. The mailing address of the principal executive office of
the Company is 6584 Poplar Avenue, Suite 340, Memphis, Tennessee 38138.
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement and, if given or made, such
information or representation should not be relied upon as having been
authorized. This Proxy Statement does not constitute the solicitation of a proxy
in any jurisdiction where, or from any person to whom it is unlawful to make
such proxy solicitation. The delivery of this Proxy Statement shall not, under
any circumstances, imply that there has not been any change in the information
set forth herein since the date of the Proxy Statement.
THE PROXY
The solicitation of proxies in the enclosed form is made on behalf of the
Board of Directors of the Company. The entire cost of soliciting these proxies
will be borne by the Company. In addition to being solicited through the mails,
proxies may be solicited personally or by telephone or telegraph by officers,
directors and employees of the Company who will receive no additional
compensation for such activities. Arrangements will also be made with brokerage
houses and other custodians, nominees and fiduciaries to forward solicitation
materials to the beneficial owners of shares held of record by such persons. It
is expected that this Proxy Statement will first be sent to shareholders on or
about April 30, 1998.
Shareholders are urged to sign the enclosed form of proxy and return it
promptly in the envelope enclosed for that purpose. If no instruction is
indicated on the proxy, the named holders of the proxies will vote all such
shares of Common Stock (hereinafter defined) of such holder (i) FOR the election
as directors of the nominees named herein, and (ii) FOR the ratification of the
selection of KPMG Peat Marwick LLP as the Company's independent auditors for
1998. The shareholder giving the proxy has the power to revoke it by delivering
written notice of such revocation to the Secretary of the Company prior to the
Annual Meeting or by attending the Annual Meeting and voting in person. The
named holders of proxies also will use their discretion in voting the shares of
Common Stock in connection with any other business that properly may come before
the Annual Meeting.
VOTING RIGHTS
Each outstanding share of the Company's common stock, $.01 par value (the
"Common Stock") is entitled to one vote. Cumulative voting is not permitted.
Only shareholders of record at the close of business on April 13, 1998 will be
entitled to notice of, and to vote at, the Annual Meeting and any adjournment
thereof. As of the close of business on April 13, 1998, the Company had
outstanding 18,610,912 shares of Common Stock.
1
<PAGE>
No specific provision of the Tennessee Business Corporation Act, the
Company's Charter or the Company's Bylaws addresses the issue of abstentions or
broker non-votes. Brokers holding shares for beneficial owners must vote those
shares according to the specific instructions they receive from the owners.
However, brokers or nominees holding shares for a beneficial owner may not have
discretionary voting power and may not have received voting instructions from
the beneficial owner with respect to voting on certain proposals. In such cases,
absent specific voting instructions from the beneficial owner, the broker may
not vote on these proposals. This results in what is known as a "broker
non-vote." A "broker non-vote" will not be counted as votes cast but will be
counted for the purpose of determining the existence of a quorum. Because the
election of directors and ratification of the selection of independent auditors
are routine matters for which specific instructions from beneficial owners will
not be required, the Company does not anticipate that any "broker non-votes"
will arise in the context of the election of directors or the ratification of
the selection of independent auditors. Votes "withheld" from a
director-nominee or from the ratification of the selection of independent
auditors have the effect of a negative vote because a plurality of the shares
cast at the Annual Meeting is required for the election of each director and the
ratification of the selection of independent auditors.
REQUIRED VOTE
Under Tennessee law, the Company's Charter and Bylaws, if a majority of the
votes entitled to be cast is present at the Annual Meeting so as to constitute a
quorum, in person or by proxy, approval of each matter submitted to the
shareholders of the Company for a vote at the Annual Meeting will require the
affirmative vote of a plurality of the votes cast.
