<PAGE>
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
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
- --------------------------------------------------------------------------------
(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(h)(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 (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:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
1873 SOUTH BELLAIRE STREET, SUITE 1700
DENVER, COLORADO 80222-4348
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 1998
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
(the "Meeting") of APARTMENT INVESTMENT AND MANAGEMENT COMPANY (the "Company")
to be held on Thursday, April 23, 1998, at 9:00 a.m. at the principal executive
offices of the Company at 1873 South Bellaire Street, Suite 1700, Denver,
Colorado 80222-4348, for the following purposes:
1. To elect six directors, for a term of one year each, until the next
Annual Meeting of Stockholders and until their successors are elected and
qualify;
2. To approve an amendment to the Apartment Investment and Management
Company 1997 Stock Award and Incentive Plan;
3. To ratify the sale of an aggregate of 15,000 Class I High Performance
Partnership Units of AIMCO Properties, L.P.;
4. To approve the Apartment Investment and Management Company 1998
Incentive Compensation Plan;
5. To approve an amendment to the Charter of the Company to increase the
authorized capital stock of the Company from 160,750,000 to 510,750,000
shares;
6. To ratify the selection of Ernst & Young LLP, to serve as independent
auditors for the Company for the fiscal year ending December 31, 1998;
and
7. To transact such other business as may properly come before the Meeting
or any adjournment(s) thereof.
Only stockholders of record at the close of business on March 18, 1998, will
be entitled to notice of, and to vote at, the Meeting or any adjournment(s)
thereof.
WHETHER OR NOT YOU EXPECT TO BE AT THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE. The proxy is revocable at any time prior to
the exercise thereof by written notice to the Company, and stockholders who
attend the Meeting may withdraw their proxies and vote their shares personally
if they so desire.
BY ORDER OF THE BOARD OF DIRECTORS
Joel F. Bonder
SECRETARY
March , 1998
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
1873 SOUTH BELLAIRE STREET, SUITE 1700
DENVER, COLORADO 80222-4348
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 1998
This Proxy Statement is furnished to stockholders of Apartment Investment
and Management Company ("AIMCO" or the "Company"), a self-administered and
self-managed real estate investment trust ("REIT"), in connection with the
solicitation of proxies in the form enclosed herewith for use at the Annual
Meeting of Stockholders of the Company (the "Meeting") to be held on Thursday,
April 23, 1998, at 9:00 a.m. at the principal executive offices of the Company
at 1873 South Bellaire Street, Suite 1700, Denver, Colorado 80222-4348, and at
any and all adjournments or postponements thereof, for the purposes set forth in
the Notice of Meeting. This Proxy Statement and the enclosed form of proxy are
first being mailed to stockholders on or about March , 1998.
This solicitation is made by mail on behalf of the Board of Directors of the
Company. Costs of the solicitation will be borne by the Company. Further
solicitation of proxies may be made by telephone, fax or personal interview by
the directors, officers and employees of the Company and its affiliates, who
will not receive additional compensation for the solicitation. The Company has
retained the services of Corporate Investor Communications, for an estimated fee
of $4,500, plus out-of-pocket expenses, to assist in the solicitation of proxies
from brokerage houses, banks, and other custodians or nominees holding stock in
their names for others. The Company will reimburse banks, brokerage firms and
other custodians, nominees and fiduciaries for reasonable expenses incurred by
them in sending proxy material to stockholders.
Holders of record of the Class A Common Stock of the Company ("Common
Stock") as of the close of business on the record date, March 18, 1998 (the
"Record Date"), are entitled to receive notice of, and to vote at, the Meeting.
Each share of Common Stock entitles the holder to one vote. At the close of
business on the Record Date, there were [ ] shares of Common Stock issued
and outstanding.
Shares represented by proxies in the form enclosed, if the proxies are
properly executed and returned and not revoked, will be voted as specified.
Where no specification is made on a properly executed and returned proxy, the
shares will be voted: FOR the election of all nominees for director; FOR the
approval of an amendment to the Apartment Investment and Management Company 1997
Stock Award and Incentive Plan (the "1997 Stock Plan"); FOR the ratification of
the sale of Class I High Performance Partnership Units (the "High Performance
Units") of AIMCO Properties, L.P. (the "Operating Partnership") to a company
owned by certain executive officers of the Company and to the Company's non-
employee directors; FOR the approval of the Apartment Investment and Management
Company 1998 Incentive Compensation Plan (the "1998 Incentive Compensation
Plan"); FOR the approval of an amendment to the Charter of the Company to
increase the authorized capital stock of the Company from 160,750,000 to
510,750,000 shares; and FOR the ratification of the selection of Ernst & Young
LLP as independent auditors for the calendar year ending December 31, 1998. To
be voted, proxies must be filed with the Secretary of the Company prior to
voting. Proxies may be revoked at any time before voting by filing a notice of
revocation with the Secretary of the Company, by filing a later dated proxy with
the Secretary of the Company or by voting in person at the Meeting. Shares
represented by proxies that reflect abstentions or "broker non-votes" (i.e.,
shares held by a broker or nominee which are represented at the
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<PAGE>
Meeting, but with respect to which such broker or nominee is not empowered to
vote on a particular proposal) will be counted as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.
The Company's 1997 Annual Report to Shareholders is being mailed with this
Proxy Statement. The principal executive offices of the Company are located at
1873 South Bellaire Street, Suite 1700, Denver, Colorado 80222-4348.
PROPOSAL 1: ELECTION OF DIRECTORS
Pursuant to the Company's Charter, directors are elected at each Annual
Meeting of Stockholders and hold office for one year, and until their successors
are duly elected and qualify. The Company's Bylaws currently authorize a Board
of Directors consisting of not fewer than three nor more than nine persons.
The nominees for election to the six positions on the Board of Directors to
be voted upon at the Meeting are Terry Considine, Richard S. Ellwood, Peter K.
Kompaniez, J. Landis Martin, Thomas L. Rhodes and John D. Smith. All nominees
were elected to the Board of Directors at the last Annual Meeting of
Stockholders. Messrs. Ellwood, Martin, Rhodes and Smith (the "Independent
Directors") are not employed by, or affiliated with, the Company, other than by
virtue of serving as directors of the Company and by virtue of their investment
in Common Stock of the Company and High Performance Units of the Operating
Partnership. Unless authority to vote for the election of directors has been
specifically withheld, the persons named in the accompanying proxy intend to
vote for the election of Messrs. Considine, Ellwood, Kompaniez, Martin, Rhodes
and Smith to hold office as directors for a term of one year until their
successors are elected and qualify at the next Annual Meeting of Stockholders.
All nominees have advised the Board of Directors that they are able and willing
to serve as directors.
If any nominee becomes unavailable for any reason (which is not
anticipated), the shares represented by the proxies may be voted for such other
person or persons as may be determined by the holders of the proxies (unless a
proxy contains instructions to the contrary). In no event will the proxy be
voted for more than six nominees.
Directors will be elected by a favorable vote of a plurality of the shares
of voting stock present and entitled to vote, in person or by proxy, at the
Meeting. Accordingly, abstentions or broker non-votes as to the election of
directors will not affect the election of the candidates receiving the plurality
of votes. Unless instructed to the contrary in the proxy, the shares represented
by the proxies will be voted FOR the election of the six nominees named above as
directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE SIX NOMINEES.
PROPOSAL 2: APPROVAL OF AN AMENDMENT TO THE 1997 STOCK PLAN
It is AIMCO's objective to maximize dividend income and share price
appreciation. In furtherance of this policy, AIMCO seeks to make share ownership
the primary economic motivation of its officers and directors, and the Company
has taken the following steps:
- paying in stock the annual retainer to Independent Directors;
- providing 25% recourse loans to officers to purchase stock at market
prices; and
- granting options to purchase stock in lieu of cash compensation.
The Board of Directors has adopted, and stockholders have approved, the 1997
Stock Plan in order to authorize certain of these actions. The total number of
shares subject to issuance pursuant to the 1997 Stock Plan is limited to 20
million. There is a further limit equal to 10% of the shares outstanding as of
the start of any one year. This latter limit became burdensome during 1997, a
year of great growth in which the shares outstanding at year end were 2.7 times
the shares outstanding at the start of the year, and the scale
2
<PAGE>
of corporate activities (and the number of members of management to be
compensated) increased commensurately.
The Board of Directors has determined that it is in the best interests of
the Company to remove the 10% limitation, while retaining the overall limit of
20 million shares, and has adopted, subject to stockholder approval, an
amendment to the 1997 Stock Plan (the "Stock Plan Amendment") that eliminates
the 10% limitation. The complete text of the Stock Plan Amendment is set forth
in Annex A to this Proxy Statement. Although the 10% limitation is eliminated,
the policy of the Board of Directors will be to limit the number of stock
options outstanding at any one time to not more than 12% of the total number of
shares of Common Stock and Operating Partnership Units outstanding. At February
18, 1998 there were 41,383,597 shares of Common Stock and 5,235,337 OP Units
outstanding.
In addition, the Compensation Committee has adopted the following policies
with respect to the issuances of stock options under the Company's stock option
plans: (i) options issued under the Company's stock option plans will not be
repriced except when necessary to fulfill a legitimate corporate purpose, to
maintain option value due to extreme circumstances beyond management's control,
and when such repricing is limited to no more than 10% of shares authorized for
grant under such plans; (ii) stock options will not be granted with an exercise
price below the market price of the Common Stock on the date of grant, and (iii)
the Compensation Committee will not make a material change to the plans without
obtaining the requisite stockholder approval.
As of February 18, 1998, an aggregate of 5,906,032 shares of Common Stock
had been issued under the 1997 Stock Plan (net of cancelled or expired options)
and, after giving effect to the Stock Plan Amendment, an aggregate of 14,093,968
shares of Common Stock (plus any shares that might in the future become
available for issuance as a result of terminations or expirations of options)
will be available for future grant.
The affirmative vote of a majority of the votes cast regarding the proposal
is required for approval of the Stock Plan Amendment. Accordingly, abstentions
or broker non-votes will not affect the outcome of the vote on the proposal.
Unless instructed to the contrary in the proxy, the shares represented by the
proxies will be voted FOR the proposal to approve the Stock Plan Amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE STOCK
PLAN AMENDMENT.
PROPOSAL 3: APPROVAL OF THE SALE OF HIGH PERFORMANCE UNITS
As an additional step in furtherance of the Company's goal of increasing
AIMCO's dividend income and share price appreciation by making share ownership
the primary economic motivation of its officers and directors, in January 1998,
the Company's Operating Partnership sold an aggregate of 15,000 High Performance
Units to a joint venture formed by fourteen of the Company's officers and to the
Company's four Independent Directors, Messrs. Ellwood, Martin, Rhodes and Smith.
The sale of the High Performance Units provides the following advantages to the
Company:
- AIMCO received $2,070,000 for an interest that will be without cost to
the Company if the three year Total Return (as defined below) to Company
stockholders is not significantly better than the industry average (as
measured by the Morgan Stanley REIT Index or other a well-known indices) and
at least 30%; and
- any value received by the purchasers is not readily transferable and
constitutes a long-term investment in the Company, providing a further
substantial and enduring alignment of the long-term economic interests of
the Company and its officers and directors.
The Company's Board of Directors has determined, based upon the advice of an
independent valuation expert, that $2,070,000 represents the fair market value
of the High Performance Units.
