<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
SUMMIT PROPERTIES 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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> 2
(logo) Summit Properties
March 14, 1997
Fellow Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of Summit
Properties Inc. to be held on Tuesday, May 13, 1997 at 10:00 a.m. at First Union
National Bank of North Carolina, 301 South Tryon Street, Charlotte, North
Carolina. The business to be conducted at the meeting is set forth in the formal
notice that follows. At the meeting we will review Summit's operations, report
on 1996 financial results and discuss Summit's plans for the future. Our
directors and management team will be available to answer any questions you may
have from the floor.
Your vote is important to us. We hope that you will take the time to complete,
sign and return the enclosed proxy card in the return envelope provided. Summit
relies upon its stockholders to promptly complete, sign and return the cards in
order to avoid costly proxy solicitation expenses. If you attend the meeting, as
we hope you do, you may withdraw your proxy at the meeting and vote your shares
in person from the floor.
Thank you for your interest in Summit.
Sincerely,
Summit Properties Inc.
/s/ William F. Paulsen
William F. Paulsen
President
(building)
<PAGE> 3
SUMMIT PROPERTIES INC.
212 SOUTH TRYON STREET
SUITE 500
CHARLOTTE, NORTH CAROLINA 28281
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1997
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders (the
"Annual Meeting") of Summit Properties Inc. (the "Company") will be held
Tuesday, May 13, 1997 at 10:00 a.m. at Two First Union Center, 301 South Tryon
Street, 12th Floor, Charlotte, North Carolina for the following purposes:
1. To elect two directors of the Company to serve until the 2000
annual meeting of stockholders and until their respective successors are
duly elected and qualified.
2. To consider and act upon any other matters that may properly be
brought before the Annual Meeting and at any adjournments or postponements
thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned, or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on March 3, 1997 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and at any adjournments or postponements thereof.
Only stockholders of record of the Company's common stock, $.01 par value per
share, at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting and at any adjournments of postponements thereof.
You are requested to fill in and sign the enclosed form of proxy, which is
being solicited by the Board of Directors, and to mail it promptly in the
enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may vote
in person, even if they have previously delivered a signed proxy.
By Order of the Board of Directors
/s/ Michael G. Malone
Michael G. Malone, Esq.
Secretary
Charlotte, North Carolina
March 14, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID
ENVELOPE PROVIDED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF
YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 4
SUMMIT PROPERTIES INC.
212 SOUTH TRYON STREET
SUITE 500
CHARLOTTE, NORTH CAROLINA 28281
------------------------------------
PROXY STATEMENT
------------------------------------
FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1997
MARCH 14, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Summit Properties Inc. (the "Company") for
use at the 1997 Annual Meeting of Stockholders of the Company to be held on
Tuesday, May 13, 1997, and at any adjournments or postponements thereof (the
"Annual Meeting"). At the Annual Meeting, stockholders will be asked to vote
upon the election of two directors of the Company and to act upon any other
matters properly brought before them.
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are first being sent to stockholders on or about March 14, 1997. The
Board of Directors has fixed the close of business on March 3, 1997 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting (the "Record Date"). Only stockholders of record of
the Company's common stock, par value $.01 per share (the "Common Stock"), at
the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. As of the Record Date, there were 23,073,636 shares
of Common Stock outstanding and entitled to vote at the Annual Meeting. Holders
of Common Stock outstanding as of the close of business on the Record Date will
be entitled to one vote for each share held by them.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. Both abstentions and broker non-votes (as defined below) will be
counted in determining the presence of a quorum. The affirmative vote of a
plurality of votes cast at a meeting at which a quorum is present is sufficient
for the election of directors. The affirmative vote of a majority of the votes
cast at a meeting at which a quorum is present is sufficient for the approval of
any other matter that may properly come before the Annual Meeting. Abstentions
and broker non-votes will be disregarded in determining the "votes cast" for
purposes of electing directors and any other matter. Broker "non-votes" are
proxies from brokers or other nominees indicating that such person has not
received instructions from the beneficial owner or other person entitled to vote
the shares which are the subject of the proxy on a particular matter with
respect to which the broker or other nominee does not have discretionary voting
power.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY RECEIVED PRIOR TO THE
VOTE AT THE ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL MEETING
AS
1
<PAGE> 5
DIRECTED ON THE PROXY. IF A PROPERLY EXECUTED PROXY IS SUBMITTED PRIOR TO SUCH
TIME AND NO INSTRUCTIONS ARE GIVEN, THE PROXY WILL BE VOTED FOR THE ELECTION OF
THE TWO NOMINEES FOR THE BOARD OF DIRECTORS OF THE COMPANY NAMED IN THIS PROXY
STATEMENT. IT IS NOT ANTICIPATED THAT ANY MATTERS OTHER THAN THOSE SET FORTH IN
THIS PROXY STATEMENT WILL BE PRESENTED AT THE ANNUAL MEETING. IF OTHER MATTERS
ARE PRESENTED, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE DISCRETION OF THE
PROXY HOLDERS.
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Secretary of the Company at
the address of the Company set forth above; by filing a duly executed proxy
bearing a later date; or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in person whether or not a proxy has been previously
given, but the presence (without further action) of a stockholder at the Annual
Meeting will not constitute revocation of a previously given proxy.
The Company's 1996 Annual Report, including financial statements for the
fiscal year ended December 31, 1996, is being mailed to stockholders
concurrently with this Proxy Statement. The Annual Report, however, is not part
of the proxy solicitation material. A COPY OF THE COMPANY'S ANNUAL REPORT TO THE
SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES, MAY BE OBTAINED WITHOUT CHARGE
BY WRITING TO THE SECRETARY OF THE COMPANY AT THE FOLLOWING ADDRESS: 212 SOUTH
TRYON STREET, SUITE 500, CHARLOTTE, NC 28281, ATTN: MICHAEL G. MALONE.
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of six members. At the
Annual Meeting, two Class III directors will be elected to serve until the 2000
annual meeting of stockholders or until their successors are duly elected and
qualified. The Board of Directors has nominated William B. McGuire, Jr. and
William F. Paulsen (the "Nominees") for election as Class III directors at the
Annual Meeting. The Board of Directors anticipates that each of the Nominees
will serve, if elected, as a director. However, if any person nominated by the
Board of Directors is unable to accept election, the proxies will be voted for
the election of such other person or persons as the Board of Directors may
recommend. The Board of Directors will consider a nominee for election to the
Board of Directors recommended by a stockholder of record if the stockholder
submits the nomination in compliance with the requirements of the Company's
Bylaws. See "Other Matters -- Stockholder Proposals" for a summary of these
requirements.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THEIR NOMINEES, WILLIAM B.
MCGUIRE, JR. AND WILLIAM F. PAULSEN.
INFORMATION REGARDING NOMINEES, OTHER DIRECTORS AND EXECUTIVE OFFICERS
The following table and biographical descriptions set forth certain
information with respect to the two Nominees for re-election as Class III
directors at the Annual Meeting, the continuing directors whose terms expire at
the annual meetings of stockholders in 1998 and 1999 and the executive officers
of the Company who are not directors, based on information furnished to the
Company by such directors and executive officers. There is no family
relationship between any director or executive officer of the Company. The
following information is as of December 31, 1996, unless otherwise specified.