OWNERSHIP OF THE COMPANY'S COMMON STOCK
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of April 13, 1998, regarding
each person known to the Company to be the beneficial owner of more than five
percent of its Common Stock:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
- ---------------------------------------- -------------------- -------------------
<S> <C> <C>
Boston Partners Asset Management,
L.P................................... 1,206,356(2) 6.5%
One Financial Center, 43rd Floor
Boston, MA 02111
Snyder Capital Management, L.P. ........ 1,088,850(3) 5.9
350 California Street, Suite 14600
San Francisco, CA 94104-1436
John F. Flournoy........................ 1,109,260(4) 5.9
900 Brookstone Center Parkway
Columbus, GA 31904
</TABLE>
- ------------
(1) Based on 18,610,912 shares of Common Stock outstanding on April 13, 1998,
plus, with respect to Mr. Flournoy, the number of shares of Common Stock
issuable by the Company to him in exchange for units of limited partnership
interests in Mid-America Apartments, L.P. ("Units").
(2) The information set forth is based on a Schedule 13G filed by Boston
Partners Asset Management, L.P. on February 14, 1998 that indicates
beneficial ownership of 1,206,356 shares of Common Stock, of which it has
shared voting and dispositive power over all of such shares of Common Stock.
(3) The information set forth is based on a Schedule 13G filed by Snyder Capital
Management, L.P. on February 19, 1998 that indicates beneficial ownership of
1,088,850 shares of Common Stock, of which it has sole voting power over
65,600 shares, shared voting power over 947,250 shares, sole dispositive
power over 65,600 shares, and shared dispositive power over 1,023,250
shares.
(4) Includes 1,067,989 shares owned directly by Mr. Flournoy and 41,271 shares
that Mr. Flournoy has the current right to acquire upon redemption of Units.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock as of April 13, 1998 by (i) each director, (ii) each director
nominee, (iii) each executive officer named in the Summary Compensation Table,
and (iv) all directors, nominees and executive officers as a group:
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
- ---------------------------------------- ---------- --------
John F. Flournoy**...................... 1,109,260 (2) 5.9%
George E. Cates......................... 717,217 (3) 3.8
Robert F. Fogelman**.................... 649,200 (4) 3.4
O. Mason Hawkins........................ 353,817 (5) 1.9
W. Randall Jones........................ 166,425 (6) *
Simon R.C. Wadsworth.................... 146,380 (7) *
H. Eric Bolton.......................... 136,417 (8) *
John J. Byrne, III**.................... 73,900 (9) *
Ralph Horn.............................. 2,000 *
John S. Grinalds**...................... 112 *
All Directors, Nominees and Executive
Officers
as a Group (10 Persons)............... 3,354,728 16.8%
- ------------
(1) Based on 18,610,912 shares of Common Stock outstanding on April 13, 1998,
plus, with respect to each listed person (or all listed persons, as a
group), the number of shares of Common Stock issuable by the Company to such
person or group in exchange for Units plus the number of shares of Common
Stock issuable to such person (or group) in respect of currently exercisable
options. The total number of shares used in calculating this percentage
assumes that none of the Units or exercisable options held by other persons
are redeemed for shares of Common Stock.
(2) Includes 1,067,989 shares owned directly by Mr. Flournoy and 41,271 shares
that Mr. Flournoy has the current right to acquire upon redemption of Units.
(3) Includes 344,654 shares owned directly by Mr. Cates, 239,436 shares that Mr.
Cates has the current right to acquire upon redemption of Units, 80,000
shares that Mr. Cates has the current right to acquire upon the exercise of
options that are currently exercisable and 53,127 shares owned by the
Company's ESOP over which Mr. Cates shares voting power. Excludes 2,123
shares owned by Mr. Cates' wife, over which Mr. Cates exercises no voting or
investment power and with respect to which Mr. Cates disclaims beneficial
ownership.
(4) Includes 78,500 shares owned directly by Mr. Fogelman, 570,500 shares that
Mr. Fogelman has the current right to acquire upon redemption of Units, and
200 shares that Mr. Fogelman has the current right to acquire upon the
exercise of options that are currently exercisable.
(5) Includes 194,799 shares owned directly by Mr. Hawkins, 158,618 shares that
Mr. Hawkins has the current right to acquire upon redemption of Units, and
400 shares that Mr. Hawkins has the current right to acquire upon the
exercise of options that are currently exercisable.
(6) Includes 162,501 shares owned directly by Mr. Jones and 3,924 shares that
Mr. Jones has the current right to acquire upon redemption of Units.