The fourteen officers have purchased their High Performance Units through
SMP I, L.L.C., a Delaware limited liability company ("SMP"), which will hold the
High Performance Units for three years
3
<PAGE>
so that there is no opportunity for the officers to profit from the ownership of
High Performance Units before the three years have elapsed. A family partnership
controlled by Terry Considine, the Chairman of the Board and Chief Executive
Officer of the Company, and Peter Kompaniez, the President and Vice Chairman of
the Company, own approximately 70% and 14%, respectively, of SMP. The remaining
interests in SMP are owned by twelve other officers of the Company. The
$1,980,300 purchase price paid by SMP was funded with cash contributions from
the participants in SMP, including $1,380,000 from Mr. Considine's family
partnership. The remaining $897,000 was paid by the Independent Directors,
individually, in exchange for their High Performance Units.
Holders of High Performance Units have no rights to receive distributions or
allocations of income or loss, or to redeem or convert their High Performance
Units prior to the date (the "Valuation Date") that is the earlier of (i)
January 1, 2001, or (ii) the date on which a change of control (as defined in
the Operating Partnership's Agreement of Limited Partnership) occurs. If, on the
Valuation Date, the cumulative Total Return of the Company Common Stock from
January 1, 1998 to the Valuation Date (the "Measurement Period") exceeds 115% of
the cumulative Total Return of a peer group index over the same period, and is
at least the equivalent of a 30% cumulative Total Return over three years (the
"Minimum Return"), then, on and after the Valuation Date, holders of the 15,000
High Performance Units will be entitled to receive distributions and allocations
of income and loss from the Operating Partnership in the same amounts and at the
same times (subject to certain exceptions upon liquidation of the Operating
Partnership) as would holders of a number of Partnership Common Units ("OP
Units") equal to the quotient obtained by dividing (i) the product of (A) 15% of
the amount by which the cumulative Total Return of the Company Common Stock over
the Measurement Period exceeds the greater of 115% of the peer group index or
the Minimum Return (such excess being the "Excess Return"), multiplied by (B)
the weighted average market value of the Company's equity capitalization
(including Common Stock and Operating Partnership Units) by (ii) the market
value of one share of Common Stock on the Valuation Date. If, on the Valuation
Date, the cumulative Total Return of the Company Common Stock does not satisfy
these criteria, then, on and after the Valuation Date, holders of the 15,000
High Performance Units will be entitled to receive distributions and allocations
of income and loss from the Operating Partnership in the same amounts and at the
same times (subject to certain exceptions upon a liquidation of the Operating
Partnership) as would holders of 150 OP Units. For purposes of determining the
market value of Common Stock or Operating Partnership Units as of any date, the
average closing price of the Common Stock for the 20 trading days immediately
preceding such date is used. It is expected that the Morgan Stanley REIT Index
will be used as the peer group index for purposes of the High Performance Units.
"Total Return" means, for any security and for any period, the cumulative
total return for such security over such period, as measured by (i) the sum of
(a) the cumulative amount of dividends paid in respect of such security for such
period (assuming that all cash dividends are reinvested in such security as of
the payment date for such dividend based on the security price on the dividend
payment date), and (b) an amount equal to (x) the security price at the end of
such period, minus (y) the security price at the beginning of such period,
divided by (ii) the security price at the beginning of the measurement period;
PROVIDED, HOWEVER, that if the foregoing calculation results in a negative
number, the "Total Return" shall be equal to zero.
The High Performance Units are subject to certain restrictions on transfer.
SMP may not transfer its High Performance Units until after the Valuation Date,
and then only to its participants or to one of their family members (or a
family-owned entity). Individuals may not transfer High Performance Units except
to a family member (or a family-owned entity) or in the event of death or
disability. In the event of a change of control of the Company, holders of High
Performance Units will have redemption rights similar to those of holders of OP
Units.
The following table illustrates the value of the 15,000 High Performance
Units on the Valuation Date under different circumstances. For purposes of this
illustration, the "value" of the High Performance Units is calculated by
multiplying (a) 15% of the Excess Return, by (b) the weighted average market
value of the
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<PAGE>
Company's equity capitalization (including Common Stock and Operating
Partnership Units) over the Measurement Period. This determination of value does
not represent the actual fair market value of the High Performance Units on the
Valuation Date because the High Performance Units are subject to substantial
restrictions on transfer and, in the absence of a change of control, do not
entitle the holders thereof to any redemption rights. Except as otherwise
indicated, it is assumed, for purposes of the illustration, that: (i) the
Valuation Date is January 1, 2001; (ii) the Company's Common Stock has a 14%
annual Total Return; (iii) the Peer Group Index has a 10% annual Total Return;
and (iv) the weighted average market value of outstanding equity (Common Stock
and Operating Partnership Units) during the Measurement Period is $3 billion
(assumptions (i) - (iv) are referred to as the "Base Case"). The table is for
illustrative purposes only and there can be no assurance that actual outcomes
will be within the ranges used below.
<TABLE>
<CAPTION>
WEIGHTED
CUMULATIVE TOTAL RETURN AVERAGE MARKET VALUE OF
OVER THREE YEARS VALUE OF HIGH
--------------------------------------------------------- OUTSTANDING EXCESS PERFORMANCE
COMPANY COMMON PEER 115% OF PEER MINIMUM EXCESS EQUITY SHAREHOLDER UNITS
STOCK GROUP INDEX GROUP INDEX RETURN RETURN(1) (MILLIONS)(2) RETURN (3) (MILLIONS)(4)
--------------- ------------ ------------- ----------- ----------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(5) 48.2% 33.1% 38.1% 30% 10.1% $ 3,000 $ 303 $ 45.4
(6) 119.7% 33.1% 38.1% 30% 81.6% $ 4,000 $ 3,264 $ 489.6
(7) 48.2% 72.8% 83.7% 30% 0% $ 3,000 $ 0 $ 0
(8) 48.2% 0% 0% 30% 18.2% $ 3,000 $ 546 $ 81.9
(9) 119.7% 33.1% 38.1% 30% 81.6% $ 10,000 $ 8,160 $ 1,224.0
(10) 26.0% 3.0% 3.5% 30% 0% $ 4,000 $ 0 $ 0
(11) 165.5% 100.8% 115.9% 30% 49.6% $ 448 $ 222.2 $ 33.3
</TABLE>
- ------------------------------
(1) "Excess Return" is the amount, if any, by which the Total Return of the
Company Common Stock over the Measurement Period exceeds the greater of 115%
of the Total Return of the Peer Group Index over the Measurement Period or
30%.
(2) As of December 31, 1997, the market value of the Company's outstanding
equity (Common Stock and Operating Partnership Units) was $1,684 million.
(3) "Excess Shareholder Return" is calculated by multiplying the Excess Return
by the weighted average market value of outstanding equity.
(4) The "Value of High Performance Units" is calculated by multiplying the
Excess Shareholder Return by 15%. This overstates the fair market value of
the High Performance Units, which must be held by SMP or one of the
Independent Directors until after the Valuation Date and thereafter may not
be transferred except to a family member (or family-owned entity) or upon
the death or disability of a holder and, in the absence of a change of
control, do not entitle the holders thereof to any redemption rights.
(5) Base Case.
(6) Base Case, except that the Company Common Stock has a 30% annual Total
Return and the weighted average market value of outstanding equity is $4
billion.
(7) Base Case, except that the Peer Group Index has a 20% annual Total Return.
(8) Base Case, except that the Peer Group Index has a negative annual Total
Return of 10%.
(9) Base Case, except that the Company Common Stock has a 30% annual Total
Return and the weighted average market value of outstanding equity is $10
billion.
(10) Base Case, except that the Company Common Stock has an 8% annual Total
Return, the Peer Group Index has a 1% annual Total Return and the weighted
average market value of outstanding equity is $4 billion.
(11) This case represents the value of the High Performance Units on December
31, 1997, as if they has been issued on January 1, 1995, based on the actual
Total Returns of the Company Common Stock and the Morgan Stanley REIT Index
(the Peer Group Index) from January 1, 1995 through December 31, 1997, and
the weighted average market value of the Company's outstanding equity over
the same period.
The affirmative vote of a majority of the votes cast regarding the proposal
is required for approval of the sale of the High Performance Units. Accordingly,
abstentions or broker non-votes will not affect the outcome of the vote on the
proposal. Unless instructed to the contrary in the proxy, the shares represented
by proxies will be voted FOR the proposal to approve the sale of the High
Performance Units.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE SALE OF
THE HIGH PERFORMANCE UNITS.
5
<PAGE>
PROPOSAL 4: APPROVAL OF THE 1998 INCENTIVE COMPENSATION PLAN
As an additional motivation for the Company's officers to seek increasing
dividend income and share price appreciation for the Company's stockholders and
to further align the interests of management with the Company's stockholders,
the Compensation Committee of the Board of Directors has adopted the 1998
Incentive Compensation Plan. The 1998 Incentive Compensation Plan provides for
the payment of annual incentive compensation to the Company's executive
officers, in the form of cash or securities, based primarily on a concept of
Excess Shareholder Value. "Excess Shareholder Value" is the amount, if any, by
which the Total Return of the Company's Common Stock over the year exceeds the
Total Return of stocks in the Company's peer group over the same period (up to a
maximum of 15% of the peer group's Total Return), multiplied by the weighted
average market value of the Company's outstanding equity capitalization (Common
Stock and Operating Partnership Units) during the fiscal year. It is expected
that the Morgan Stanley REIT Index will be used as the peer group index for
purposes of the 1998 Incentive Compensation Plan.
The 1998 Incentive Compensation Plan is being presented for stockholder
approval in order to satisfy one of the requirements of Section 162(m)("Section
162(m)") of the Internal Revenue Code of 1986, as amended (the "Code"). Section
162(m) provides that compensation paid to any employee in excess of one million
dollars per year is not deductible unless such compensation is (i)
performance-based compensation (as defined under Section 162(m) of the Code),
and (ii) paid pursuant to a plan that is approved by stockholders. The 1998
Incentive Compensation Plan is designed to comply with the requirements for
"performance-based compensation" under Section 162(m) of the Code. Therefore, if
stockholders approve the 1998 Incentive Compensation Plan and amounts in excess
of one million dollars are paid thereunder, such amounts will be deductible by
the Company. This will result in a greater percentage of dividends received by
stockholders being characterized as a return of capital than would be the case
if such payments were not deductible. If stockholders do not approve the 1998
Incentive Compensation Plan, no compensation will be paid under this plan.
However, in order to properly incentivize management, the Compensation Committee
may determine to pay compensation to officers based on the return of the
Company's Common Stock relative to the Total Return of the Company's peer group,
which could exceed Section 162(m)'s $1 million limit for deductibility. The
complete text of the 1998 Incentive Compensation Plan is set forth in Annex B to
this Proxy Statement, and the following description is qualified in its entirety
by reference thereto.
The 1998 Incentive Compensation Plan is administered by the Compensation
Committee. Under the plan, at the end of each fiscal year, the Compensation
Committee will determine the Excess Shareholder Value, if any. The Compensation
Committee may award to executive officers of the Company, in the aggregate, up
to 15% of the Excess Shareholder Value. The Compensation Committee is not
obligated to pay any incentive compensation even if the Excess Shareholder Value
is significant. The incentive compensation may be paid in cash, securities of
the Company or any combination thereof, as determined by the Compensation
Committee.
The following table illustrates the annual incentive compensation that could
be paid under the 1998 Incentive Compensation Plan under various circumstances.
The table is for illustrative purposes only and there can be no assurance that
actual outcomes will be within the ranges used below, or that the
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<PAGE>
Compensation Committee will determine to pay any or all of the maximum incentive
compensation indicated.