2
<PAGE> 6
<TABLE>
<CAPTION>
Number of Shares Percent of
Director and Units All Shares
Name Age Since Beneficially Owned and Units(1)
---- --- -------- ------------------ ------------
<S> <C> <C> <C> <C>
Class III Nominees for Election at 1997
Annual Meeting
(Term to Expire in 2000)
- -------------------------
William B. McGuire, Jr................ 52 1994 914,972(2) 3.4%
William F. Paulsen.................... 50 1994 951,709(3) 3.5%
Class II Continuing Directors
(Term to Expire in 1999)
- -------------------------
Nelson Schwab III..................... 52 1994 27,000(4) *
John Crosland, Jr..................... 68 1995 528,653(5) 2.0%
Class I Continuing Directors
(Term to Expire in 1998)
- -------------------------
James H. Hance, Jr.................... 52 1994 10,997(6) *
Henry H. Fishkind..................... 47 1994 8,700(7) *
</TABLE>
- ---------------
* Less than one percent
(1) Assumes all units of partnership interest ("Units") in Summit Properties
Partnership, L.P., the Company's principal operating subsidiary, held by the
person are redeemed for shares of Common Stock. The total number of shares
of Common Stock and Units used in calculating the percentage includes the
total number of shares of Common Stock outstanding and the total number of
Units outstanding held by persons other than the Company.
(2) The indicated ownership includes 620,313 Units, 40,000 shares of Common
Stock subject to stock options exercisable within 60 days, 5,900 shares of
restricted stock awarded under the 1994 Stock Option and Incentive Plan that
vested twenty percent (20%) on January 12, 1996 and will vest twenty percent
(20%) on January 1st of each of the next four years, and 159,984 shares of
Common Stock owned by certain related family trusts with respect to which
shares of Common Stock Mr. McGuire disclaims beneficial ownership.
(3) The indicated ownership includes 596,045 Units, 40,000 shares of Common
Stock subject to stock options exercisable within 60 days, 11,700 shares of
restricted stock awarded under the 1994 Stock Option and Incentive Plan that
vested twenty percent (20%) on January 12, 1996 and will vest twenty percent
(20%) on January 1st of each of the next four years, and 39,535 shares of
Common Stock owned by Mr. Paulsen's spouse and 85,696 shares of Common Stock
owned by certain related family trusts with respect to which shares of
Common Stock Mr. Paulsen disclaims beneficial ownership.
(4) The indicated ownership includes 7,000 shares of Common Stock subject to
stock options exercisable within 60 days.
(5) The indicated ownership includes 521,656 Units and 4,000 shares of Common
Stock subject to stock options exercisable within 60 days.
(6) The indicated ownership includes 1,000 shares of Common Stock held jointly
by Mr. Hance and his spouse, and 7,000 shares of Common Stock subject to
stock options exercisable within 60 days.
(7) The indicated ownership includes 7,000 shares of Common Stock subject to
stock options exercisable within 60 days.
3
<PAGE> 7
Nominees for Election as Directors
WILLIAM B. MCGUIRE, JR. Mr. McGuire is the Chairman of the Board. Prior to
the formation of the Company, Mr. McGuire served as a senior partner of the
predecessor to the Company and as a general partner of each of the partnerships
which transferred multifamily apartment communities (the "Communities") to the
Company when it was formed. Mr. McGuire founded McGuire Properties, Inc., the
predecessor to the Company, in 1972. He has been active in the following
professional and community organizations: Residential, Multifamily and Urban
Development Mixed Use Councils of the Urban Land Institute; Charlotte Advisory
Board of NationsBank of North Carolina, N.A.; and the Board of Governors of The
Charlotte City Club. He was a Trustee of the North Carolina Nature Conservancy;
a Founder and Director of Habitat for Humanity of Charlotte; and the Founder and
President of The Neighborhood Medical Clinic. Mr. McGuire is 52 years old.
WILLIAM F. PAULSEN. Mr. Paulsen is the President and Chief Executive
Officer and a director. Prior to the formation of the Company, Mr. Paulsen was a
senior partner and the Chief Executive Officer of the predecessor to the Company
and a general partner of each of the partnerships which transferred Communities
to the Company when it was formed. Mr. Paulsen joined the predecessor to the
Company in 1982. He was selected as North Carolina Entrepreneur of the Year in
1990. In addition to his responsibilities with the Company, Mr. Paulsen is a
full Member and Residential Council Member of the Urban Land Institute. He is a
Member of the Board of Directors of The Beach Company, a real estate investment
company specializing primarily in commercial and resort development in the
southeastern United States and is a trustee of The Asheville School. Mr. Paulsen
also served as a Vice President of the Charlotte Apartment Association. He is 50
years old.
Incumbent Directors -- Term Expiring in 1998
JAMES H. HANCE, JR. Mr. Hance has been a director since 1994. He is a Vice
Chairman and the Chief Financial Officer of NationsBank Corporation, where he is
responsible for NationsBanc Services Company, which performs NationsBank
Corporation's operations functions, the Management Services Group, and
NationsBank Corporation's finance group. He also has responsibility for
NationsBank's non-bank consumer and commercial credit companies, NationsCredit
Consumer Corporation and NationsCredit Commercial Corporation, and serves as
Managing Director of several of NationsBank's banks and subsidiaries. Mr. Hance
is the Vice Chairman of the Board of Trustees of Presbyterian Health Services
Corporation. He also is a Member of the Board of Visitors of the Duke University
Fuqua School of Business and the Washington University National Council for the
John M. Olin School of Business. He is on the Board of Directors of Caraustar
Industries, Inc., Family Dollar Stores, Inc. and Lance, Inc. Additionally, Mr.
Hance is a certified public accountant, a 1988 International Business Fellow,
former Chairman of the Charlotte Chamber of Commerce and is the vice chairman of
the Board of Trustees of the Charlotte Country Day School. Mr. Hance is 52 years
old.
HENRY H. FISHKIND. Dr. Fishkind has been a director since 1994. He is the
President of Fishkind & Associates, Inc., a private consulting firm based in
Orlando, Florida that he founded in 1988. Dr. Fishkind is a member of the Board
of Directors of Engle Homes. Dr. Fishkind served on the Florida Governor's
Economic Advisory Board from 1979 to 1981. He is 47 years old.
Incumbent Directors -- Term Expiring in 1999
NELSON SCHWAB III. Mr. Schwab has been a director since 1994. He is a
Managing Director of Carousel Capital, a merchant banking firm based in
Charlotte, North Carolina specializing in middle market acquisitions. Mr. Schwab
is a Member of the Board of Directors of First Union National Bank of North
Carolina, Silver
4
<PAGE> 8
Dollar City, Inc., Griffin Corporation and Burlington Industries. He served as
the Chairman of the Carolinas Partnership and the Charlotte Chamber of Commerce.
Mr. Schwab is 52 years old.
JOHN CROSLAND, JR. Mr. Crosland has been a director since 1995. He has
been Chairman and Chief Executive Officer of The Crosland Group, Inc., a fully
diversified real estate development company, since 1971. Mr. Crosland is a
member of the Board of Directors of First Union National Bank of North Carolina,
Fox Ridge Homes and Writer Corporation. He has been active in the home-building
industry holding office at local, state and national levels. From 1977 to 1989
he served as Chairman of the North Carolina Housing Finance Agency. Among his
diverse civic involvement, Mr. Crosland was a founder and first Chairman of
Charlotte's Habitat for Humanity; currently serves on the Habitat for Humanity
International Affiliates Advisory Committee; was 1996 Chairman of the Davidson
College Board of Visitors and is a member of the Davidson Board of Trustees. Mr.
Crosland was honored by the home building industry by being named 1985 Builder
of the Year by Professional Builder Magazine and has been inducted into both the
National and North Carolina Housing Halls of Fame. Mr. Crosland is 68 years old.