(7) Includes 22,122 shares owned directly by Mr. Wadsworth, 102,189 shares that
Mr. Wadsworth has the current right to acquire upon redemption of Units, and
22,069 shares that Mr. Wadsworth has the current right to acquire upon the
exercise of options that are currently exercisable.
(8) Includes 4,317 shares owned directly by Mr. Bolton, 110,000 shares that Mr.
Bolton has the current right to acquire upon redemption of Units and 22,100
shares that Mr. Bolton has the current right to acquire upon the exercise of
options that are currently exercisable.
(9) Includes 73,500 shares owned directly by Mr. Byrne and 400 shares that Mr.
Byrne has the current right to acquire upon the exercise of options that are
currently exercisable.
* Represents less than 1% of total.
** Nominee.
3
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company presently has an Audit Committee and a Compensation Committee
composed of certain of its directors who are not employees of the Company or any
affiliate thereof ("Independent Directors"). The Company may, from time to
time, form other committees as circumstances warrant. Such committees have
authority and responsibility as delegated by the Board of Directors.
AUDIT COMMITTEE. The Audit Committee of the Board of Directors is composed
of Messrs. Hawkins (Chairman), Byrne, Fogelman, Horn and General Grinalds. The
Audit Committee makes recommendations concerning the engagement of independent
public accountants, reviews with the independent public accountants the plans
and results of the audit engagement, approves professional services provided by
the independent public accountants, 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. The Audit Committee
met twice during 1997.
COMPENSATION COMMITTEE. The Compensation Committee of the Board of
Directors is composed of Messrs. Byrne (Chairman), Fogelman, Hawkins, Horn and
General Grinalds. The Compensation Committee determines compensation (if any)
for the Company's executive officers and administers the Company's Amended and
Restated 1994 Restricted Stock and Stock Option Plan and the Company's
Non-Qualified Executive Deferred Compensation Plan. The Compensation Committee
met once during 1997.
DIRECTOR MEETINGS. The business of the Company is under the general
management of its Board of Directors as provided by the Company's by-laws and
the laws of Tennessee, the Company's state of incorporation. The Board of
Directors regularly meets quarterly during the Company's fiscal year. There are
presently nine directors. The Board of Directors held four regular meetings and
one special meeting during 1997, and all appointed directors attended all of the
meetings with the exception of Michael B. Yanney (a former director), who did
not attend one meeting.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company or one of its subsidiaries do
not receive additional remuneration as directors. Prior to 1995, the Company's
Independent Directors were awarded 2,500 shares of Common Stock for their
services as director. The directors' rights in the Common Stock vest at the rate
of 500 shares per year beginning in 1994. Each director is entitled to receive
the distributions paid on his shares of Common Stock prior to vesting. Directors
who cease to be directors will forfeit any shares not previously vested prior to
the termination of that person's service on the board of directors. Independent
Directors added since June 1995 are compensated $15,000 annually. During 1997,
the Company granted to Messrs. Fogelman and Yanney options to purchase 1,000
shares of Common Stock each and granted to Messrs. Hawkins and Byrne, Committee
Chairmen, options to purchase 2,000 shares of Common Stock each.
NOMINEES FOR DIRECTORS
The Company's Charter divides the Board of Directors into three classes as
nearly equal in number as possible, with each class serving a term of three
years. One class of Directors is elected by the shareholders of the Company at
each annual meeting. The Board of Directors has set at nine the number of
directors constituting the full Board of Directors.
4
<PAGE>
The Board of Directors proposes to nominate the following four individuals
for election to serve as directors of the Company. Messrs. Byrne, Fogelman,
Flournoy and General Grinalds are currently directors of the Company, Mr.
Flournoy and General Grinalds having been appointed by the Board of Directors in
November 1997 to fill newly-created seats on the Board of Directors. The
remaining members of the Board of Directors listed below will continue as
members thereof until their respective terms expire as indicated below.
Unless a shareholder specifies otherwise, it is intended that such
shareholder's shares of Common Stock will be voted for the election of the
nominees to serve as directors until the annual meetings disclosed below and
until their successors are elected and qualified. If any nominee shall become
unavailable or unwilling to serve the Company as a director for any reason, the
persons named in the Proxy Form are expected to consult with the management of
the Company in voting the shares represented by them. The Board of Directors has
no reason to doubt the availability of any of the nominees, and each has
indicated his willingness to serve as a director of the Company if elected.