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE MARKET
MAXIMUM VALUE OF MAXIMUM
ANNUAL TOTAL EXCESS RETURN OUTSTANDING INCENTIVE
ANNUAL TOTAL RETURN OF RETURN OF PEER (15% OF PEER EQUITY EXCESS SHAREHOLDER COMPENSATION
COMPANY COMMON STOCK GROUP INDEX EXCESS RETURN GROUP INDEX) (MILLIONS) VALUE (MILLIONS) (MILLIONS)
- ----------------------- --------------- ------------------- ----------------- -------------- ------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
14 % 10% 4% 1.50% $ 3,000 $ 45 $ 6.75
30 % 10% 20% 1.50% $ 4,000 $ 60 $ 9.00
14 % 20% 0% 0% $ 3,000 $ 0 $ 0
14 % (10%) 0% 0% $ 3,000 $ 0 $ 0
30 % 10% 20% 1.50% $ 10,000 $ 150 $ 22.50
8 % 1% 7% 0.15% $ 4,000 $ 6 $ 0.90
</TABLE>
The following table shows, for each calendar year commencing January 1,
1994, (i) annual Total Return of the Company Common Stock, (ii) the annual Total
Return of the Morgan Stanley REIT Index (which is expected to be used as the
Peer Group Index for purposes of the 1998 Incentive Compensation Plan), (iii)
the Excess Return of the Company Common Stock, (iv) the maximum Excess Return
used for determining incentive compensation (15% of the Total Return of the Peer
Group Index), (v) the weighted average market value of the Company's outstanding
equity (Common Stock and Operating Partnership Units), and (vi) the maximum
incentive compensation that could have been paid for that year if the 1998
Incentive Compensation Plan had been in effect (15% of Excess Shareholder
Value). For additional historical information with respect to the return of the
Common Stock and other stock indices, see "Stock Price Performance Graph."
<TABLE>
<CAPTION>
YEAR 1995 1996 1997
- ------------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Annual Total Return of Company Common Stock.............................. 21.9% 56.2% 38.2%
Annual Total Return of Morgan Stanley REIT Index......................... 14.2% 35.8% 18.6%
Excess Return............................................................ 7.7% 20.4% 19.6%
Maximum Excess Return.................................................... 2.13% 5.37% 2.79%
Weighted Average Market Value of Outstanding Equity (millions)........... $ 229 $ 331 $ 914
Excess Shareholder Value (millions)...................................... $ 4.88 $ 17.77 $ 25.50
Maximum Incentive Compensation (millions)................................ $ 0.7 $ 2.7 $ 3.8
</TABLE>
The affirmative vote of a majority of the votes cast regarding the proposal
is required for approval of the 1998 Incentive Compensation Plan. Accordingly,
abstentions or broker non-votes will not affect the outcome of the vote on the
proposal. Unless instructed to the contrary in the proxy, the shares represented
by the proxies will be voted FOR the proposal to approve the 1998 Incentive
Compensation Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 1998
INCENTIVE COMPENSATION PLAN.
PROPOSAL 5: APPROVAL OF INCREASE IN NUMBER OF
AUTHORIZED SHARES OF CAPITAL STOCK
The Board of Directors has approved and adopted, subject to stockholder
approval, an amendment to the Company's Charter (the "Charter Amendment") to
increase the number of authorized shares of capital stock from 160,262,500
shares to 510,750,000 shares and to reclassify all undesignated preferred stock
into Common Stock. The authorized capital stock is currently classified into
150,000,000 shares of Class A Common Stock, 262,500 shares of Class B Common
Stock, 750,000 shares of Class B Cumulative Convertible Preferred Stock,
2,760,000 shares of Class C Cumulative Preferred Stock, 4,600,000 shares of
Class D Cumulative Preferred Stock, and 1,890,000 shares of preferred stock. As
amended, the authorized
7
<PAGE>
capital stock will be classified into 502,377,500 shares of Class A Common
Stock, 262,500 shares of Class B Common Stock, 750,000 shares of Class B
Cumulative Convertible Preferred Stock, 2,760,000 shares of Class C Cumulative
Preferred Stock and 4,600,000 shares of Class D Cumulative Preferred Stock. The
Board of Directors may classify and reclassify any unissued shares of capital
stock into other classes or series of capital stock (including classes or series
of preferred stock) by setting or changing in any one or more respects the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption of such shares of capital stock. Of such shares of capital stock, as
of the Record Date, are outstanding, leaving only shares of capital
stock available to be issued. The proposed text of the Charter Amendment is
attached hereto as Annex C.
Since the Company's initial public offering on July 29, 1994, its
outstanding Common Stock has increased by 322%, with 170% occurring in 1997
alone. The Charter Amendment will provide the Company with additional
flexibility to use its capital stock for business and financial purposes. The
additional shares will be available for future issuances for cash, for
acquisitions of property or shares of other corporations, for stock dividends
and stock splits, for employee compensation, and for other corporate purposes of
the Company. Unless required to do so by law or the rules of any exchange or
trading system upon which the Common Stock is then listed, the Board of
Directors would not be required to seek any authorization or approval from the
Company's stockholders for the issuance of additional shares of Common Stock or
preferred stock.
All of the increase in shares of capital stock has initially been allocated
to the Class A Common Stock. The additional shares of authorized Class A Common
Stock would have rights identical to the currently authorized Class A Common
Stock, although the Board of Directors may change those rights and preferences
by reclassifying such shares into other classes or series of capital stock.
Adoption of the Charter Amendment and the issuance of additional shares of
capital stock could, among other things, have a dilutive effect on future
earnings per share of Common Stock and on the percentage of equity ownership and
voting rights of the current stockholders. However, the Board of Directors
believes that the benefits of providing the Company with the flexibility to
issue shares of capital stock without further stockholder approval and delay
outweigh the possible disadvantages of dilution to the current stockholders and
that it is prudent and in the best interests of the stockholders to provide the
advantage of greater flexibility that will result from the adoption of the
Charter Amendment.
Although the Company does not believe that the Charter Amendment will have
an antitakeover effect, the proposed amendment could, under certain
circumstances, have such an effect. For example, in the event of a hostile
attempt to take over control of the Company, it may be possible for the Company
to endeavor to impede the attempt by issuing shares of capital stock, thereby
diluting the voting power of the other outstanding shares and increasing the
potential cost to acquire control of the Company. However, the Board of
Directors is not aware of any attempt to take control of the Company and the
Board of Directors has not presented this proposal with the intent that it be
utilized as a type of antitakeover device.
The Charter Amendment will not be effective unless and until it is filed
with the State Department of Assessments and Taxation of Maryland. If the
Charter Amendment is authorized by a vote of the Company's stockholders, the
Board intends to file the Charter Amendment with the State Department of
Assessments and Taxation of Maryland as soon as practicable following the
Meeting.
The affirmative vote of a majority of the outstanding shares of Common Stock
is required for approval of the Charter Amendment. Accordingly, abstentions or
broker non-votes will have the effect of a effect of a vote against the
proposal. Unless instructed to the contrary in the proxy, the shares represented
by the proxies will be voted FOR the proposal to approve the Charter Amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE CHARTER
AMENDMENT.
8
<PAGE>
PROPOSAL 6: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The firm of Ernst & Young LLP, the Company's independent auditors for the
year ended December 31, 1997, was selected by the Board of Directors, upon the
recommendation of the Audit Committee, to act in the same capacity for the
fiscal year ending December 31, 1998, subject to ratification by the Company's
stockholders. There are no affiliations between the Company and Ernst & Young
LLP, its partners, associates or employees, other than as pertain to the
engagement of Ernst & Young LLP as independent auditors for the Company in the
previous year. Representatives of Ernst & Young LLP are expected to be present
at the Meeting and will be given the opportunity to make a statement if they so
desire and to respond to appropriate questions.
The affirmative vote of a majority of the votes cast regarding the proposal
is required to ratify the selection of Ernst & Young LLP. Accordingly,
abstentions or broker non-votes will not affect the outcome of the vote on the
proposal. Unless instructed to the contrary in the proxy, the shares represented
by the proxies will be voted FOR the proposal to ratify the selection of Ernst &
Young LLP to serve as independent auditors for the Company for the fiscal year
ending December 31, 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF ERNST & YOUNG LLP.
BOARD OF DIRECTORS AND OFFICERS
The executive officers of the Company and the nominees for election as
directors of the Company, their ages, dates they were first elected and their
positions with the Company or on the Board of Directors are set forth below.
<TABLE>
<CAPTION>
NAME AGE FIRST ELECTED POSITION
- ------------------------- --- ------------------ ----------------------------------------------------
<S> <C> <C> <C>
Terry Considine.......... 50 July 1994 Chairman of the Board of Directors and Chief
Executive Officer
Peter K. Kompaniez....... 52 July 1994 Vice Chairman, President and Director
Joel F. Bonder........... 49 December 1997 Executive Vice President, General Counsel and
Secretary
Robert Ty Howard......... 40 February 1998 Executive Vice President--Ancillary Services
Steven D. Ira............ 47 July 1994 Executive Vice President and Co-Founder
Thomas W. Toomey......... 37 January 1996 Executive Vice President--Finance and Administration
David L. Williams........ 52 January 1997 Executive Vice President--Property Operations
Harry G. Alcock.......... 34 July 1996 Senior Vice President--Acquisitions
Troy D. Butts............ 33 November 1997 Senior Vice President and Chief Financial Officer
Richard S. Ellwood....... 65 July 1994 Director, Chairman, Audit Committee
J. Landis Martin......... 52 July 1994 Director, Chairman, Compensation Committee
Thomas L. Rhodes......... 58 July 1994 Director
John D. Smith............ 69 November 1994 Director
</TABLE>
The following is a biographical summary of the experience of the current
directors and executive officers of the Company for the past five years or more.
TERRY CONSIDINE. Mr. Considine has been Chairman of the Board of Directors,
President and Chief Executive Officer of the Company since July 1994. He is the
sole owner of Considine Investment Co. and prior to July 1994 was owner of
approximately 75% of Property Asset Management, L.L.C., Limited Liability
Company, a Colorado limited liability company, and its related entities
(collectively, "PAM"), one of the Company's predecessors. On October 1, 1996,
Mr. Considine was appointed Co-Chairman and
9
<PAGE>
director of Asset Investors Corp. and Commercial Asset Investors, Inc., two
other public real estate investment trusts, and appointed as a director of
Financial Assets Management, LLC, a real estate investment trust manager. Mr.
Considine has been and remains involved as a principal in a variety of real
estate activities, including the acquisition, renovation, development and
disposition of properties. Mr. Considine has also controlled entities engaged in
other businesses such as television broadcasting, gasoline distribution and
environmental laboratories. Mr. Considine received a B.A. from Harvard College,
a J.D. from Harvard Law School and is admitted as a member of the Massachusetts
Bar.
Mr. Considine has had substantial multifamily real estate experience. From
1975 through July 1994, partnerships or other entities in which Mr. Considine
had controlling interests invested in approximately 35 multifamily apartment
properties and commercial real estate properties. Six of these real estate
assets (four of which were multifamily apartment properties and two of which
were office properties) did not generate sufficient cash flow to service their
related indebtedness and were foreclosed upon by their lenders, causing pre-tax
losses of approximately $11.9 million to investors and losses of approximately
$2.7 million to Mr. Considine.
PETER K. KOMPANIEZ. Mr. Kompaniez has been Vice Chairman and a director of
the Company since July 1994. Since September 1993, Mr. Kompaniez has owned 75%
of PDI Realty Enterprises, Inc., a Delaware corporation ("PDI"), one of the
Company's predecessors, and serves as its President and Chief Executive Officer.
From 1986 to 1993, he served as President and Chief Executive Officer of Heron
Financial Corporation ("HFC"), a United States holding company for Heron
International, N.V.'s real estate and related assets. While at HFC, Mr.