Executive Officers Who Are Not Directors
RAYMOND V. JONES. Mr. Jones is the Executive Vice President/Development
and Construction. Prior to the formation of the Company, Mr. Jones served as
regional partner for the Charlotte division of the predecessor to the Company,
as well as a general partner of several of the partnerships which transferred
Communities to the Company when it was formed. Mr. Jones is a member of the
Board of Directors and Chairman of the Charlotte Mecklenburg Housing
Partnership, a non-profit venture organized to provide low income housing.
Additionally, he is a member of the Board of Directors of Golf Trust of America,
Inc. a recently formed real estate investment trust listed on the American Stock
Exchange. He also served as President of the Charlotte Apartment Association and
the Apartment Association of North Carolina. Mr. Jones is 49 years old.
MICHAEL L. SCHWARZ. Mr. Schwarz is an Executive Vice President and Chief
Financial Officer. Prior to joining the Company in 1994, Mr. Schwarz was a
co-founder and spent five years as the Senior Vice President and Chief Financial
Officer of Industrial Developments International, Inc., a developer of
industrial real estate. He is a certified public accountant. Mr. Schwarz served
as the Chairman of the Board of The Study Hall of Emmaus House, a non-profit
educational facility serving inner-city youths. Mr. Schwarz is 36 years old.
WILLIAM B. HAMILTON. Mr. Hamilton was hired by the Company in December,
1996 to assume the positions of Executive Vice President/Property Management of
the Company and President of Summit Management Company, the Company's management
subsidiary. Prior to joining the Company, Mr. Hamilton spent one year as a
Senior Vice President with Insignia Management Group in Atlanta, Georgia where
he was responsible for property and asset management for 50,000 multifamily
apartments. For the four years immediately prior thereto, Mr. Hamilton was the
President of NPI Property Management Corporation, where his management portfolio
consisted of 31,000 multifamily apartments. Mr. Hamilton's experience in the
property and asset management field for multifamily apartments has spanned more
than 20 years. Mr. Hamilton has been designated a certified property manager by
the Institute of Real Estate Management and a Certified Apartment Supervisor by
the National Apartment Association. Mr. Hamilton is 49 years old.
DAVID F. TUFARO. Mr. Tufaro is an Executive Vice President and Chief
Investment Officer. Prior to the formation of the Company, Mr. Tufaro served as
regional partner for the Baltimore division of the predecessor to the Company,
as well as a general partner of several of the partnerships which transferred
Communities to the Company when it was formed. Mr. Tufaro currently serves as
President of the Board of Directors of the Baltimore Corporation for Housing
Partnerships, a non-profit housing sponsor for low income families, and is
President of the Board of Directors of the Roland Park Community Foundation. Mr.
Tufaro is 50 years old.
5
<PAGE> 9
JOHN T. GRAY. Mr. Gray was the Executive Vice President/Property
Management of the Company and the President of Summit Management Company, the
Company's management subsidiary, until his departure from the Company in January
1997. Prior to the formation of the Company, Mr. Gray was President of Old
Summit Management Company, as well as a general partner of several of the
partnerships which transferred Communities to the Company when it was formed.
Since the formation of Old Summit Management Company in 1985, he was responsible
for the leasing, management and maintenance of the Communities, as well as all
residential properties managed for related and unrelated third parties. Mr. Gray
is 41 years old.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors. The Company is managed by a six member Board of
Directors, a majority of whom are independent of the Company's management. The
Company's Board of Directors is divided into three classes, and the members of
each class serve for staggered three year terms. The Board is composed of two
Class I directors (Messrs. Hance and Fishkind), two Class II directors (Messrs.
Schwab and Crosland), and two Class III directors (Messrs. Paulsen and McGuire).
The Class III directors are up for election at the Annual Meeting. The terms of
the Class I and II directors will expire upon the election and qualification of
directors at the annual meetings of stockholders in 1998 and 1999, respectively.
At each annual meeting of stockholders, directors will be reelected or elected
for a full term of three years to succeed those directors whose terms are
expiring.
The Board of Directors met four times in 1996. Each of the directors
attended 100% of the total number of meetings of the Board of Directors and of
the committees of the Board of which he was eligible to attend during 1996.
Audit Committee. The Board has established an Audit Committee consisting
of Henry H. Fishkind, James H. Hance, Jr., Nelson Schwab III and John Crosland,
Jr. 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 1996.
Compensation Committee. The Board of Directors has established a
Compensation Committee to determine compensation for the Company's executive
officers. The members of the Compensation Committee are Henry H. Fishkind, James
H. Hance, Jr., Nelson Schwab III and John Crosland, Jr. The Compensation
Committee exercises all powers of the Board of Directors in connection with
compensation matters, including incentive compensation and benefit plans. The
Compensation Committee also has authority to grant awards under the Company's
1994 Stock Option and Incentive Plan (the "1994 Stock Option Plan") to the
employee directors, management and other employees of the Company and its
subsidiaries. The Compensation Committee met twice during 1996.
The Board of Directors does not have a standing nominating committee. The
full Board of Directors performs the function of such a committee.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR COMPENSATION
Directors of the Company who are also employees receive no additional
compensation for their services as directors. Non-employee directors of the
Company (the "Independent Directors") received an annual
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<PAGE> 10
director's fee of $12,000 in 1996. Each Independent Director also receives
$1,000 for each regular meeting of the Board of Directors attended, $1,000 for
each special meeting of the Board of Directors attended, $250 for each committee
meeting attended if held concurrently with a Board of Directors regular or
special meeting and $500 for each committee meeting attended if not held
concurrently with a Board of Directors regular or special meeting. Under the
1994 Stock Option Plan, following each annual meeting of stockholders, each
Independent Director also receives a non-qualified option to purchase 2,000
shares of Common Stock at a price equal to the market price of the Common Stock
on the date of grant.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to the Chief Executive Officer and each of the
other four most highly compensated executive officers of the Company whose
compensation exceeded $100,000 during the fiscal year ended December 31, 1996.
Because the Company completed its Initial Offering on February 15, 1994 (the
"Initial Offering"), amounts paid during 1994 reflect only the portion of the
year following completion of the Initial Offering.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
----------------- ------------------------
Restricted Securities
Stock Underlying All Other
Salary Bonus Awards Options Compensation
Name and Principal Position Year ($)(1) ($) ($) (#) ($)(2)
--------------------------- ---- ------- ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
William F. Paulsen.............. 1996 232,875 0 231,075(3) 0 4,750
President and Chief Executive 1995 232,875 72,491 0 0 4,620
Officer 1994 225,000 33,840 0 40,000 3,653
Raymond V. Jones................ 1996 165,000 60,000 154,050(4) 0 4,750
Executive Vice President/ 1995 155,250 100,359 0 0 4,620
Development and Construction 1994 150,000 22,560 0 27,000 3,131
Michael L. Schwarz.............. 1996 155,250 38,812 0 0 4,750
Executive Vice President and 1995 155,250 63,414 0 30,000 0
Chief Financial Officer 1994 150,000 39,420 0 27,000 0
David F. Tufaro................. 1996 155,250 43,112 154,050(5) 0 4,750
Executive Vice President and 1995 155,250 40,000 0 0 4,130
Chief Investment Officer 1994 150,000 22,560 0 27,000 1,666
John T. Gray.................... 1996 155,250 23,250 0 0 4,750
Executive Vice
President/Property 1995 155,250 59,533 0 30,000 4,192
Management and President of 1994 150,000 26,280 0 27,000 3,553
Summit Management Company
</TABLE>
- ---------------
(1) Includes amounts deferred under the Company's 401(k) plan. Under the plan,
employees generally are permitted to invest up to 17% of their salary on a
pre-tax basis, subject to a statutory maximum.