- --------------------------------------------------------------------------------
NOMINEES FOR ELECTION AS CLASS I DIRECTORS
(TERMS EXPIRING 2001)
- --------------------------------------------------------------------------------
JOHN J. BYRNE III, age 38. Mr. Byrne has served as a director of the Company
since May 1995. Mr. Byrne founded Cirque Property L.C., a real estate
acquisitions and property management company headquartered in Salt Lake City,
Utah, in 1986, and since that time has served as its President and Managing
Member.
Committees: Audit, Compensation
- --------------------------------------------------------------------------------
ROBERT F. FOGELMAN, age 62. Mr. Fogelman has served as a director of the Company
since July 1994 and has been the President of Fogelman Investment Company, a
privately-owned investment firm for more than five years.
Committees: Audit, Compensation
- --------------------------------------------------------------------------------
JOHN F. FLOURNOY, age 57. Mr. Flournoy has served as the Vice-Chairman of the
Board of Directors of the Company and President of Flournoy Development Company
(a subsidiary of the Company) since November 1997. Prior to the acquisition of
Flournoy Development Company and certain related entities by the Company in
November 1997, Mr. Flournoy served as the Chairman and Chief Executive Officer
of Flournoy Development Company for more than five years. Mr. Flournoy currently
serves as a director of W.C. Bradley Co. and is on the advisory board of
Columbus Bank and Trust Company.
Committees: None
- --------------------------------------------------------------------------------
NOMINEE FOR ELECTION AS CLASS III DIRECTOR
(TERMS EXPIRING 2000)
- --------------------------------------------------------------------------------
JOHN S. GRINALDS, age 60. General Grinalds has served as a director of the
Company since November 1997. General Grinalds became the President of The
Citadel, Charleston, South Carolina in 1997. Prior to assuming the presidency of
The Citadel, General Grinalds was the headmaster of Woodberry Forest School in
Virginia. From 1989 through 1991, General Grinalds held the rank of Major
General and was the commanding general of the Marine Corps Recruit Depot in San
Diego, California.
Committees: Audit, Compensation
5
<PAGE>
- --------------------------------------------------------------------------------
INCUMBENT DIRECTORS -- CLASS II
(TERMS EXPIRING 1999)
- --------------------------------------------------------------------------------
O. MASON HAWKINS, age 50. Mr. Hawkins has served as a director of the Company
since October 1993 and is Chairman and Chief Executive Officer of Southeastern
Asset Management, Inc., a registered investment advisor, since 1975. He is also
a director of Longleaf Partners Funds Trust, a registered investment company of
which Southeastern Asset Management, Inc. serves as investment advisor, for more
than five years.
Committees: Audit, Compensation
- --------------------------------------------------------------------------------
H. ERIC BOLTON, JR., age 41. Mr. Bolton is President, Chief Operating Officer
and a director of the Company. Mr. Bolton joined the Company in 1994 as
Vice-President of Development and was named Chief Operating Officer in February
1996 and promoted to President in December 1996. Mr. Bolton was with Trammell
Crow Company for more than five years and prior to joining the Company was
Executive Vice President and Chief Financial Officer of Trammell Crow Realty
Advisors.
Committees: None
- --------------------------------------------------------------------------------
RALPH HORN, age 57. Mr. Horn has served as a director of the Company since April
1998 and is Chairman of the Board, President and Chief Executive Officer of
First Tennessee National Corporation. Mr. Horn was elected President, Chief
Operating Officer, and a Director of First Tennessee National Corporation in
July 1991, Chief Executive Officer in April 1994, and Chairman of the Board,
effective January 1, 1996. Mr. Horn is also a director of Harrah's
Entertainment, Inc.
Committees: Audit, Compensation
- --------------------------------------------------------------------------------
INCUMBENT DIRECTORS -- CLASS III
(TERMS EXPIRING 2000)
- --------------------------------------------------------------------------------
GEORGE E. CATES, age 60. Mr. Cates is the Chief Executive Officer and Chairman
of the Board of Directors of the Company since October 1993. Mr. Cates served as
President, Chief Executive Officer and Chairman of the Board of Directors of the
Company since inception of the Company in February 1994 through December 1996.