Kompaniez administered the acquisition, development and disposition of
approximately 8,150 apartment units (including 6,217 units that have been
acquired by the Company) and 3.1 million square feet of commercial real estate.
Prior to joining HFC, Mr. Kompaniez was a senior partner with the law firm of
Loeb and Loeb where he had extensive real estate and REIT experience. Mr.
Kompaniez received a B.A. from Yale College and a J.D. from the University of
California (Boalt Hall).
The downturn in the real estate markets in the late 1980s and early 1990s
adversely affected the United States real estate operations of Heron
International N.V. and its subsidiaries and affiliates (the "Heron Group").
During this period from 1986 to 1993, Mr. Kompaniez served as President and
Chief Executive Officer of Heron Financial Corporation ("HFC"), and as a
director or officer of certain other Heron Group entities. In 1993, HFC, its
parent Heron International, and certain other members of the Heron Group
voluntarily entered into restructuring agreements with separate groups of their
United States and international creditors. The restructuring agreement for the
United States members of the Heron Group generally provided for the joint
assumption of certain liabilities and the pledge of unencumbered assets in
support of such liabilities for the benefit of their United States creditors. As
a result of the restructuring, the operations and assets of the United States
members of the Heron Group were generally separated from those of Heron
International and its non-United States subsidiaries. At the conclusion of the
restructuring, Mr. Kompaniez commenced the operations of PDI Realty Enterprises,
Inc., a Delaware corporation ("PDI"), which was engaged to act as asset and
corporate manager of the continuing United States operations of HFC and the
other United States Heron Group members for the benefit of the United States
creditors. In connection with certain transactions effected at the time of the
initial public offering of The Company's Common Stock, Mr. Kompaniez was
appointed Vice Chairman of The Company and substantially all of the property
management assets of PDI were transferred or assigned to The Company.
JOEL F. BONDER. Mr. Bonder was appointed Executive Vice President and
General Counsel of the Company effective December 8, 1997. Prior to joining the
Company, Mr. Bonder served as Senior Vice President and General Counsel of NHP
Incorporated from April 1994 until December 1997. Mr. Bonder served as Vice
President and Deputy General Counsel of NHP Incorporated from June 1991 to March
1994 and as Associate General Counsel of NHP Incorporated from 1986 to 1991.
From 1983 to 1985, Mr. Bonder was with the Washington, D.C. law firm of Lane &
Edson, P.C. From 1979 to 1983, Mr. Bonder
10
<PAGE>
practiced with the Chicago law firm of Ross and Hardies. Mr. Bonder received an
A.B. from the University of Rochester and a J.D. from Washington University
School of Law.
ROBERT TY HOWARD. Mr. Howard was appointed Executive Vice
President--Ancillary Services in February 1998. Prior to joining the Company,
Mr. Howard served as an officer and/or director of four affiliated companies,
Hecco Ventures, Craig Corporation, Reading Company and Decurion Corporation. Mr.
Howard was responsible for financing, mergers and acquisitions activities,
investments in commercial real estate, both nationally and internationally,
cinema development and interest rate risk management. From 1983 to 1988, he was
employed by Spieker Properties. Mr. Howard received a B.A. from Amherst College,
a J.D. from Harvard Law School and an M.B.A. from Stanford University Graduate
School of Business.
STEVEN D. IRA. Mr. Ira is a Co-Founder of the Company and has served as
Executive Vice President of the Company since July 1994. From 1987 until July
1994, he served as President of PAM. Prior to merging his firm with PAM in 1987,
Mr. Ira acquired extensive experience in property management. Between 1977 and
1981 he supervised the property management of over 3,000 apartment and mobile
home units in Colorado, Michigan, Pennsylvania and Florida, and in 1981 he
joined with others to form the property management firm of McDermott, Stein and
Ira. Mr. Ira served for several years on the National Apartment Manager
Accreditation Board and is a former president of both the National Apartment
Association and the Colorado Apartment Association. Mr. Ira is the sixth
individual elected to the Hall of Fame of the National Apartment Association in
its 54-year history. He holds a Certified Apartment Property Supervisor (CAPS)
and a Certified Apartment Manager designation from the National Apartment
Association, a Certified Property Manager (CPM) designation from the National
Institute of Real Estate Management (IREM) and he is a member of the Boards of
Directors of the National Multi-Housing Council, the National Apartment
Association and the Apartment Association of Metro Denver. Mr. Ira received a
B.S. from Metropolitan State College in 1975.
THOMAS W. TOOMEY. Mr. Toomey has served as Senior Vice President--Finance
and Administration of the Company since January 1996 and was promoted to
Executive Vice President--Finance and Administration in March 1997. From 1990
until 1995, Mr. Toomey served in a similar capacity with Lincoln Property
Company ("LPC") as Vice President/Senior Controller and Director of
Administrative Services of Lincoln Property Services where he was responsible
for LPC's computer systems, accounting, tax, treasury services and benefits
administration. From 1984 to 1990, he was an audit manager with Arthur Andersen
& Co. where he served real estate and banking clients. From 1981 to 1983, Mr.
Toomey was on the audit staff of Kenneth Leventhal & Company. Mr. Toomey
received a B.S. in Business Administration/ Finance from Oregon State University
and is a Certified Public Accountant.
DAVID L. WILLIAMS. Mr. Williams has been Executive Vice
President--Operations of the Company since January 1997. Prior to joining the
Company, Mr. Williams was Senior Vice President of Operations at Evans
Withycombe Residential, Inc. from January 1996 to January 1997. Previously, he
was Executive Vice President at Equity Residential Properties Trust from October
1989 to December 1995. He has served on National Multi-Housing Council Boards
and NAREIT committees. M. Williams also served as Senior Vice President of
Operations and Acquisitions of US Shelter Corporation from 1983 to 1989. Mr.
Williams has been involved in the property management, development and
acquisition of real estate properties since 1973. Mr. Williams received his B.A.
in education and administration from the University of Washington in 1967.
HARRY G. ALCOCK. Mr. Alcock has served as a Vice President since July 1996,
and was promoted to Senior Vice President--Acquisitions in October 1997, with
responsibility for acquisition and financial activities since July 1994. From
June 1992 until July 1994, Mr. Alcock served as Senior Financial Analyst for PDI
and HFC. From 1988 to 1992, Mr. Alcock worked for Larwin Development Corp., a
Los Angeles based real estate developer, with responsibility for raising debt
and joint venture equity to fund land
11
<PAGE>
acquisitions and development. From 1987 to 1988, Mr. Alcock worked for Ford
Aerospace Corp. He received his B.S. from San Jose State University.
TROY D. BUTTS. Mr. Butts has served as Senior Vice President and Chief
Financial Officer of the Company since November 1997. Prior to joining the
Company, Mr. Butts served as a Senior Manager in the audit practice of the Real
Estate Services Group for Arthur Anderson LLP in Dallas, Texas. Mr. Butts was
employed by Arthur Andersen, LLP for ten years and his clients were primarily
publicly-held real estate companies, including office and multi-family real
estate investment trust. Mr. Butts holds a Bachelor of Business Administration
degree in Accounting from Angelo State University and is a Certified Public
Accountant.
RICHARD S. ELLWOOD. Mr. Ellwood was appointed a director of the Company in
July 1994 and is currently Chairman of the Audit Committee. Mr. Ellwood is the
founder and President of R.S. Ellwood & Co., Incorporated, a real estate
investment banking firm. Prior to forming R.S. Ellwood & Co., Incorporated in
1987, Mr. Ellwood had 31 years experience on Wall Street as an investment
banker, serving as: Managing Director and senior banker at Merrill Lynch Capital
Markets from 1984 to 1987; Managing Director at Warburg Paribas Becker from 1978
to 1984; general partner and then Senior Vice President and a director at White,
Weld & Co. from 1968 to 1978; and in various capacities at J.P. Morgan & Co.
from 1955 to 1968. Mr. Ellwood currently serves as a director of FelCor Suite
Hotels, Inc.
J. LANDIS MARTIN. Mr. Martin was appointed a director of the Company in
July 1994 and became Chairman of the Compensation Committee on March , 1998.
Mr. Martin has served as President and Chief Executive Officer and a Director of
NL Industries, Inc., a manufacturer of titanium dioxide since 1987. Mr. Martin
has served as Chairman of Tremont Corporation, a holding company operating
through its affiliates Titanium Metals Corporation ("TIMET") and NL Industries,
Inc. since 1990 and as Chief Executive Officer and a director of Tremont since
1988. Mr. Martin has served as Chairman of TIMET, an integrated producer of
titanium since 1987 and Chief Executive Officer since January, 1995. From 1990
until its acquisition by Dresser Industries, Inc. ("Dresser") in 1994, Mr.
Martin served as Chairman of the Board and Chief Executive Officer of Baroid
Corporation, an oilfield services company. In addition to Tremont, NL and TIMET,
Mr. Martin is a director of Dresser, which is engaged in the petroleum services,
hydrocarbon and engineering industries.
THOMAS L. RHODES. Mr. Rhodes was appointed a Director of the Company in
July 1994. Mr. Rhodes has served as the President and a Director of NATIONAL
REVIEW magazine since November 30, 1992, where he has also served as a Director
since 1988. From 1976 to 1992, he held various positions at Goldman, Sachs & Co.
and was elected a General Partner in 1986 and served as a General Partner from
1987 until November 27, 1992. He is currently Co-Chairman of the Board, Co-Chief
Executive Officer and a Director of Commercial Assets Inc. [and Asset Investors
Corporation]. He also serves as a Director of Delphi Financial Group, Inc. and
its subsidiaries, Delphi International Ltd., Oracle Reinsurance Company, and The
Lynde and Harry Bradley Foundation. Mr. Rhodes is Chairman of the Impire
Foundation for Policy Research, a Founder and Trustee of Change NY, a Trustee of
The Heritage Foundation, and a Trustee of The Manhattan Institute.
JOHN D. SMITH. Mr. Smith was appointed a director of the Company in
November, 1994. Mr. Smith is Principal and President of John D. Smith
Developments. Mr. Smith has been a shopping center developer, owner and
consultant for over 8.6 million square feet of shopping center projects
including Lenox Square in Atlanta, Georgia. Mr. Smith is a Trustee and former
President of the International Council of Shopping Centers and was selected to
be a member of the American Society of Real Estate Counselors. Mr. Smith served
as a director for Pan-American Properties, Inc. (National Coal Board of Great
Britain) formerly known as Continental Illinois Properties. He also serves as a
director of American Fidelity Assurance Companies and is retained as an advisor
by Shop System Study Society, Tokyo, Japan.
12
<PAGE>
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors held seven meetings during the year ended December
31, 1997. During 1997, no director attended fewer than 75% of the total number
of meetings of the Board of Directors and any committees of the Board of
Directors upon which he served. The Board of Directors has established standing
audit and compensation committees. There is no standing nominating committee.
AUDIT COMMITTEE. The Audit Committee currently consists of the four
Independent Directors: Messrs. Ellwood (Chairman), Martin, Rhodes and Smith. The
Audit Committee makes recommendations to the Board of Directors concerning the
engagement of independent auditors, reviews with the independent auditors the
plans and results of the audit engagement, approves professional services
provided by the independent auditors, 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 once in 1997.
COMPENSATION COMMITTEE. The Compensation Committee currently consists of
the four Independent Directors: Messrs. Martin (Chairman), Ellwood, Rhodes and
Smith. The Compensation Committee determines and reports to the Board of
Directors regarding compensation for the Company's executive officers and
administers the Company's stock option plans. The Compensation Committee met 2
times in 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Rhodes, a member of the Compensation Committee, is a director,
co-chairman of the board and co-chief executive officer of Commercial Assets
Inc. ("Commercial Assets") and Asset Investors Corporation ("Asset Investors").