(2) Amounts represent matching contributions made by the Company to the named
executive officer's account under the Company's 401(k) plan.
(3) Mr. Paulsen received an award of 11,700 shares of restricted stock on
January 12, 1996 under the 1994 Stock Option and Incentive Plan that vest
over a five year period. The value of vested and unvested shares
7
<PAGE> 11
of such restricted stock as of December 31, 1996 was $258,862. Twenty
percent (20%) of the shares of restricted stock vested on the date of the
grant and twenty percent (20%) will vest on January 1st of each of the next
four years. Dividends will be paid on the shares of restricted stock.
(4) Mr. Jones received an award of 7,800 shares of restricted stock on January
12, 1996 under the 1994 Stock Option and Incentive Plan that vest over a
five year period. The value of vested and unvested shares of such restricted
stock as of December 31, 1996 was $172,575. Twenty percent (20%) of the
shares of restricted stock vested on the date of the grant and twenty
percent (20%) will vest on January 1st of each of the next four years.
Dividends will be paid on the shares of restricted stock.
(5) Mr. Tufaro received an award of 7,800 shares of restricted stock on January
12, 1996 under the 1994 Stock Option and Incentive Plan that vest over a
five year period. The value of vested and unvested shares of such restricted
stock as of December 31, 1996 was $172,575. Twenty percent (20%) of the
shares of restricted stock vested on the date of the grant and twenty
percent (20%) will vest on January 1st of each of the next four years.
Dividends will be paid on the shares of restricted stock.
Option Grants in Fiscal Year 1996. No options have been or will be granted
to executive officers of the Company with respect to the fiscal year ended
December 31, 1996.
Option Exercises and Year-End Holdings. The following table sets forth the
aggregated number of options to purchase shares of Common Stock exercised in
1996 and the value of options to purchase shares of Common Stock held on
December 31, 1996 by the Company's Chief Executive Officer and the four other
most highly compensated executive officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996 AND
FISCAL YEAR-END 1996 OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of Securities Unexercised
Underlying Unexercised in-the-Money
Shares Options at Fiscal Options at Fiscal
Acquired On Year-End(#) Year-End($)(1)
Exercise Value Exercisable/ Exercisable/
Name (#) Realized($) Unexercisable Unexercisable
---- ----------- ----------- ---------------------- -----------------
<S> <C> <C> <C> <C>
William F. Paulsen............ 0 0 40,000/0 125,000/0
Raymond V. Jones.............. 0 0 27,000/0 84,375/0
David F. Tufaro............... 0 0 27,000/0 84,375/0
John T. Gray.................. 0 0 39,000/18,000 144,315/89,910
Michael L. Schwarz............ 0 0 39,000/18,000 144,315/89,910
</TABLE>
- ---------------
(1) Based on a closing price of $22.125 per share of Common Stock on December
31, 1996, the last 1996 trading day for the Company's Common Stock.
EMPLOYMENT AND NONCOMPETITION AGREEMENTS
The Company has entered into employment agreements (the "Employment
Agreements") with each of Messrs. Paulsen, Jones, Tufaro, Gray, Schwarz and
Hamilton. The employment agreement with Mr. Gray has terminated as a result of
his departure from the Company in January 1997. The agreements with Messrs.
Paulsen, Jones, and Tufaro will expire on February 15, 1999 unless otherwise
extended, although these officers can resign at any time after giving 180 days'
prior written notice, without breaching such agreements. The agreement with Mr.
Schwarz had an original term through February 16, 1996, and has been
automatically extended until such time as terminated pursuant to the terms of
such agreement. Mr. Hamilton's agreement
8
<PAGE> 12
will expire on December 5, 1998 unless otherwise extended pursuant to the terms
of the agreement. The Employment Agreements provide that the officers will be
paid the base salaries set forth next to their names in the Summary Compensation
Table above, which amounts may be increased or decreased (subject to certain
limitations) at the Compensation Committee's discretion, plus any other amounts
the Compensation Committee, in its discretion, determines to award. The
Employment Agreements also provide for certain severance benefits. If the
employment of Messrs. Paulsen, Jones or Tufaro is terminated by either the
Company without "cause" or by the employee for "cause" (as defined in the
Employment Agreements) during the original term of the Employment Agreement, the
terminated employee will be entitled to receive as severance an amount equal to
his base salary, as in effect on the date of termination, through the remainder
of his original term of employment under his Employment Agreement, payable over
time. If the employment of Mr. Hamilton is terminated by the Company without
"cause" or by Mr. Hamilton for "cause" (as defined in the Employment
Agreements), Mr. Hamilton will be entitled to receive as severance an amount
equal to his base salary as in effect on the date of termination for a period of
twelve months, payable over time, if such termination occurs during the original
term of his Employment Agreement, or for a period of six months, payable over
time, if such termination occurs subsequent to the original term of his
Employment Agreement. Upon the termination of the employment of Messrs. Paulsen,
Jones or Tufaro by reason of death or disability, his estate or he, as the case
may be, will be entitled to receive a payment equal to his base salary, as in
effect on the date of termination, through the remainder of his original term of
employment under his Employment Agreement, except that in the case of
termination by reason of disability the amount of such benefit shall be offset
by the proceeds of any disability plan awards provided by the Company. Upon the
termination of the employment of Mr. Hamilton by reason of death or disability,
his estate or he, as the case may be, will be entitled to receive a payment
equal to his base salary, as in effect on the date of termination, for a period
of twelve months, except that in the case of termination by reason of disability
the amount of such benefit shall be offset by the proceeds of any disability
plan awards provided by the Company. The Employment Agreements provide that if
any of Messrs. Paulsen, Jones, Tufaro or Hamilton are terminated by the Company
for "cause" or if they voluntarily terminate their employment (as defined in the
Employment Agreements), no severance amount will be payable. If the employment
of any of Messrs. Paulsen, Jones, Schwarz or Tufaro is terminated for any reason
after the original term of his employment, no severance amount will be payable.
Each of these officers also entered into noncompetition agreements (the
"Noncompetition Agreements") with the Company. These agreements (except for the
agreements with Mr. Schwarz and Mr. Hamilton), subject to certain limited
exceptions, prohibit such individuals from engaging, directly or indirectly,
during the noncompetition period (the "Noncompetition Period") in any business
which engages or attempts to engage in, directly or indirectly, the acquisition,
development, construction, operation, management or leasing of any multifamily
apartment residential real estate property within a 30 mile radius of any
property that the Company owns, operates or manages or that the Company has
undertaken to acquire, develop, construct, operate, manage or lease. The
Noncompetition Period is the period beginning on the date of termination of
employment and ending on the latest of (i) one year from the termination of
their employment with the Company or (ii) the date on which the severance
amounts described above cease. Prior to their termination of employment, subject
to certain limited exceptions, the Noncompetition Agreements prohibit all of the
executive officers from engaging in any businesses other than those of the
Company without the prior written consent of the Board of Directors (or in the
case of Mr. Schwarz and Mr. Hamilton, without the prior written consent of the
President of Summit Properties Inc.). The Noncompetition Agreements with each of
the officers also prohibit such officers for certain periods after their
termination from the Company from hiring certain key employees of the Company or
participating in any efforts to persuade such employees to leave the Company and
from engaging in any manner, directly or indirectly, in any business which
engages or attempts to engage in the acquisition, development, construction,
operation, management or leasing of any of the Company's then existing
communities or development or acquisition opportunities. Under the Noncompeti-
9
<PAGE> 13
tion Agreements, such officers are prohibited from disclosing trade secrets and,
for certain periods, other confidential information of the Company.