Mr. Cates was President and Chief Executive Officer of The Cates Company from
1977 until its merger with the Company in February 1994. Mr. Cates is also a
director of First Tennessee National Corporation.
Committees: None
- --------------------------------------------------------------------------------
SIMON R. C. WADSWORTH, age 51. Mr. Wadsworth is Executive Vice-President, Chief
Financial Officer and a director of the Company since March 1994. Mr. Wadsworth
was President of TMF, Inc., an industrial equipment dealership, from 1981 until
March 1994.
Committees: None
- --------------------------------------------------------------------------------
CERTAIN TRANSACTIONS WITH MANAGEMENT
On July 23, 1997, the Company purchased the building in which its principal
office is located from a partnership in which Mr. Cates had a 6.9% interest and
Mr. Wadsworth had a 4.2% interest. In connection with the purchase, the Company
formed a special committee of its Independent Directors to negotiate the
transaction on its behalf. The purchase price for the building was approximately
$2,919,000. The total consideration paid consisted of 22,264 Units valued at
$634,000 ($28.50 per Unit) and the assumption of an existing loan. The Company
believes the terms of the sale were no less favorable to the Company than could
have been negotiated by the Company with unaffiliated third parties.
6
<PAGE>
On April 22, 1997, Mr. Wadsworth purchased from Mid-America Apartments,
L.P. (the "Partnership") 50,000 Units at a price equal to the fair market
value of the Units. Simultaneously, the Company loaned Mr. Wadsworth $195,000
(an amount equal to 15% of the purchase price of the Units) which is payable in
equal annual installments over 5 years from the date of the purchase and bears
interest at the applicable federal rate of interest as defined by the Internal
Revenue Code of 1986, as amended. In addition, the Company has agreed to pay a
bonus to Mr. Wadsworth, for so long as he remains employed by the Company, in an
amount equal to the debt service on the loan from the Company to Mr. Wadsworth.
The loan will become due and payable and the bonus agreement will terminate if
Mr. Wadsworth voluntarily terminates his employment with the Company. On March
31, 1998, Mr. Wadsworth purchased from the Partnership 50,000 Units at a price
equal to the fair market value of the Units. Simultaneously, the Company loaned
Mr. Wadsworth $211,000 (an amount equal to 15% of the purchase price of the
Units) which is payable in equal annual installments over 5 years from the date
of purchase and bears interest at the applicable federal rate of interest. In
addition, the Company has agreed to pay a bonus to Mr. Wadsworth, for so long as
he remains employed by the Company in an amount equal to the debt service on the
loan from the Company to Mr. Wadsworth. The loan will become due and payable and
the bonus agreement will terminate if Mr. Wadsworth voluntarily terminates his
employment with the Company.
On April 22, 1997, Mr. Bolton purchased from the Partnership 60,000 Units
at a price equal to the fair market value of the Units. Simultaneously, the
Company loaned Mr. Bolton $234,000 (an amount equal to 15% of the purchase price
of the Units) which is payable in equal annual installments over 5 years from
the date of the purchase and bears interest at the applicable federal rate of
interest. In addition, the Company has agreed to pay a bonus to Mr. Bolton, for
so long as he remains employed by the Company, in an amount equal to the debt
service on the loan from the Company to Mr. Bolton. The loan will become due and
payable and the bonus agreement will terminate if Mr. Bolton voluntarily
terminates his employment with the Company. On March 31, 1998, Mr. Bolton
purchased from the Partnership 50,000 Units at a price equal to the fair market
value of the Units. Simultaneously, the Company loaned Mr. Bolton $211,000 (an
amount equal to 15% of the purchase price of the Units) which is payable in
equal annual installments over 5 years from the date of purchase and bears
interest at the applicable federal rate of interest. In addition, the Company
has agreed to pay a bonus to Mr. Bolton, for so long as he remains employed by
the Company in an amount equal to the debt service on the loan from the Company
to Mr. Bolton. The loan will become due and payable and the bonus agreement will
terminate if Mr. Bolton voluntarily terminates his employment with the Company.