Mr. Considine, the Chairman of the Board and Chief Executive Officer of the
Company, is also a Director, Co-Chairman of the Board and Co-Chief Executive
Officer of Commercial Assets and Asset Investors.
COMPENSATION OF DIRECTORS
In 1997, the Company paid the Independent Directors an annual fee of 600
shares of the Company's Common Stock, a fee of $1,000 for attendance at each
in-person meeting of the Board of Directors, $500 for each in-person meeting of
any committee thereof, and $750 for each telephonic meeting of the Board of
Directors or any committee thereof. For 1998, Independent Directors will be paid
an annual fee of 1,000 shares of Common Stock, a fee of $1,000 for attendance at
each in-person meeting of the Board of Directors, $750 for each in-person
meeting of any committee thereof, and $750 for each telephonic meeting of the
Board of Directors or any committee thereof. Directors who are not Independent
Directors do not receive directors' fees.
Pursuant to The 1994 Stock Option Plan of Apartment Investment and
Management Company and Affiliates, each Independent Director, upon joining the
Board of Directors, received an initial grant of an option to purchase up to
3,000 shares of Common Stock at the market price of the shares on the date of
grant. Following each annual meeting of stockholders, each Independent Director
receives an additional option to purchase up to 3,000 shares of Common Stock at
the market price of the shares on the date of grant. Such options vest one year
after the date of grant.
13
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information available to the Company,
as of February 18, 1998, with respect to shares of the Company's Common Stock
and OP Units held by (i) each director and the five most highly compensated
executive officers who were serving as of December 31, 1997, (ii) all directors
and executive officers of the Company as a group and (iii) those persons known
to the Company to be the beneficial owners (as determined under the rules of the
Commission) of more than 5% of such shares. This table does not reflect options
that are not exercisable within 60 days, or the beneficial ownership of High
Performance Units by executive officers and directors of the Company. See
"PROPOSAL 3: APPROVAL OF THE SALE OF HIGH PERFORMANCE UNITS." The business
address of each of the following persons is 1873 South Bellaire Street, Suite
1700, Denver, Colorado 80222-4348, unless otherwise specified.
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
NAME AND ADDRESS OF NUMBER OF SHARES COMMON STOCK NUMBER OF OP OWNERSHIP OF THE
BENEFICIAL OWNER OF COMMON STOCK OUTSTANDING UNITS(1) COMPANY(2)
- ----------------------------------------------- ----------------- ----------------- ------------ -------------------
<S> <C> <C> <C> <C>
DIRECTORS & EXECUTIVE OFFICERS:
Terry Considine.............................. 1,777,445(3)(4) 4.3% 783,803(5) 5.5%
Peter K. Kompaniez........................... 598,430(3) 1.4% 23,625 1.3%
Steven D. Ira................................ 240,897(3)(6) * 96,373 *
Thomas W. Toomey............................. 239,632 * *
Harry G. Alcock.............................. 19,842(7) * *
Richard S. Ellwood........................... 13,200(8) * *
J. Landis Martin............................. 21,700 * *
Thomas L. Rhodes............................. 39,600(9) * *
John D. Smith................................ 13,700(10) * *
All directors and executive officers as a
group (13 persons)......................... 3,161,425(11) 7.6% 903,801 8.7%
5% OR GREATER HOLDERS
Cohen & Steers Realty Shares, Inc.
757 Third Avenue
New York, New York 10017 3,575,300 8.6% 7.7%
ABKB/LaSalle Securities Limited
Partnership
100 East Pratt Street
Baltimore, Maryland 21202 2,817,018(12) 6.8% 6.0%
</TABLE>
- ------------------------
* Less than 1.0%
(1) Through wholly owned subsidiaries, the Company acts as general partner of,
and, as of February 18, 1998, holds 89% of the interests in, the Operating
Partnership. After a one-year holding period, OP Units may be tendered for
redemption and, upon tender, may be acquired by the Company for shares of
the Company's Common Stock at an exchange ratio of one share of the
Company's Common Stock for each OP Unit (subject to adjustment). If all OP
Units were acquired by the Company for the Company's Common Stock (without
regard to the Ownership Limit) these shares of the Company's Common Stock
would constitute approximately 11% of the then outstanding shares of the
Company's Common Stock. OP Units are subject to certain restrictions on
transfer.
(2) On a fully diluted basis, assuming all 5,235,337 OP Units outstanding as of
February 18, 1998 are acquired by the Company for shares of the Company's
Common Stock without regard to the Ownership Limit.
14
<PAGE>
(3) Excludes 93,428, 41,438 and 13,821 shares of the Company's Class B Common
Stock held by Messrs. Considine, Kompaniez and Ira, respectively,
representing 57.5%, 25.5% and 8.5%, respectively of the total number of
shares of the Company's Class B Common Stock outstanding. The Company's
Class B Common Stock is convertible into an equal number of shares of the
Company's Common Stock over a period ending December 31, 1998 if certain
performance standards are achieved.
(4) Includes 1,494,759 shares held by entities in which Mr. Considine holds
sole voting and investment power. Mr. Considine holds a 10% and 1% general
partnership interest, respectively, in these entities, with the remaining
90% and 99%, respectively, held by trusts for members of Mr. Considine's
family, and, accordingly, Mr. Considine disclaims beneficial ownership of
1,380,078 of these shares. This number also includes 74,743 shares held by
Mr. Considine's spouse, Elizabeth Considine, for which Mr. Considine
disclaims beneficial ownership, and 36,778 shares held by a non-profit
corporation in which Mr. Considine has shared voting and investment power
with his spouse.
(5) Includes 161,816 OP Units held by entities in which Mr. Considine has sole
voting and investment power, 2,300 OP Units held by the Considine
Partnership for 90% of which Mr. Considine disclaims beneficial ownership,
and 157,698 OP Units held by Mr. Considine's spouse, for which Mr.
Considine disclaims beneficial ownership.
(6) Includes 48,800 shares subject to options that are exercisable within 60
days.
(7) Includes 5,241 shares subject to options that are exercisable within 60
days.
(8) Includes 1,500 shares subject to options that are exercisable within 60
days.
(9) Includes 8,900 shares of common stock held by the Rhodes Family Foundation.
(10) Includes 9,000 shares subject to options that are exercisable within 60
days.
(11) Includes 64,521 shares subject to options that are exercisable within 60
days.
(12) Includes 937,508 shares beneficially owned by LaSalle Advisors Capital
Management, Inc.
15
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid for each of the three
fiscal years ended December 31, 1997 to the Company's Chief Executive Officer
and each of the four other most highly compensated executive officers of the
Company (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION(1)
----------------
AWARDS
ANNUAL COMPENSATION ----------------
-------------------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS/ SARS(#) COMPENSATION($)
- --------------------------------- --------- --------- ----------- --------------------- ---------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Terry Considine ................. 1997 $ 275,000 $ 2,060,000 -- -- --
Chairman of the Board of 1996 267,500 20,000 -- 165,000 --
Directors and Chief Executive 1995 257,500 6,000 -- -- --
Officer
Peter K. Kompaniez .............. 1997 $ 235,000 $ 800,000 -- -- --
President and Vice Chairman 1996 227,500 20,000 -- 87,000 --
1995 227,500 6,000 -- -- --
Steven D. Ira ................... 1997 $ 200,000 $ 550,000 -- -- --
Executive Vice President and 1996 194,000 20,000 -- 77,000 --
Co-Founder 1995 158,500 6,000 -- -- --
Thomas W. Toomey ................ 1997 $ 180,000 $ 555,000 -- -- --
Executive Vice President-- 1996 130,000 50,000 -- 73,000 --
Finance and Administration 1995 (2) -- -- -- --
Harry L. Alcock ................. 1997 $ 120,200 $ 300,000 -- 4,000 --
Senior Vice President-- 1996 75,000 22,000 -- -- --
Acquisitions 1995 65,000 6,000 -- 650 --
</TABLE>
- --------------------------
(1) Excludes 1,227,078, 376,526, 125,632, 165,632 and 14,000 shares of Common
Stock underlying options granted to Messrs. Considine, Kompaniez, Ira,
Toomey and Alcock, respectively, from 1995 to 1997, which were immediately
exercised to purchase shares pursuant to the Company's leveraged stock
purchase program. See "Certain Relationships and Transactions--Stock
Purchase Loans."
(2) Mr. Toomey was not an employee of the Company prior to January 1996.
16
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Information on options granted in 1997 to the Named Executive Officers is
set forth in the following table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
-------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM(3)
OPTIONS/SARS EMPLOYEES IN BASE EXPIRATION ------------------------------
NAME GRANTED(#)(2) FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($)
- ------------------------ ------------- --------------- ----------- ----------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Terry Considine......... -- -- -- -- -- --
Peter K. Kompaniez...... -- -- -- -- -- --
Steven D. Ira........... -- -- -- -- -- --
Thomas W. Toomey........ -- -- -- -- -- --
Harry G. Alcock......... 4,000 2.8% 26.75 2/04/2007 $ 67,292 $ 170,530
</TABLE>
- ------------------------
(1) Unless otherwise specified, options vest over five years. Under the terms of
the 1997 Stock Plan, the plan administrator retains discretion, subject to
certain restrictions, to modify the terms of outstanding options. The
exercise price of incentive and non-qualified options granted under the 1997
Stock Plan will generally equal the fair market value of a share of Common
Stock on the date of grant.
(2) Excludes 691,578, 210,526, 52,632, 52,632 and 14,000 shares of Common Stock
underlying options granted to Messrs. Considine, Kompaniez, Ira, Toomey and
Alcock, respectively, which were immediately exercised to purchase shares
pursuant to the Company's leveraged stock purchase program. See "Certain
Relationships and Transactions--Stock Purchase Loans."
(3) Assumed annual rates of stock price appreciation are set forth for
illustrative purposes only. The amounts shown are for the assumed rates of
appreciation only, do not constitute projections of future stock price
performance, and may not be realized.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
Information on option exercises during 1997 by the Named Executive Officers,
and the value of unexercised options held by Named Executive Officers at
December 31, 1997 is set forth in the following table.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
SHARES OPTIONS/SARS AT FY-END(#) AT FY-END($)(3)
ACQUIRED ON VALUE ---------------------------- -------------------------
NAME EXERCISE(#)(1) REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ------------- ------------- ----------- --------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Terry Considine............ 153,000 2,333,250 0 9,600 0 154,800
Peter K. Kompaniez......... 83,800 1,110,450 0 3,200 0 51,600
Steven D. Ira.............. 0 0 73,800 3,200 1,180,900 51,600
Thomas W. Toomey........... 73,000 972,250 0 0 0 0
Harry G. Alcock............ 0 0 5,241 828 63,185 15,469
</TABLE>
- ------------------------
(1) Excludes 691,578, 210,526, 52,632, 52,632 and 14,000 shares of Common Stock
underlying options granted to Messrs. Considine, Kompaniez, Ira, Toomey and
Alcock, respectively, which were immediately exercised to purchase shares
pursuant to the Company's leveraged stock purchase program. See "Certain
Relationships and Transactions--Stock Purchase Loans."
(2) "Value Realized" includes amounts withheld for payment of Federal and state
taxes.
17
<PAGE>
(3) Market value of underlying securities at fiscal year-end, less the exercise
price. Market value is determined based on the closing price of the Common
Stock on the New York Stock Exchange on December 31, 1997 of $36.75 per
share.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The four directors who are not members of management (the "Independent
Directors") constitute the Compensation Committee. The Compensation Committee:
- determines the compensation of the Chief Executive Officer and the
President
- reviews and approves the compensation of other corporate officers holding
the title of Senior Vice President or above ("Other Senior Management"
and, together with the Chief Executive Officer and the President, "Senior
Management");
- reviews the general compensation and benefit practices of the Company; and
- administers the Company's compensation and stock option plans.