SEVERANCE AGREEMENTS
On January 2, 1997, the Company entered into Severance Agreements with each
of Messrs. Paulsen, Jones, Schwarz, Hamilton and McGuire (the "Severance
Agreements"). The Severance Agreements provide for the payment of severance
benefits of up to three times such officer's annual base salary and cash bonus
in the event of the termination of the officer's employment under certain
circumstances following certain "change in control" or "combination
transactions" involving a consolidation or merger. The benefits payable under
the terms of the Severance Agreements are subject to reduction by the amount of
any severance benefits payable under applicable Employment Agreements.
STOCK PERFORMANCE GRAPH
The following graph provides a comparison, from the Company's Initial
Offering on February 15, 1994 through December 31, 1996, of the cumulative total
stockholder return (assuming reinvestment of any dividends) among the Company,
the Standard & Poor's 500 Index (the "S&P 500 Index") and the National
Association of Real Estate Investment Trusts, Inc. ("NAREIT") Equity REIT Total
Return Index (the "NAREIT Index"), an industry index of 177 REITs (including the
Company). The NAREIT Index includes REITs with 75% or more of their gross
invested book value of assets invested directly or indirectly in the equity
ownership of real estate. Upon written request, the Company will provide any
stockholder with a list of the REITs included in the NAREIT Index. The
historical information set forth below is not necessarily indicative of future
performance. Data for the NAREIT Index and the S&P 500 Index were provided to
the Company by SNL Securities LP.
[STOCK PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Summit Properties, Inc. S&P 500 Index NAREIT Index
<S> <C> <C> <C>
2/8/94 100.00 100.00 100.00
6/30/94 106.22 95.41 101.16
9/30/94 104.11 100.08 99.09
12/31/94 106.41 100.06 99.11
3/31/95 92.77 109.80 98.94
6/30/95 99.16 120.28 104.76
9/30/95 110.89 129.84 109.69
12/31/95 119.20 137.66 114.24
3/31/96 122.21 145.05 116.83
6/30/96 122.32 151.54 122.03
9/30/96 125.53 156.23 130.02
12/31/96 143.42 169.13 154.52
</TABLE>
10
<PAGE> 14
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Responsibilities of the Company's Compensation Committee. The Company's
Executive Compensation Program is administered under the direction of the
Compensation Committee of the Board of Directors of the Company, which is
composed of all four Independent Directors. The specific responsibilities of the
Compensation Committee are to:
1. Administer the Company's Executive Compensation Program.
2. Review and approve compensation awarded to the Company's executive
officers pursuant to the Executive Compensation Program.
3. Monitor the performance of the Company in comparison to performance by
executive officers in conjunction with executive officer compensation.
4. Monitor compensation awarded to executive officers of the Company in
comparison to compensation received by executive officers of the
Company's Comparative Compensation Peer Group, as defined below.
Compensation determinations pursuant to the Executive Compensation Program
are generally made at or shortly after the end of the fiscal year. At the end of
the fiscal year, incentive cash bonuses are calculated pursuant to the funds
from operations ("FFO") growth criteria which was contained in the respective
Summit Properties Inc. Incentive Compensation Plan approved by the Compensation
Committee prior to or at the beginning of the fiscal year. Payment of a cash
bonus is subject to audited confirmation of Company financial performance, which
occurs immediately after the end of the fiscal year. Also at the end of the
fiscal year, base salaries and grants of long-term equity based compensation
under the 1994 Stock Option Plan are set for the following fiscal year.
In fulfilling its responsibilities, the Compensation Committee takes into
account recommendations from management as well as the specific factors
enumerated herein for specific elements of compensation. The Compensation
Committee periodically reviews comparative compensation data which includes data
on the Company's Comparative Compensation Peer Group as well as data from other
companies with attributes comparable to the Company.
The Philosophy of the Compensation Committee. The philosophy of the
Compensation Committee as reflected in the specific compensation plans included
in the Executive Compensation Program is to:
1. Attract, retain and reward experienced, highly motivated executive
officers who are capable of effectively leading and continuing the
growth of the Company.
2. Place more emphasis on short and long-term incentive compensation which
is dependent upon both Company and individual performance rather than
base salary.
3. Reward and encourage executive officer activity that results in enhanced
value for stockholders.
4. Link both short-term and long-term incentive compensation as much as
possible to the achievement of specific individual and Company goals.
Elements of Compensation. It is the belief of the Compensation Committee
that the above philosophy can best be implemented through three separate
components of executive compensation with each component designed to reward
different performance goals, yet with all three components working together to
satisfy the ultimate goal of enhancing stockholder value. The three elements of
executive compensation are:
1. Salary, which compensates the executive for performing the basic job
description through the performance of routine designated tasks.
11
<PAGE> 15
2. Cash bonus, which rewards the executive for commendable performance of
specially designated tasks or outstanding performance of routine
designated tasks during the fiscal year.
3. Stock options and/or stock grants, which provide long-term rewards to
the executive in a manner directly related to the enhancement of
stockholder value through an appreciated stock price.
In administering each element of compensation, the Compensation Committee
considers the integration of that element not only with the other two elements
of compensation, but also with additional benefits available to the executive
such as the 1996 Non-Qualified Employee Stock Purchase Plan, Company provided
insurance benefits, and Company sponsored retirement savings plans.
Base Salary. Base salaries for executive officers are set based on the
following factors:
1. Comparison to executive officer base salaries for the Comparative
Compensation Peer Group (as defined below) to the extent such data is
available.
2. Individual performance of the routine designated tasks assigned.
3. Overall experience of the executive officer.
4. Historical relationship with the Company.
As a result of the Compensation Committee's philosophy of focusing the
compensation of the Company's executive officers on performance-based rewards,
the base salaries of the executive officers are lower when compared to the
Comparative Compensation Peer Group.
Base salary increases for executive officers are considered annually by the
Compensation Committee. The granting of salary increases is dependent upon:
1. The executive's performance relative to:
a. Accomplishing the routine designated tasks of the position.
b. Promoting Company values.
c. Development and training of subordinate Company employees.
d. Leadership abilities and team member abilities.
e. The satisfaction of the executive officer's respective internal or
external customers.
2. Increased or revised job responsibilities.
3. Comparison to the Comparative Compensation Peer Group.
In 1995, the Company acquired a 2,025 unit portfolio of apartment
communities located in the Charlotte region. As a result of that significant
increase in responsibility, Raymond V. Jones was awarded an increase in base
salary of approximately 6.45% for fiscal year 1996. However, in keeping with the
Company's goal of emphasizing performance-based compensation, the Compensation
Committee approved the request of the remaining executive officers of the
Company to decline any cost of living adjustments or other increases in base
salaries of such executive officers for fiscal year 1996. As further evidence of
the Company's commitment towards emphasizing performance-based compensation, all
senior level officers of the Company, in addition to executive level officers,
elected not to receive base salary increases for fiscal year 1996.