On April 29, 1997, Mr. Cates purchased from the Company 75,000 shares of
Common Stock at a price equal to the fair market value of the Common Stock.
Simultaneously, the Company loaned Mr. Cates $291,000 (an amount equal to 15% of
the purchase price of the Units) which is payable in equal annual installments
over 5 years from the date of the purchase and bears interest at the applicable
federal rate of interest. In addition, the Company has agreed to pay a bonus to
Mr. Cates, for so long as he remains employed by the Company, in an amount equal
to the debt service on the loan from the Company to Mr. Cates. The loan will
become due and payable and the bonus agreement will terminate if Mr. Cates
voluntarily terminates his employment with the Company. On March 17, 1998, Mr.
Cates purchased from the Partnership 50,000 shares of Common Stock at a price
equal to the fair market value of the Common Stock. Simultaneously, the Company
loaned Mr. Cates $210,000 (an amount equal to 15% of the purchase price of the
Units) which is payable in equal annual installments over 5 years from the date
of purchase and bears interest at the applicable federal rate of interest. In
addition, the Company has agreed to pay a bonus to Mr. Cates, for so long as he
remains employed by the Company in an amount equal to the debt service on the
loan from the Company to Mr. Cates. The loan will become due and payable and the
bonus agreement will terminate if Mr. Cates voluntarily terminates his
employment with the Company.
All transactions involving related parties must be approved by a majority
of the disinterested members of the Company's Board of Directors. Each of the
transactions described above was approved in such a manner. The Company has, and
expects to have, transactions in the ordinary course of its business with
directors and officers of the Company and their affiliates, including members of
their families or corporations, partnerships or other organizations in which
such officers or directors have a controlling interest, on substantially the
same terms (including price, or interest rates and collateral) as those
prevailing at the time for comparable transactions with unrelated parties.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION ----------------------------
---------------------------------------- RESTRICTED
OTHER ANNUAL STOCK
NAME AND POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS($) OPTIONS(#)
- ---------------------------------------- ------ --------- -------- --------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
George E. Cates......................... 1997 $272,000 $42,331 $-- $-- 40,000
Chairman, Chief Executive 1996 255,137 -- -- -- 25,000
Officer, and Director 1995 257,500 67,500 -- -- --
H. Eric Bolton.......................... 1997 166,251 22,762 -- -- 33,000
President, Chief Operating 1996 136,670 15,770 -- -- 15,000
Officer, and Director 1995 108,400 20,800 -- -- 12,500
Simon R. C. Wadsworth................... 1997 136,974 22,192 -- -- 27,000
Executive Vice President, 1996 135,187 -- -- -- 27,000
Chief Financial Officer and Director 1995 131,400 36,000 -- -- 2,500
</TABLE>
OPTION GRANTS AS OF DECEMBER 31, 1997 The following table provides
information on option grants during the year ending December 31, 1997 to the
executive officers listed in the table above.
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL
REALIZATION
VALUE AT
ASSUMED RATES OF
% OF TOTAL ANNUAL STOCK PRICE
OPTIONS APPRECIATION FOR
GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------
GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
------- ------------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
George E. Cates......................... 40,000 19.0% $29.50 2/12/07 $ 742,096 $1,880,616
H. Eric Bolton.......................... 33,000 15.7 29.50 2/12/07 612,229 1,551,508
Simon R. C. Wadsworth................... 27,000 12.8 29.50 2/12/07 500,915 1,269,416
</TABLE>
AGGREGATED OPTION EXERCISES THROUGH DECEMBER 31, 1997 The following table
provides information on options held by the executive officers listed above
through December 31, 1997 and the value of each of their unexercised options at
December 31, 1997
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING
EXERCISED OPTIONS UNEXERCISED OPTIONS
----------------------- AT DECEMBER 31, 1997 VALUE OF UNEXERCISED
SHARES --------------------- IN-THE-MONEY OPTIONS
ACQUIRED VALUE EXERCISABLE/ AT DECEMBER 31,
NAME ON EXERCISE REALIZED UNEXERCISABLE 1997(1)
- ---------------------------------------- ----------- -------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
George E. Cates......................... -- -- 49,000/96,000 $398,087/$358,528
H. Eric Bolton.......................... -- -- 9,500/53,500 29,099/54,354
Simon R. C. Wadsworth................... 8,000 $43,460 13,000/48,500 59,444/83,917
</TABLE>
- ------------
(1) Based upon the closing price of the Company's Common Stock on the NYSE on
December 31, 1997 of $28.563 per share.