The Compensation Committee considers various factors, including:
- recruitment, motivation and retention of the Company's management team;
- alignment of management financial rewards with shareholder objectives for
Total Return (dividend income plus share price appreciation); and
- reasonability in consideration of all the facts, including Total Return,
the size and complexity of the Company and the practices of other real
estate investment trusts.
Compensation of Senior Management is comprised of Base Compensation,
Discretionary Compensation and Incentive Compensation. The policy of the
Compensation Committee is to set Base Compensation at or below the median paid
by comparable companies to executive officers with comparable responsibilities;
to utilize Discretionary Compensation, generally cash and not more than Base
Compensation, to reward specific achievements; and to make the chief financial
reward Incentive Compensation which is tied directly to the creation of
shareholder value.
BASE COMPENSATION. The Compensation Committee determined 1997 Base
Compensation for the Chief Executive Officer and for the President; reviewed and
approved 1997 Base Compensation for Other Senior Management based upon the
recommendation of the Chief Executive Offer and President; and considered such
1997 Base Compensation reasonable.
DISCRETIONARY COMPENSATION. For 1997, the Compensation Committee
considered, among other things:
- the achievement of the 1997 objective for per share Adjusted Funds from
Operations;
- the growth in the size and complexity of the Company during 1997; and
- the number and size of 1997 acquisitions and their financings.
The Compensation Committee considered 1997 to be a year of superior
performance by the Company. Recognizing Senior Management's contribution to this
performance, the Compensation Committee awarded Discretionary Compensation of
$275,000 to Mr. Considine and $235,000 to Mr. Kompaniez, and approved additional
Discretionary Compensation of $697,200 to Other Senior Management. Discretionary
Compensation is generally equal to 50% or 100% of Base Compensation.
INCENTIVE COMPENSATION. Beginning in 1997, the Compensation Committee
decided to base Incentive Compensation primarily by reference to "Excess Value
Added," calculated as the amount, if any, by which the Company's Total Return
exceeds Total Returns achieved by other real estate investment trusts (as
18
<PAGE>
measured by Morgan Stanley REIT Index) multiplied by the weighted average market
value of the Company's stock and OP Units outstanding during the measurement
period.
In 1997, the Company's Total Return was 38.2% which exceeded the 18.6% Total
Return of the Morgan Stanley REIT Index; the Company's weighted average equity
market value was $914 million; and Excess Value Added was $179.1 million.
The Compensation Committee awarded Senior Management $18,406,000 in 1997
Incentive Compensation: $3,255,000 in cash and approximately $15,151,000 in
options to acquire approximately 4,151,000 shares at $37.375 per share, the
closing price of the Company Common Stock on January 21, 1998, the date of the
award. The Compensation Committee valued the options at $3.65 per underlying
share, based on the advice of an independent financial adviser that considered
the exercise price, the terms of the options, the vesting provisions (40% after
two years and an additional 20% annually for years three to five), and the
likely dividend rate on the underlying stock.
CHIEF EXECUTIVE OFFICER AND PRESIDENT. In granting the options described
above, and in determining the compensation for the Chief Executive Officer and
the President, the Compensation Committee considered, among other things, the
Company's 1997 financial performance:
- 38.2% Total Return for 1997 and an average annual Total Return of 38.8%
for the past three years;
- Excess Value Added equal to $179.1 million, based on the Company's 1997
Total Return exceeding that of the Morgan Stanley REIT Index;
- Increase in the number of apartment units owned or operated from 42,809 to
192,910;
- Multiple equity offerings raising a total of $637.0 million; and
- Recruitment of a number of executive officers strengthening Senior
Management.
In consideration of this outstanding performance, Terry Considine, the
Company's Chief Executive Officer, and Peter Kompaniez, the Company's President,
received:
<TABLE>
<CAPTION>
CONSIDINE KOMPANIEZ
------------------ ----------------
<S> <C> <C>
Base Compensation.................. $ 275,000 $235,000
Discretionary Compensation......... $ 275,000 $235,000
Incentive Compensation(a)
Cash........................... $1,785,000 $565,000
Options to purchase............ 2,740,000 shares 815,000 shares
</TABLE>
- ------------------------
(a) The Incentive Compensation paid to Messrs. Considine and Kompaniez is
estimated to equal 6.6% and 2.0%, respectively, of 1997 Excess Value Added.
The options granted as Incentive Compensation are subject to approval of the
Stock Plan Amendment by stockholders at the Company's 1998 Annual Meeting. See
"PROPOSAL 2: APPROVAL OF AN AMENDMENT TO THE 1997 STOCK PLAN."
Section 162(m) of the Internal Revenue Code of 1986, as amended, places a
limit of $1,000,000 on the amount of compensation that may be deducted by the
Company in any year with respect to each of the Company's five most highly paid
executive officers. Certain performance based compensation that has been
approved by stockholders is not subject to the deduction limit. Certain payments
made to the Company's Chief Executive Officer and the Company's President for
1997 did not comply with Section 162(m) and may not be fully deductible by the
Company. To meet the stockholder requirements of Section 162(m), the Company's
Incentive Compensation Plan is being submitted for approval by the Company's
stockholders at the 1998 annual meeting. However, in order to maintain
flexibility in compensating executive officers in a manner designed to promote
varying corporate goals, the Compensation Committee has not adopted a policy
that all compensation must be deductible.
19
<PAGE>
EQUITY TRANSACTIONS IN SUPPORT OF COMPENSATION OBJECTIVES
The Compensation Committee has determined that the Company is well served by
the alignment of interest that occurs when the Senior Management has the same
financial interests as do other Shareholders. To promote this end, the
Compensation Committee and the Board of Directors have:
- structured Board annual compensation to be paid entirely in stock and
stock options, with meeting fees paid in cash;
- facilitated the purchase of stock at 100% of then current value by making
loans to Senior Management and others at interest rates equal to the
Company's borrowing cost and with 25% personal recourse; and
- granted to Senior Management and others options to acquire stock at 100%
of then current value which are fully vested only after three or five
years.
For 1998 through 2000, the Company has sold High Performance Units to a
joint venture formed by fourteen members of Senior Management and to all four
Independent Directors. The High Performance Units have the following features:
- They were issued for a cash cost of $2,070,000, payable entirely from
personal resources of the purchasers;
- They have nominal value unless the Company's Total Return (dividend income
plus share price appreciation) for the three year period from 1998 through
2000 exceeds the greater of 115% of the Total Return of the Morgan Stanley
REIT Index or 30%;
- Total Return in excess of these benchmarks is considered "Excess
Shareholder Return," and the High Performance Units receive distributions
and allocations of income and loss from the Operating Partnership based on
15% of the Excess Shareholder Return;
- The High Performance Units must be continued as a long term equity
investment in the Company and are only transferable to family members (or
a family-owned entity) or in the event of the holder's death or
disability.
The sale of the High Performance Units is subject to stockholder
ratification at the Company's 1998 Annual Meeting. The price was established by
the Board of Directors based on the advice of an independent financial adviser
that such price represented fair market value.
As a result of the issuance of the High Performance Units, it is anticipated
that substantially fewer stock options will be granted for performance in 1998
through 2000, than were granted for the Company's performance for 1997.
Date: March , 1998 J. LANDIS MARTIN (Chairman)
RICHARD S. ELLWOOD
THOMAS L. RHODES
JOHN D. SMITH
THE ABOVE REPORT WILL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY
FILING BY THE COMPANY UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY
INCORPORATES THE SAME BY REFERENCE.
20
<PAGE>
EMPLOYMENT ARRANGEMENTS
Each of Messrs. Considine, Kompaniez and Ira receive annual cash
compensation pursuant to employment contracts with the Company. The initial
two-year term of each of these contracts expired in July 1996 but the contracts
are automatically renewed for successive one-year terms unless the officer is
terminated by the Company. The base salary payable under the employment
contracts is subject to annual review and adjustment by the Compensation
Committee. The base annual salaries of Messrs. Considine, Kompaniez and Ira are
$275,000, $235,000 and $200,000, respectively, for 1997 and 1998. Each of
Messrs. Considine, Kompaniez and Ira are also eligible for a bonus set by the
Compensation Committee. See "Compensation Committee Report to Stockholders."
The employment contracts provide that upon a change in control of the
Company or a termination of employment under certain circumstances, the employee
will be entitled to a payment equal to three times the average annual salary for
the previous three years. The contracts provide that during the term of the
contract and for one year thereafter, except with respect to certain existing
investments held by the employee (which the employees have committed to
liquidate in an orderly manner), in no event will the employees engage in the
acquisition, development, operation or management of other multifamily rental
apartment properties outside of the Company. In addition, the contracts provide
that the employees will not engage in any active or passive investment in
property relating to multifamily rental apartment properties, with the exception
of the ownership of up to 1% of the securities of any publicly-traded company
involved in those activities.
21
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph compares cumulative total returns for the Company's
Common Stock ("AIMCO"), the Standard & Poor's 500 Total Return Index (the "S&P
500"), the SNL Equity REIT Index, and the SNL Residential REIT Index from July
29, 1994 (the date on which the initial public offering of the Company's Common
Stock was consummated) to December 31, 1997. The SNL Equity REIT Index and the
SNL Residential REIT Index were prepared by SNL Securities, an independent
research and publishing firm specializing in the collection and dissemination of
data on the banking, thrift and financial services industries. The indices are
weighted for all companies that fit the definitional criteria of the particular
index and are calculated to exclude companies as they are acquired and add them
to the index calculation as they become publicly traded companies. All companies
of the definitional criteria in existence at the point in time presented are
included in the index calculations. The graph assumes the investment of $100 in
the Company's Common Stock and in each index on July 29, 1994, and that all
dividends paid have been reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
<S> <C> <C> <C> <C>
Stock Price Performance
AIMCO S&P 500 SNL Equity REIT Index SNL Residential REIT Index
7/29/94 $ 100.00 $ 100.00 $ 100.00 $ 100.00
12/31/94 $ 94.78 $ 102.85 $ 98.29 $ 99.73
12/31/95 $ 116.08 $ 141.49 $ 113.11 $ 113.22
12/31/96 $ 183.47 $ 173.84 $ 153.77 $ 148.20
3/31/97 $ 192.43 $ 178.50 $ 154.63 $ 150.66
6/30/97 $ 189.77 $ 209.87 $ 162.27 $ 158.62
9/30/97 $ 246.12 $ 225.37 $ 181.98 $ 172.38
12/31/97 $ 253.55 $ 231.86 $ 185.13 $ 171.95
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDING
--------------------------------------------------------------------------------------
7/29/94 12/31/94 12/31/95 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AIMCO........................... $ 100.00 $ 94.78 $ 116.08 $ 183.47 $ 192.43 $ 189.77 $ 246.12 $ 253.55
S&P 500......................... $ 100.00 $ 102.85 $ 141.49 $ 173.84 $ 178.50 $ 209.87 $ 225.37 $ 231.86
SNL Equity REIT Index........... $ 100.00 $ 98.29 $ 113.11 $ 153.77 $ 154.63 $ 162.27 $ 181.98 $ 185.13
SNL Residential REIT Index...... $ 100.00 $ 99.73 $ 113.22 $ 148.20 $ 150.66 $ 158.62 $ 172.38 $ 171.95
</TABLE>
THE STOCK PRICE PERFORMANCE GRAPH WILL NOT BE DEEMED TO BE INCORPORATED BY
REFERENCE INTO ANY FILING BY THE COMPANY UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT THE COMPANY
SPECIFICALLY INCORPORATES THE SAME BY REFERENCE.