Cash bonuses. The Company's 1996 Incentive Compensation Plan rewards
Company executives with annual cash bonuses based on favorable performance by
both the Company and the individual executive. This plan was formulated to
foster a team performance among the executive officers in accomplishing FFO
growth
12
<PAGE> 16
goals while at the same time aligning executive annual cash incentive goals with
stockholder goals through the translation of FFO growth into appreciated share
price. For 1996, 100% of Mr. Paulsen's cash bonus was dependent upon growth in
per share FFO over the previous fiscal year. The cash bonuses of Messrs. Gray
and Schwarz are dependent in large part on FFO growth over the prior fiscal year
and a minority portion of each respective cash bonus is dependent upon the
executive's commendable performance of specially assigned tasks and outstanding
performance of routine duties. For the first half of 1996, the cash bonuses for
Messrs. Jones and Tufaro were dependent upon growth in community operating
income for 1996 over 1995 from their respective portfolios of stabilized
properties as well as the success of development and acquisition projects
initiated by them which met certain targeted financial rates of return. However,
as the result of the Company's strategic reorganization in the second quarter of
1996, Mr. Jones assumed responsibility for all of the Company's development and
construction activities. In conjunction therewith, Mr. Jones' cash bonus became
dependent upon achieving defined financial returns on new development
communities. For the second half of 1996, the cash bonuses of Mr. Tufaro became
dependent upon his success in achieving specific results relative to special
projects assigned to him.
Management has informed the Compensation Committee that to further promote
the Company's philosophy of performance-based compensation, certain
non-executive senior level officers also have cash bonus elements of
compensation, wherein the majority of that cash bonus is dependent on FFO growth
over the prior fiscal year.
The 1996 Incentive Compensation Plan was approved by the Compensation
Committee in December of 1995, and the amendment thereto as a result of the
Company's strategic reorganization was approved by the Compensation Committee in
August of 1996, thereby establishing the specific per share FFO growth criteria
and requisite financial returns on development and acquisition communities upon
which executive officers' cash bonuses were dependent. For fiscal year 1996, the
threshold per share FFO growth criteria was not achieved and, therefore, Mr.
Paulsen did not receive any cash bonus and Messrs. Schwarz and Gray did not
receive the majority of their cash bonus, as such was dependent on growth in per
share FFO. Messrs. Schwarz and Gray did receive cash bonuses based upon their
commendable performance of specially assigned tasks and outstanding fulfillment
of their routine duties. In fiscal year 1996, the required community operating
income growth thresholds for the stabilized portfolio managed by Mr. Jones was
not achieved and therefore he did not receive that component of his cash bonus.
The stabilized portfolio managed by Mr. Tufaro did however meet or exceed the
target threshold for community operating income, and Mr. Tufaro did receive that
component of his cash bonus. Mr. Jones did receive a cash bonus for certain
development and/or acquisition projects which produced financial returns that
met or exceeded the targeted rate of return.
Stock Options and Stock Grants. The Compensation Committee believes that
awards of stock options or stock grants provide long-term incentive compensation
to executive officers that is aligned most directly with the achievement of
enhanced value for stockholders through an appreciating stock price. As such,
the Compensation Committee believes that awards of stock options or stock grants
should be made to executive officers in meaningful amounts on a regular basis.
When granting stock, it is the intention of the Compensation Committee to
utilize restricted stock grants subject to a three to five year vesting period,
other than in those instances where stock is granted in lieu of cash
compensation, in which case the grants would not be restricted and, thus, not
subject to vesting.
The number of stock options or stock grants awarded to an executive officer
is based on the following criteria:
1. Overall responsibility of the executive officer.
2. Overall ability to contribute to an increase in FFO.
13
<PAGE> 17
3. Level of base salary component of compensation.
4. Level of incentive cash bonus, in that any fiscal year cash bonus
amounts in excess of 50% of the respective executive officer's base
salary will be paid to that executive in non-restricted stock of
comparable value.
The Compensation Committee considers the awards of stock options or
restricted stock grants on a current basis only. The existing stockholdings of
an individual executive are not taken into consideration when awarding stock
options or restricted stock grants.
In 1996, no stock options were granted. However, in 1996, the Compensation
Committee did award grants of restricted stock to certain executive officers.
The terms of these awards call for the vesting of 20% of the total number of
restricted shares of common stock upon the date of grant on January 12, 1996
with 20% of the total amount vesting on January 1 of each of the next four
years.
Definition of Funds from Operations (FFO). As noted above, certain
elements of executive compensation are based on achieving specific FFO per share
growth criteria. FFO is defined as income or loss before minority interest of
unitholders of the operating partnership, extraordinary items and non-recurring
formation expenses and certain non-cash items, primarily depreciation. Industry
analysts consider FFO to be an appropriate measure of the performance of an
equity REIT.
Compensation of the Chief Executive Officer. Mr. Paulsen's total
compensation for fiscal year 1996 consisted of only base salary. Mr. Paulsen
declined any additional increase in base salary. Based on per share FFO growth
performance for fiscal year 1996, Mr. Paulsen did not receive a cash bonus. The
Compensation Committee believes that compared to the market, Mr. Paulsen's base
salary and potential maximum cash bonus based on FFO growth of the Company, are
each respectively and when combined, conservative in comparison to the
Comparative Compensation Peer Group. Mr. Paulsen did receive 11,700 shares of
restricted stock in 1996 with vesting to occur over a period of the next four
years.
Comparative Compensation Peer Group. The Compensation Committee compares
both the individual components as well as total compensation of executive
officers to compensation practices in the comparative market by periodically
reviewing data on the Comparative Compensation Peer Group provided by management
or outside consultants. The Comparative Compensation Peer Group is a sampling of
primarily REITs with similar characteristics to the Company as well as some
similar sized companies from other industries. Utilization of this comparative
data provides assurance to both executive officers and the Company's
stockholders that executive officers are being compensated adequately yet
reasonably in the context of the overall market. While comparative market data
is valuable in providing assurance of reasonable compensation for executive
officers, the Company's stated policy of emphasizing performance-based
compensation will result in base salaries for executive officers being below the
comparative norm.
A portion of the REITs that comprise the Comparative Compensation Peer
Group as defined above are also included in the NAREIT equity index that is the
basis for the Company Performance Graph contained elsewhere in this Proxy
Statement, however, not all of those REITs are included in the Comparative
Compensation Peer Group. The Compensation Committee believes that the equity
REITs that comprise the Comparative Compensation Peer Group are the most direct
comparisons for the Company and its Executive Compensation Program.
Deduction Limit of $1 million Pursuant to Section 162(m). The Securities
and Exchange Commission (the "SEC") requires that this report comment upon the
Company's policy with respect to Section 162(m) of the Internal Revenue Code
which limits the deductibility on the Company's tax return of compensation over
$1 million to any of the named executive officers of the Company unless, in
general, the compensation is paid pursuant to a plan which is performance
related, non-discretionary and has been approved by the Company's
14
<PAGE> 18
stockholders. The Committee's policy with respect to Section 162(m) is to make
every reasonable effort to insure that compensation is deductible to the extent
permitted, while simultaneously providing Company executives with appropriate
awards for their performance. The Company did not pay any compensation during
1996 that would be subject to Section 162(m).
Submitted by the Compensation Committee:
Henry H. Fishkind
James H. Hance, Jr.
Nelson Schwab III
John Crosland, Jr.
The foregoing report should not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference and shall not otherwise be deemed filed under such
Acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Fishkind, Hance, Schwab and
Crosland. None of these individuals has served as an officer of the Company.
Messrs. Hance, Schwab and Crosland serve as officers and directors of lending
institutions that have provided financing and related services to the Company.
James H. Hance, Jr. is a Vice Chairman and the Chief Financial Officer of
NationsBank Corporation ("NationsBank") and Nelson Schwab III and John Crosland,
Jr. are members of the Board of Directors of First Union National Bank of North
Carolina ("First Union"). NationsBank and First Union have provided the Company
with credit enhancements on certain of the Company's communities financed with
tax-exempt bonds. First Union is also the joint provider of the Company's $150
million unsecured credit facility. In August 1996, the Company purchased from an
affiliate of Mr. Crosland a parcel of land for a purchase price of $378,000.