8
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
There were no compensation committee interlocks in 1997, and no insider
participated in decisions related to his compensation in 1997.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee of the Board of Directors is composed of
Independent Directors. The Compensation Committee is responsible for ensuring
that a proper balance of current compensation and longer-term equity-based
rewards are offered to executive management to provide incentives to increase
shareholder value.
Each executive officer's compensation is determined annually by the
Committee, including base salary, discretionary cash bonuses, and stock
incentive awards. The Company's compensation policy is to reward performance
which leads to long term growth in shareholder value per share, as exemplified
by growth in funds from operations per share, which the Committee believes is a
primary measure of performance. The Committee has reviewed the Compensation
plans of other multi-family REITs of similar size and performance to the Company
and attempts to be competitive on a total compensation basis.
BASE SALARY
Each executive officer's base salary is based upon the competitive market
for the executive officer's services, including the executive's specific
responsibilities, experience and overall performance. The Committee attempts to
reward long term performance, and it is the objective of the Company to set base
salaries at or below the level of median base salary level of the Company's
peers in its industry.
ANNUAL INCENTIVE COMPENSATION
The Committee awards discretionary year-end bonuses which are tied to
achieving specific goals for growth in funds from operations per share and other
specific individual and Company goals which it believes are instrumental in
building long term value. The Committee sets the Company's bonus formula
annually.
AMENDED AND RESTATED 1994 RESTRICTED STOCK AND STOCK OPTION PLAN
The Amended and Restated 1994 Restricted Stock and Stock Option Plan (the
"1994 Plan") is the Company's long-term incentive plan for executive officers
and other selected employees. The objective of the program is to retain and
motivate executives to improve long-term stock performance. The Compensation
Committee has the authority, within limitations set forth in the 1994 Plan, (i)
to establish rules and regulations concerning the 1994 Plan, (ii) to determine
the persons to whom options and restricted securities may be granted (iii) to
fix the number of shares of Common Stock to be covered by each option and (iv)
to set the terms and provisions of each option and restricted security to be
granted. Stock options are generally granted at the prevailing market value and
will only have value if the Company's stock increases.
NON-QUALIFIED EXECUTIVE DEFERRED COMPENSATION PLAN
The non-qualified deferred compensation plan is the Company's long-term
incentive plan for key employees who are not qualified for participation in the
Company's 401(k). Under the terms of the plan, key employees may elect to defer
a percentage of their compensation and the Company matches a portion of their
salary deferral with similar provisions as apply for the Company's 401(k). The
plan is designed so that the employees' investment earnings under the
non-qualified plan should be the same as the earning assets in the Company's
401(k).
9
<PAGE>
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Cates' base salary was $272,000 for the year ended December 31, 1997.
The Compensation Committee considered the annual base salary of Mr. Cates to be
competitive with comparable REITs in the Company's geographic area. The terms of
Mr. Cates' employment contract provides for certain severance payments in the
event of death or disability or upon termination by the Company without cause or
by the employee with cause. The agreement contains a non-competition provision
which prohibits Mr. Cates, except as an officer or employee of the Company, from
engaging directly or indirectly in the acquisition, development, operation,
management, leasing or landscaping of any multifamily community. This
prohibition extends to all multifamily communities wherever located, during the
term of employment and to multifamily properties within 30 miles of any
multifamily community owned by the Company after termination of such employment.