22
<PAGE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
FORMATION OF PREFERRED STOCK SUBSIDIARIES
In order to satisfy certain requirements of the Internal Revenue Code with
respect to the Company's continued qualification as a real estate investment
trust, from time to time the Company has formed corporations (the "Preferred
Stock Subsidiaries") in which the Company holds non-voting preferred stock
representing a 95% economic interest in such corporations. The remaining 5%
economic interest, which represents 100% of the voting interest, is owned by
certain of the Company's executive officers, including Messrs. Considine,
Kompaniez and Ira. Although transactions between the Company and the Preferred
Stock Subsidiaries are not made on an arms-length basis, the Company believes
that such transactions are at fair market value.
Messrs. Considine, Kompaniez and Ira, collectively, own 5% of the
outstanding stock of Property Asset Management Services, Inc. ("PAMS Inc."), a
Preferred Stock Subsidiary formed in 1996. During 1997, in connection with the
acquisition of NHP Incorporated ("NHP") and certain related assets (the "NHP
Acquisition"), the following Preferred Stock Subsidiaries were formed: AIMCO/NHP
Holdings, Inc. ("ANHI"), NHP Management Company ("NHP Management"), AIMCO/NHP
Properties, Inc. ("ANPI") and NHP A&R Services, Inc. ("NHPAR"). Mr. Considine
acquired 4% of the outstanding stock of each of ANHI, NHP Management, ANPI and
NHPAR for $2,526,315, $[2,219,776], $[17,458] and $1,052,631, respectively, with
a total of $[5,816,180] financed with loans from the Company or the Preferred
Stock Subsidiaries. Mr. Kompaniez aqcuired 1% of the outstanding stock of each
of ANHI, NHP Management, ANPI and NHPAR for $631,578, $554,944, $[4,365] and
$263,158, respectively, with a total of $[1,454,044] financed with loans from
the Company or the Preferred Stock Subsidiaries. For the year ended December 31,
1997, Messrs. Considine, Kompaniez and Ira have received dividends of
approximately $1,703,500, $420,700 and $19,550, respectively, on their shares of
common stock of the Preferred Stock Subsidiaries, and the Company has received
dividends of $40,731,250 on its shares of preferred stock of the Preferred Stock
Subsidiaries. Substantially all of the amounts paid as dividends to Messrs.
Considine, Kompaniez and Ira were used to pay interest and/or principal due
under promissory notes to the Company and the Preferred Stock Subsidiaries.
TRANSACTIONS WITH THE PREFERRED STOCK SUBSIDIARIES
On April 16, 1997, the Company entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement"), with Demeter Holdings Corporation ("Demeter"), and
Capricorn Investors, L.P. ("Capricorn"), which provided for the Company to
acquire an aggregate of 6,930,122 shares of common stock (the "NHP Common
Stock"), of NHP. Pursuant to the Stock Purchase Agreement, on May 5, 1997, the
Company acquired 2,866,073 shares of NHP Common Stock from Demeter, Capricorn
and affiliates of Capricorn, in exchange for 2,142,857 shares of Common Stock,
and contributed these shares to ANHI in exchange for the Company's non-voting
preferred stock interest in ANHI. In August and September 1997, the Company
purchased an aggregate of 5,717,000 shares of NHP Common Stock from ANHI for $20
per share, the price determined pursuant to the Stock Purchase Agreement.
On August 15, 1997, the Operating Partnership contributed stock of a captive
insurance subsidiary to PAMS Inc. Messrs. Considine, Kompaniez and Ira made
additional capital contributions (in the form of promissory notes) to PAMS Inc.
of $133,389, $26,678 and $25,196, respectively ($185,263 in the aggregate), to
maintain their aggregate 5% interest in PAMS Inc. (3.6%, 0.72% and 0.68%,
respectively).
On July 10, 1997, the Operating Partnership entered into a limited
partnership (the "Unconsolidated Partnership") with an affiliate of Messrs.
Considine and Kompaniez, in which such affiliate acquired a 1% general
partnership interest in exchange for promissory notes with an aggregate
principal amount of $ . The Operating Partnership contributed partnership
interests in certain limited partnerships formerly owned by NHP, with an
aggregate, estimated value of $ for its 99% limited partnership interest in
the Unconsolidated Partnership.
23
<PAGE>
During 1997, in order to preserve the Company's REIT status, the Company
transferred the following assets to Preferred Stock Subsidiaries in exchange for
non-voting preferred stock: (i) partnership interests with an estimated value of
approximately $419,333 million to ANPI: (ii) partnership interests with an
estimated value of approximately $5,919 to ANHI: (iii) partnership interests, a
$50 million promissory note and certain management agreements with an aggregate
estimated value of approximately $53.7 million to NHP Management; and (iv) stock
of certain corporations with an estimated value of $25 million to NHPAR.
STOCK PURCHASE LOANS
During 1997, the Company issued [1,462,735] shares of Common Stock to
certain executive officers (or entities controlled by them) at prices equal to
the closing price of the Common Stock on the New York Stock Exchange on each
date of issuance. In payment for such shares, the executive officers executed
notes payable to the Company bearing interest at 7.25% per annum, payable
quarterly, and due in 2007. These stock purchase notes are secured by the shares
purchased and are recourse as to 25% of the principal owed.
The following table sets forth the amounts owed under such stock purchase
notes:
<TABLE>
<CAPTION>
AMOUNTS
HIGHEST AMOUNT REPAID REPAID DURING
AMOUNT OWED 12/31/97 SINCE 1998 (AS OF 2/18/98
NAME DURING 1997 BALANCE INCEPTION 2/18/98) BALANCE
- ------------------------------------ ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Terry Considine..................... $ 23,795,317 $ 22,020,964 $ 13,815,026 $ 5,500,000 $ 16,561,456
Peter K. Kompaniez.................. 7,510,749 4,124,478 7,806,918 100,000 4,024,478
Steven D. Ira....................... 3,068,884 3,052,093 41,617 12,350 3,033,524
Thomas W. Toomey.................... 3,212,525 1,363,946 4,403,724 69,500 1,294,446
Harry G. Alcock..................... 406,050 404,289 2,711 60,000 345,142
David L. Williams................... 1,578,960 1,568,309 10,651 0 1,568,309
</TABLE>
MANAGEMENT OF CERTAIN PROPERTIES
Mr. Considine has retained the Company to manage two properties owned by his
affiliates. These contracts are on similar terms as contracts with other
property owners and are terminable upon 30 days notice. During 1997, an
aggregate of $111,900 in management fees was paid to the Company for management
of these properties.
SALE OF HIGH PERFORMANCE UNITS
On January 21, 1998, the Operating Partnership sold an aggregate of 15,000
High Performance Units to SMP and to Messrs. Rhodes, Ellwood, Martin and Smith
for an aggregate purchase price of $2,070,000, of which $1,980,300 was paid by
SMP and an aggregate of $89,700 was paid by the four non-employee directors. The
purchase price of the High Performance Units was determined by the Board of
Directors, based upon the advice of an independent valuation expert that this
purchase price represented the fair market value of the High Performance Units.
See "PROPOSAL 4: APPROVAL OF THE SALE OF HIGH PERFORMANCE UNITS."
OTHER MATTERS
SECTION 16(A) COMPLIANCE. Section 16(a) of the Exchange Act requires the
Company's executive officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports (Forms 3, 4 and 5) of stock ownership and changes in ownership with the
Securities and Exchange Commission and the New York Stock Exchange. Officers,
directors and beneficial
24
<PAGE>
owners of more than ten percent of the Company's stock are required by
Securities and Exchange Commission regulation to furnish the Company with copies
of all such forms that they file.
Based solely on the Company's review of the copies of Forms 3, 4 and 5 and
the amendments thereto received by it for the year ended December 31, 1997, or
written representations from certain reporting persons that no Forms 5 were
required to be filed by those persons, the Company believes that during the
period ended December 31, 1997, all filing requirements were complied with by
its executive officers, directors and beneficial owners of more than ten percent
of the Company's stock, with the exception of the following: Messrs. Considine,
Kompaniez and Ira each filed a Form 5 on February , 1998, disclosing Common
Stock acquired upon conversion of their Class B Common Stock. Messrs. Bonder and
DeTuno were each late in filing their Form 3.
STOCKHOLDERS' PROPOSALS. Proposals of stockholders intended to be presented
at the Company's Annual Meeting of Stockholders to be held in 1999 must be
received by the Company, marked to the attention of the Secretary, no later than
[December 24], 1998. Proposals must comply with the requirements as to form and
substance established by the Securities and Exchange Commission for proposals in
order to be included in the proxy statement.
OTHER BUSINESS. The Company knows of no other business that will come
before the Meeting for action. As to any other business that comes before the
Meeting, the persons designated as proxies will have discretionary authority to
act in their best judgment.
THE BOARD OF DIRECTORS
March , 1998
Denver, Colorado
25
<PAGE>
ANNEX A
Amendment No. 1 to the
Apartment Investment and Management Company
1997 Stock Award and Incentive Plan
THIS AMENDMENT NO. 1 TO THE APARTMENT INVESTMENT AND MANAGEMENT COMPANY 1997
STOCK AWARD AND INCENTIVE PLAN (the "Amendment"), is adopted as of January 21,
1998, for the benefit of the eligible employees and directors of Apartment
Investment and Management Company, a Maryland corporation (the "Company"), AIMCO
Properties, L.P., a Delaware limited partnership, and Property Asset Management
Services, L.P., a Delaware limited partnership. Capitalized terms used herein,
but not otherwise defined, shall have the meanings ascribed to them in the
Apartment Investment and Management Company 1997 Stock Award and Incentive Plan
(the "Plan").
1. NUMBER AND SOURCE OF SHARES. Section 3.1 of the Plan is hereby amended
and restated in its entirety to read as follows:
"3.1 NUMBER AND SOURCE OF SHARES. The total number of shares of Stock
reserved and available for issuance under the Plan shall be 20,000,000.
To the extent that (a) a Stock Option expires or is otherwise terminated
without being exercised, or (b) any shares of Stock subject to any
Restricted Stock, Deferred Stock or Performance Share award granted
hereunder are forfeited, such shares shall again be available for
issuance in connection with future awards under the Plan. Such shares may
consist, in whole or in part, of treasury shares, authorized and unissued
shares or shares of Stock reacquired by the Company."
2. APPROVAL OF AMENDMENT BY STOCKHOLDERS. This Amendment shall take effect
upon its adoption by the Board, but this Amendment (and any grants or awards
made in reliance on this Amendment prior to shareholder approval of this
Amendment) shall be subject to ratification by the holders of a majority of the
issued and outstanding shares of voting securities of the Company, voting at a
duly convened shareholders' meeting of the Company, which ratification must
occur within twelve (12) months of the date that this Amendment is adopted by
the Board. In the event that the shareholders of the Company do not ratify this
Amendment at a meeting of the shareholders at which such issue is considered and
voted upon, then this Amendment and all Stock Options, Restricted Stock,
Deferred Stock and Performance Share awards made in reliance hereon shall
immediately terminate and be of no force or effect.
3. ACKNOWLEDGMENT. Other than as modified pursuant to this Amendment, all
of the provisions of the Plan shall continue in full force and effect.