15
<PAGE> 19
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth the beneficial ownership of Common Stock for
(i) directors, the Chief Executive Officer and the other four most highly
compensated executive officers of the Company, (ii) the directors (including
Independent Directors) and such executive officers of the Company as a group,
and (iii) each other person who is a stockholder of the Company holding more
than a 5% beneficial interest in the Company. Unless otherwise indicated in the
footnotes, all of such interests are owned directly, and the indicated person or
entity has sole voting and investment power. The number of shares listed
represents the number of shares of Common Stock the person holds plus the number
of shares for which Units of limited partnership interest in Summit Properties
Partnership, L.P., a Delaware limited partnership and the entity through which
the Company conducts principally all of its business operations, held by the
person are redeemable (if the Company elects to issue Common Stock rather than
pay cash upon such redemption). The extent to which the persons hold shares of
Common Stock as opposed to Units is set forth in the footnotes.
<TABLE>
<CAPTION>
Number of
Shares and Units Percent of Percent of
Name and Business Address Beneficially All All
of Beneficial Owners** Owned(1) Shares(2) Shares/Units(3)
------------------------- --------------------- ------------- -------------------
<S> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
William B. McGuire, Jr.(4).............. 914,972 4.0% 3.4%
William F. Paulsen(5)................... 951,709 4.2% 3.5%
Raymond V. Jones(6)..................... 420,502 1.8% 1.6%
David F. Tufaro(7)...................... 352,458 1.5% 1.3%
John T. Gray(8)......................... 147,773 * *
Michael L. Schwarz(9)................... 61,598 * *
Henry H. Fishkind(10)................... 8,700 * *
James H. Hance, Jr.(11)................. 10,997 * *
Nelson Schwab III(12)................... 27,000 * *
John Crosland, Jr.(13).................. 528,653 2.3% 2.0%
ALL DIRECTORS AND EXECUTIVE
OFFICERS AS A GROUP (10 PERSONS)...... 3,424,362 15.0% 12.8%
5% HOLDERS
Franklin Resources, Inc.(14)............ 3,522,061 15.4% 13.1%
Mutuelles AXA, AXA, and The Equitable
Companies Incorporated(15)............ 1,885,000 8.3% 7.0%
Cohen & Steers Capital
Management, Inc.(16).................. 1,704,000 7.5% 6.3%
</TABLE>
- ---------------
* Less than one percent.
** Unless otherwise indicated, the address is: c/o Summit Properties Inc., 212
South Tryon Street, Suite 500, Charlotte, NC, 28281.
(1) The information in the above chart was provided by the stockholders listed
and reflects their beneficial ownership known by the Company as of December
31, 1996.
(2) Assumes that all Units held by the person are redeemed for shares of Common
Stock. The total number of shares outstanding used in calculating this
percentage assumes that none of the Units held by other persons are
redeemed for shares of Common Stock. Units became redeemable on February
15, 1995.
16
<PAGE> 20
(3) Assumes that all Units held by the person are redeemed for shares of Common
Stock. The total number of shares of Common Stock and Units used in
calculating this percentage includes the total number of shares of Common
Stock outstanding and the total number of Units outstanding held by persons
other than the Company.
(4) The indicated ownership includes 620,313 Units, 40,000 shares of Common
Stock subject to stock options exercisable within 60 days, 5,900 shares of
restricted stock awarded under the 1994 Stock Option and Incentive Plan
that vested twenty percent (20%) on January 12, 1996 and will vest twenty
percent (20%) on January 1st of each of the next four years, and 159,984
shares of Common Stock owned by certain related family trusts with respect
to which shares of Common Stock Mr. McGuire disclaims beneficial ownership.
(5) The indicated ownership includes 596,045 Units, 40,000 shares of Common
Stock subject to stock options exercisable within 60 days, 11,700 shares of
restricted stock awarded under the 1994 Stock Option and Incentive Plan
that vested twenty percent (20%) on January 12, 1996 and will vest twenty
percent (20%) on January 1st of each of the next four years, and 39,535
shares of Common Stock owned by Mr. Paulsen's spouse and 85,696 shares of
Common Stock owned by certain related family trusts with respect to which
shares of Common Stock Mr. Paulsen disclaims beneficial ownership.
(6) The indicated ownership includes 274,526 Units, 27,000 shares of Common
Stock subject to stock options exercisable within 60 days, 7,800 shares of
restricted stock awarded under the 1994 Stock Option and Incentive Plan
that vested twenty percent (20%) on January 12, 1996 and will vest twenty
percent (20%) on January 1st of each of the next four years, and 38,652
shares of Common Stock owned by certain related family trusts with respect
to which shares of Common Stock Mr. Jones disclaims beneficial ownership.
(7) The indicated ownership includes 206,388 Units, 27,000 shares of Common
Stock subject to stock options exercisable within 60 days, 7,800 shares of
restricted stock awarded under the 1994 Stock Option and Incentive Plan
that vested twenty percent (20%) on January 12, 1996 and will vest twenty
percent (20%) on January 1st of each of the next four years, and 19,920
shares of Common Stock owned by Mr. Tufaro's spouse and 41,361 shares of
Common Stock owned by certain related family trusts with respect to which
shares of Common Stock Mr. Tufaro disclaims beneficial ownership.
(8) The indicated ownership includes 695 Units and 57,000 shares of Common
Stock subject to stock options exercisable within 60 days.
(9) The indicated ownership includes 57,000 shares of Common Stock subject to
stock options exercisable within 60 days.
(10) The indicated ownership includes 7,000 shares of Common Stock subject to
stock options exercisable within 60 days.
(11) The indicated ownership includes 1,000 shares of Common Stock held jointly
by Mr. Hance and his spouse, and 7,000 shares of Common Stock subject to
stock options exercisable within 60 days.
(12) The indicated ownership includes 7,000 shares of Common Stock subject to
stock options exercisable within 60 days.
(13) The indicated ownership includes 521,656 Units and 4,000 shares of Common
Stock subject to stock options exercisable within 60 days.
(14) These shares are beneficially owned as a group by Franklin Resources, Inc.,
Charles B. Johnson, Rupert H. Johnson, Jr., Templeton Global Advisors
Limited and certain direct and indirect investment advisor subsidiaries of
Franklin Resources, Inc. (the "Advisor Subsidiaries"). Templeton Global
Advisors Limited has sole voting and dispositive power over 2,284,900
shares. The following Advisor Subsidiaries have sole voting and dispositive
power with respect to the following numbers of shares: Templeton Investment
Counsel, Inc. (571,361 shares); Franklin Advisers, Inc. (255,000 shares);
Templeton Investment Management Limited (215,300 shares); Templeton
Management Limited ("TML") (172,000 shares); Templeton Investment
Management (Australia) Limited (22,000 shares); and an account advised by
TML under a sub-advisor agreement (1,500 shares). Franklin Resources, Inc.,
Charles B. Johnson and Rupert H. Johnson, Jr. are deemed to be beneficial
owners of 2,284,900 shares through their direct or indirect ownership of
Templeton Global Advisors Limited and the Advisor Subsidiaries. The
principal business address of Franklin Resources, Inc., Charles B. Johnson
and Rupert H. Johnson, Jr. is 777 Mariners Island Boulevard, San Mateo, CA
94404. The principal business address of Templeton Global Advisors Limited
is Lyford Cay, P.O. Box N-7759, Nassau, Bahamas.
(15) These shares are beneficially owned as a group by Alpha Assurances I.A.R.D.