COMPENSATION COMMITTEE
John J. Byrne, III (Chairman)
John S. Grinalds
Robert F. Fogelman
O. Mason Hawkins
Ralph Horn
10
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total return to the
shareholders of Mid-America Apartment Communities, Inc. ("MAA") to the S&P 500
and the Equity Total Return index prepared by the National Association of Real
Estate Investment Trusts ("NAREIT") assuming a base share price of $100 for
the Common Stock and each index for comparison purposes and assuming all
dividends are reinvested. The performance graph is not necessarily indicative of
future investment performance.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
INDEX 2/4/94 12/31/94 12/31/95 12/31/96 12/31/97
- ------------ ------ -------- -------- -------- --------
MAA 100.00 142.20 142.63 180.11 192.35
S & P 500 100.00 98.02 134.72 165.65 220.91
NAREIT Equity REITs 100.00 100.26 115.56 156.31 187.98
11
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers to
file with the Commission initial reports of ownership and reports of changes in
ownership of the Company's Common Stock and to furnish the Company with copies
of all forms filed.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the past fiscal year all Section 16(a) filing
requirements applicable to the Company's directors and executive officers were
completed on a timely basis, except General Grinalds inadvertently failed to
file timely a Form 3, which was subsequently filed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE NOMINEES FOR CLASS I DIRECTORS AND THE
NOMINEE FOR CLASS III DIRECTOR
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF KPMG PEAT MARWICK LLP
AS THE 1998 INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP as the Company's
independent auditors for 1998. KPMG Peat Marwick LLP served as independent
auditors of the Company for the year ended December 31, 1997. Representatives of
the firm will be present at the Annual Meeting, have an opportunity to make a
statement if they so desire and are expected to be available to respond to
appropriate questions.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock entitled to vote at the Meeting is required to ratify the
selection of KPMG Peat Marwick LLP as the Company's independent auditors for
1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
ADOPTION OF PROPOSAL NO. 2.
SHAREHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING
Shareholders' proposals intended to be presented at the 1998 Annual Meeting
of Shareholders must be received by the Company no later than January 5, 1999
for inclusion in the Company's proxy statement and form of proxy relating to
that meeting.
12
<PAGE>
OTHER MATTERS
The Board of Directors, at the time of the preparation of this Proxy
Statement, knows of no business to come before the meeting other than that
referred to herein. If any other business should come before the meeting, the
person named in the enclosed Proxy will have discretionary authority to vote all
proxies in accordance with his best judgment.
Upon the written request of any record holder or beneficial owner of common
stock entitled to vote at the Annual Meeting, the Company, without charge, will
provide a copy of its Annual Report on Form 10-K for the year ended December 31,
1997, as filed with the Securities and Exchange Commission. Requests should be
directed to Mark S. Martini, Secretary, Mid-America Apartment Communities, Inc.,
6584 Poplar Avenue, Suite 340, Memphis, Tennessee, 38138, which is the address
of the Company's principal executive offices.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ MARK S. MARTINI
Mark S. Martini
SECRETARY
April 30, 1998
13
<PAGE>
PROXY NO. OF SHARES _______________
MID-AMERICA APARTMENT COMMUNITIES, INC.
6584 POPLAR AVENUE, SUITE 340, MEMPHIS, TENNESSEE 38138
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints George E. Cates, Simon R.C. Wadsworth,
and Mark S. Martini as proxies, each with the power to appoint such person's
substitute, and hereby authorizes them to vote, as designated below, all the
shares of common stock of Mid-America Apartment Communities, Inc. (the
"Company") held of record by the undersigned on April 13, 1998 at the
annual meeting of shareholders to be held on June 4, 1998, or any adjournment
thereof.
1. ELECTION OF THREE CLASS I DIRECTORS AND ONE CLASS III DIRECTOR
[ ]FOR ALL NOMINEES LISTED BELOW [ ]WITHHOLD AUTHORITY to vote for all
nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name on the list below).
John J. Byrne III Robert F. Fogelman John F. Flournoy
John S. Grinalds
2. RATIFICATION OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR 1998
[ ]FOR RATIFICATION [ ]AGAINST RATIFICATION
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
(CONTINUED FROM OTHER SIDE)
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made,
this proxy will be voted for the election of all nominees and for all
proposals.
DATED: _______________________, 1998
Please sign exactly as name
appears to left. When shares are
held by joint tenants, both should
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign
full corporate name by President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
____________________________________
Signature
____________________________________
Signature (if held jointly)
Please mark, sign, date and return the proxy card promptly using the enclosed
envelope.