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ANNEX B
APARTMENT INVESTMENT MANAGEMENT COMPANY
1998 INCENTIVE COMPENSATION PLAN
1. PURPOSE; AWARDS; CONSTRUCTION.
The purpose of the Apartment Investment Management Company 1998 Incentive
Compensation Plan as amended from time to time, (the "Plan") is to afford an
incentive to selected executive officers (each, a "participant") of Apartment
Investment and Management Company a Maryland corporation (together with the
successors, the "Company") or any Subsidiary or Affiliate, to further the
Company's success by reinforcing the identity of their interests with those of
the Company's stockholders. Pursuant to Section 5 of the Plan, Participants may
be awarded incentive compensation based on the achievement of specified
financial goals. The Plan is designed to comply with the requirements for
"performance-based compensation" under Section 162(m) of the Internal Revenue
Code of 1986, as amended from time to time and shall be interpreted in a manner
consistent with the requirements thereof.
2. ADMINISTRATION.
The Plan shall be administered by the Board of Directors of the Company or a
committee thereof established to administer the Plan (the "Administrator"). The
Administrator shall have the authority in its discretion, subject to and not
inconsistent with the express provisions of the Plan, to administer the Plan and
to exercise all the power and authority either specifically granted to it under
the Plan or necessary or advisable in the administration of the Plan, including,
without limitation, the authority to determine the terms, conditions,
restrictions and performance criteria relating to any award; to determine
whether, to what extent, and under what circumstances an award may be settled,
cancelled, forfeited, exchanged, or surrendered; to make adjustments in the
terms and conditions of, and the criteria and performance objectives included in
awards in recognition of unusual or non-recurring events affecting the Company
or any Subsidiary or Affiliate or the financial statements of the Company or any
Subsidiary or Affiliate, or in response to changes in applicable laws,
regulations, or accounting principles; to designate Affiliates; to construe and
interpret the Plan and any award; to prescribe, amend and rescind rules and
regulations relating to the Plan; and to make all other determinations deemed
necessary or advisable for the administration of the Plan.
The Administrator may appoint a chairperson and a secretary and may make
such rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings. All determinations of the
Administrator shall be made by a majority of its members either present in
person or participating by conference telephone at a meeting or by written
consent. The Administrator may delegate to one or more of its members or to one
or more agents such administrative duties as it may deem advisable, and the
Administrator or any person to whom it has delegated duties as aforesaid may
employ one or more persons to render advice with respect to any responsibility
the Administrator or such person may have under the Plan. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all persons, including the Company, and any Participant (or any
person claiming any rights under the Plan from or through any Participant).
No member of the Administrator shall be liable for any action taken or
determination made in good faith with respect to the Plan or any award made
hereunder.
3. ELIGIBILITY.
Subject to the conditions set forth below, awards may be made to selected
executive officers of the Company, in the discretion of the Administrator. In
determining the persons to whom awards shall be made (including the number of
shares to be covered by such award), the Administrator shall take into
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account such factors as the Administrator shall deem relevant in connection with
accomplishing the purposes of the Plan.
4. SPECIFIC TERMS OF AWARDS.
At the end of each fiscal year, the Administrator will determine the amount
of Excess Shareholder Value (as defined below), for the year, if any. The
Administrator may award to executive officers of the Company, in the aggregate,
up to fifteen percent (15%) of the Excess Shareholder Value as incentive
compensation. The incentive compensation may be paid in cash, securities of the
Company or any combination thereof, as determined by the Administrator.
"Excess Shareholder Value" means, for any year, the amount, if any, by which
the Total Return (as defined below) of the Company's Common Stock over that year
exceeds the Total Return of stocks in the Morgan Stanley REIT Index or another
index, as determined by the Administrator (the "Peer Group Index"), over the
same period (up to a maximum of 15% of the Total Return of the Peer Group
Index), multiplied by the weighted average market value of the Company's
outstanding equity capitalization (Common Stock and Partnership Units of AIMCO
Properties, L.P.) during the year.
"Total Return" means, for any security and for any period, the cumulative
total return for such security over such period, as measured by (i) the sum of
(a) the cumulative amount of dividends paid in respect of such security for such
period (assuming that all cash dividends are reinvested in such security as of
the payment date for such dividend based on the security price on the dividend
payment date), and (b) an amount equal to (x) the security price at the end of
such period, minus (y) the security price at the beginning of such period,
divided by (ii) the security price at the beginning of the measurement period;
PROVIDED, HOWEVER, that if the foregoing calculation results in a negative
number, the "Total Return" shall be equal to zero.
5. GENERAL PROVISIONS.
(a) APPROVAL OF STOCKHOLDERS. The Plan shall take effect upon its
adoption by the Board. The Plan shall be presented to the stockholders
for their approval, however, the Plan shall be effective and all awards
made hereunder shall be valid regardless of the outcome of the
stockholder vote.
(b) NO RIGHT TO CONTINUED EMPLOYMENT, ETC. Nothing in the Plan or
in any award made pursuant thereto shall confer upon any Participant the
right to continue in the employ of the Company, or to be entitled to any
remuneration or benefits not set forth in the Plan or to interfere with
or limit in any way the right of the Company or any such Subsidiary or
Affiliate to terminate such Participant's employment.
(c) TAXES. The Company is authorized to withhold from any award
made or any payment relating to an award under the Plan, including from a
distribution of Stock, or any other payment to a Participant, amounts of
withholding and other taxes due in connection with any transaction
involving an award, and to take such other action as the Administrator
may deem advisable to enable the Company and Participants to satisfy
obligations for the payment of withholding taxes and other tax
obligations relating to any award. This authority shall include authority
to withhold or receive Stock or other property and to make cash payments
in respect thereof in satisfaction of a Participant's tax obligations.
(d) AMENDMENT AND TERMINATION OF THE PLAN. The Board of Directors
of the Company may at any time and from time-to-time alter, amend,
suspend, or terminate the Plan in whole or in part.
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<PAGE>
(e) NO RIGHTS TO AWARDS; NO STOCKHOLDER RIGHTS. No Participant
shall have any right to any award under the Plan, and there is no
obligation for uniformity of treatment of Participants. Except as
provided specifically herein, a Participant or a transferee of an award
shall have no rights as a stockholder with respect to any shares of Stock
issued in connection with an award until the date of the issuance of a
stock certificate to him for such shares.
(f) UNFUNDED STATUS OF AWARDS. The Plan is intended to constitute
an "unfunded" plan for incentive and deferred compensation. With respect
to any payments not yet made to a Participant pursuant to an award,
nothing contained in the Plan or any award shall give any such
Participant any rights that are greater than those of a general creditor
of the Company.
(g) NO FRACTIONAL SHARES. No fractional shares of Stock shall be
issued or delivered in connection with the payment of any award made
pursuant to the Plan. The Committee shall determine whether cash or other
property shall be paid in lieu of such fractional shares or whether such
fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
(h) LISTING OR REGISTRATION OF STOCK. Each award is subject to the
requirement that, if at any time the Administrator determines, in its
absolute discretion, that the listing, registration or qualification of
Stock issuable in connection with the payment of an award under the Plan
is required by any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with an award
or the issuance of Stock, no such payment shall be made or Stock issued,
in whole or in part, unless listing, registration, qualification, consent
or approval has been effected or obtained free of any conditions not
acceptable to the Administrator.
(i) GOVERNING LAW. The Plan and all determinations made and actions
taken pursuant hereto shall be governed by the laws of the State of
Maryland without giving effect to the conflict of laws principles
thereof.
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<PAGE>
ANNEX C
PROPOSED AMENDMENT TO THE CHARTER OF THE COMPANY
ARTICLE IV, SECTION 1.1, PRIOR TO AMENDMENT:
1.1 CLASS AND NUMBER OF SHARES. The total number of shares of stock that
the Corporation from time to time shall have authority to issue is 160,750,000
shares of capital stock having a par value of $.01 per share, amounting to an
aggregate par value of $1,607,500, consisting of 150,000,000 shares initially
classified as Class A Common Stock having a par value of $.01 per share ("Class
A Common Stock"), 750,000 shares initially classified as Class B Common Stock
having a par value of $.01 per share (the "Class B Common Stock") (the Class A
Common Stock and Class B Common Stock being referred to collectively herein as
the "Common Stock") and 10,000,000 shares initially classified as Preferred
Stock having a par value of $.01 per share ("Preferred Stock").
Note: Since the last amendment of this Section of the Charter, (a) conversions
of the Class B Common Stock have reduced the authorized capital stock and
Class B Common Stock to 160,262,500 shares and 262,500 shares,
respectively, and (b) the Board of Directors of the Company has
reclassified 8,110,000 shares of the Preferred Stock into 750,000 shares
of Class B Cumulative Convertible Preferred Stock, 2,760,000 shares of
Class C Cumulative Preferred Stock and 4,600,000 shares of Class D
Cumulative Preferred Stock.
ARTICLE IV, SECTION 1.1, AS AMENDED:
1.1 CLASS AND NUMBER OF SHARES. The total number of shares of stock that
the Corporation from time to time shall have authority to issue is 510,750,000
shares of capital stock having a par value of $.01 per share, amounting to an
aggregate par value of $5,107,500, consisting of 502,377,500 shares currently
classified as Class A Common Stock, par value of $.01 per share ("Class A Common
Stock"), 262,500 shares currently classified as Class B Common Stock, par value
$.01 per share (the "Class B Common Stock") (the Class A Common Stock and Class
B Common Stock being referred to collectively herein as the "Common Stock"),
750,000 shares currently classified as Class B Cumulative Convertible Preferred
Stock, par value $.01 per share (the "Class B Preferred Stock"), 2,760,000
shares currently classified as Class C Cumulative Preferred Stock, par value
$.01 per share (the "Class C Preferred Stock"), and 4,600,000 shares currently
classified as Class D Cumulative Preferred Stock, par value $.01 per share (the
"Class D Preferred Stock") (the Class B Preferred Stock, the Class C Preferred
Stock, the Class D Preferred Stock, and all other classes or series of preferred
stock hereafter classified being referred to collectively herein as the
"Preferred Stock").
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<PAGE>
ANNEX D
PROXY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSALS REFERRED
TO IN (1), (2), (3), (5) and (6)
The undersigned hereby appoints Terry Considine and Peter K. Kompaniez and
each of them the undersigned's true and lawful attorneys and proxies (with full
power of substitution in each) to vote all Common Stock of Apartment Investment
and Management Company (the "Company"), standing in the undersigned's name, at
the Annual Meeting of Stockholders of the Company to be held at 1873 South
Bellaire Street, Suite 1700, Denver, Colorado, on April 23, 1998 at 9:00 a.m.,
Denver time (including any adjournments or postponements thereof, the
"Stockholders' Meeting"), upon those matters as described in the Proxy Statement
for the meeting and such other matters as may properly come before such meeting.
A vote FOR the following proposals described in the Proxy Statement for the
Stockholders' Meeting is recommended:
1. To elect all nominees for director.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Approval of the amendment to the Apartment Investment and Management
Company 1997 Stock Award and Incentive Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the sale of High Performance Units
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Approval of the Apartment Investment and Management Company 1998
Incentive Compensation Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Approval of the amendment to the Company's Charter
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. Ratification of the selection of Ernst & Young LLP as independent
auditors for the calendar year ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
If any other business is transacted at the Stockholders' Meeting, the Proxy
shall be voted in accordance with the best judgment of the above-named attorneys
and proxies.
Continued on Reverse Side
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<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PROXY FOR COMMON STOCK
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS
MARCH , 1998
Dated: ,
1998
----------------------
(Signature of
Stockholder)
----------------------
(Signature of
Stockholder)
Please sign your name
exactly as it appears
hereon. If acting as
attorney, executor,
trustee, or in other
representative
capacity, please sign
name and title. If
stock is held jointly,
each joint owner
should sign.
PLEASE SIGN, DATE AND
RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE
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