Mutuelle, Alpha Assurances Vie Mutuelle, AXA Assurances I.A.R.D. Mutuelle,
AXA Assurances Vie Mutuelle and AXA Courtage Assurance Mutuelle
(collectively, the "Mutuelles AXA"), AXA, The Equitable Companies
Incorporated, The Equitable Life Assurance Society of the United States and
Alliance Capital Management L.P. The Equitable Companies Incorpo-
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rated, The Equitable Life Assurance Society of the United States and
Alliance Capital Management L.P. shall be collectively referred to as the
"Equitable Companies." The indicated ownership includes 113,000 shares over
which Mutuelles AXA, AXA and The Equitable Companies have shared voting
power. The Equitable Life Assurance Society of the United States has sole
dispositive power with respect to 113,000 shares, and Alliance Capital
Management L.P. has sole voting power with respect to 1,744,900 shares and
sole dispositive power with respect to 1,772,000 shares. The principal
business address of Alpha Assurances I.A.R.D. Mutuelle and Alpha Assurances
Vie Mutuelle is 100-101 Terrasse Boieldieu, 92042 Paris La Defense France.
The principal business address of AXA Assurances I.A.R.D. Mutuelle and AXA
Assurances Vie Mutuelle is 21 Rue de Chateaudun 75009, Paris France. The
principal business address of AXA Courtage Assurance Mutuelle is 26 Rue
Louis le Grand, 75002 Paris France. The principal business address of AXA
is 23 Avenue Matignon, 75008 Paris France. The principal business address
of The Equitable Companies Incorporated is 787 Seventh Avenue, New York, NY
10019.
(16) Cohen & Steers Capital Management has sole voting power with respect to
1,506,000 shares of Common Stock and sole dispositive power with respect to
1,704,000 shares of Common Stock. The principal business address of Cohen &
Steers Capital Management, Inc. is 757 Third Avenue, New York, NY 10017.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act, as amended (the "Exchange
Act") requires the Company's executive officers and directors, and persons who
are beneficial owners of more than 10% of a registered class of the Company's
equity securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "SEC"). Officers, directors and greater
than 10% beneficial owners are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. To the Company's
knowledge, based solely on a review of the copies of such reports furnished to
the Company, the executive officers, directors and greater than 10% beneficial
owners filed on a timely basis the reports required to be filed under Section
16(a) of the Exchange Act of during the fiscal year end December 31, 1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As discussed above, Messrs. Hance and Schwab serve as officers and
directors of lending institutions that have provided financing and related
services to the Company. James H. Hance, Jr. is a Vice Chairman and the Chief
Financial Officer of NationsBank, and Nelson Schwab III is a member of the Board
of Directors of First Union. Both NationsBank and First Union provided the
Company with credit enhancements on certain of its communities financed with
tax-exempt bonds. First Union is also the joint provider of the Company's $150
million unsecured credit facility. In August 1996, the Company purchased from an
affiliate of Mr. Crosland a parcel of land for a purchase price of $378,000.
OTHER MATTERS
INDEPENDENT AUDITORS
The accounting firm of Deloitte & Touche LLP has served as the Company's
and its predecessors' independent auditors since August 15, 1993. A
representative of Deloitte & Touche LLP will be present at the Annual Meeting,
will be given the opportunity to make a statement if he or she so desires and
will be available to respond to appropriate questions.
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
paid by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees, which
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are beneficially owned by others, to send proxy materials to and obtain proxies
from such beneficial owners. The Company will reimburse such holders for their
reasonable expenses.
STOCKHOLDER PROPOSALS
Stockholder proposals submitted pursuant to Exchange Act Rule 14a-8 for
inclusion in the Company's proxy statement and form of proxy for the 1998 annual
meeting of stockholders must have been received in writing by the Company by
November 7, 1997. Such proposals must also comply with the requirements as to
form and substance established by the Securities and Exchange Commission if such
proposals are to be included in the proxy statement and form of proxy. Any such
proposals should be mailed to: Summit Properties Inc., 212 South Tryon Street,
Suite 500, Charlotte, NC 28281, Attn: Secretary.
Stockholder proposals to be presented at the 1998 annual meeting of
stockholders, other than stockholder proposals submitted pursuant to Exchange
Act Rule 14a-8, must be received in writing by the Company not earlier than
January 13, 1998 nor later than February 12, 1998, unless the 1998 annual
meeting of stockholders is scheduled to take place before March 14, 1998. The
Company's Bylaws provide that any stockholder wishing to nominate a director or
have a stockholder proposal, other than a stockholder proposal submitted
pursuant to Exchange Act Rule 14a-8, considered at an annual meeting must
provide written notice of such nomination or proposal and appropriate supporting
documentation, as set forth in the Bylaws, to the Company not less than 90 days
nor more than 120 days prior to the anniversary of the immediately preceding
annual meeting of stockholders (the "Anniversary Date"); provided, however, that
in the event that the annual meeting is scheduled to be held more than 60
calendar days prior to the Anniversary Date, such nominations or proposals must
be delivered to the Company not earlier than 120 days or later than 90 days
prior to the earlier date or, if later, the tenth day following the date on
which public announcement of the date of such meeting is first made.
Notwithstanding the foregoing, in the event the number of directors of the
Company is increased and there is no public announcement made by the Company
naming all of the nominees for director or specifying the size of the increased
Board of Directors at least 70 days prior to the Anniversary Date, stockholder
nominations for such directors may be delivered to the Company not later than
the tenth day following the date on which such public announcement is first made
by the Company. Any such proposals should be mailed to: Summit Properties Inc.,
212 South Tryon Street, Suite 500, Charlotte, NC 28281, Attn: Secretary.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
TODAY.
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APPENDIX A
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS OF SUMMIT PROPERTIES INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AND MAY BE REVOKED PRIOR TO ITS EXERCISE
The undersigned hereby appoints Michael L. Schwarz and Michael G. Malone, or
either of them, proxies, each with full power of substitution, for and in the
name of the undersigned at the Annual Meeting of Stockholders of Summit
Properties Inc. to be held on May 13, 1997 and at any and all adjournments and
postponements thereof, to vote all shares of the capital stock of Summit
Properties Inc. held of record by the undersigned on March 3, 1997, as if the
undersigned were present and voting shares. The undersigned hereby revokes any
proxy previously given in connection with such meeting and acknowledges receipt
of the Notice of Annual Meeting of Stockholders and Proxy Statement and the 1996
Annual Report to Stockholders.
1. To elect two Class III directors to hold office until the 2000 annual meeting
of stockholders and until their successors are duly elected and qualified.
Nominees:
<TABLE>
<S> <C> <C> <C> <C> <C>
FOR WITHHELD FOR WITHHELD
William B. McGuire, Jr. [ ] [ ] William F. Paulsen [ ] [ ]
</TABLE>
2. To consider and act upon any matters incidental to the foregoing or any
matters which may properly come before the Annual Meeting or any adjournments
and postponements thereof.
(Continued on other side)
The shares represented by this Proxy, when properly executed, will be voted
in the manner directed. IN THE ABSENCE OF ANY DIRECTION, THE SHARES WILL BE
VOTED FOR EACH NOMINEE NAMED IN PROPOSAL 1 ABOVE AND IN ACCORDANCE WITH THE
PROXIES' DISCRETION ON SUCH OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE
MEETING.
DATED , 1997
-----------------------
-----------------------------------
(Signature)
-----------------------------------
(Signature if held jointly)
(Please date this Proxy and sign
exactly as your name appears
hereon. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full
title. If there is more than one
trustee, all should sign. All joint
owners should sign.)
I PLAN TO ATTEND THE MEETING [ ]
