UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No._)
Securities Exchange Act of 1934 (Amendment No._)
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Filed by a Party other than the Registrant ☐
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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MID-AMERICA APARTMENT COMMUNITIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
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Proxy Statement
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and
Notice of Annual Meeting of Shareholders
2018 Annual Meeting of Shareholders
Tuesday, May 22, 2018
11:00 a.m. local time
MAA Corporate Headquarters
5th Floor
6815 Poplar Avenue, Suite 500
Germantown, Tennessee 38138
Mid-America Apartment Communities, Inc.
April 9, 2018
To our shareholders:
You are invited to attend the 2018 Annual Meeting of Shareholders of Mid-America Apartment Communities, Inc. to be held at 11:00 a.m., local time, on Tuesday, May 22, 2018, at our corporate headquarters, 6815 Poplar Avenue, Suite 500, Germantown, Tennessee 38138. The Notice of Annual Meeting of Shareholders and Proxy Statement, both of which accompany this letter, provide details regarding the business to be conducted at the meeting, as well as other important information about us.
Your vote is important. Whether you can or cannot attend the 2018 Annual Meeting of Shareholders, I encourage you to vote. Please complete, sign and return your proxy card or give your proxy authorization over the Internet or by phone prior to the meeting so that your shares will be represented and voted, regardless of whether or not you attend.
Along with the other members of the Board of Directors and management, I look forward to greeting you at the meeting if you are able to attend.
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Cordially,
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H. Eric Bolton, Jr.
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Chairman of the Board of Directors and Chief Executive Officer
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MID-AMERICA APARTMENT COMMUNITIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DATE, TIME & PLACE
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DATE:
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Tuesday, May 22, 2018
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TIME:
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11:00 a.m., local time
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PLACE:
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MAA Corporate Headquarters
6815 Poplar Avenue, Suite 500
Germantown, Tennessee 38138
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ITEMS OF BUSINESS
Shareholders will consider and vote on the following items at the 2018 Annual Meeting of Shareholders:
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Election of the 12 directors named herein to serve for one year and until their successors have been duly elected and qualified;
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An advisory (non-binding) vote to approve the compensation of our named executive officers as disclosed in the accompanying Proxy Statement;
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To approve the Second Amended and Restated Mid-America Apartment Communities, Inc. 2013 Stock Incentive Plan; and
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Ratification of Ernst & Young LLP as our independent registered public accounting firm for 2018.
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Shareholders will also consider any other business as may properly come before the meeting or any adjournment thereof.
WHO MAY VOTE
Shareholders of record at the close of business on Friday, March 16, 2018, are entitled to receive this notice and vote at the 2018 Annual Meeting of Shareholders and any adjournments or postponements of the 2018 Annual Meeting of Shareholders.
HOW TO VOTE
Your vote is important. Please refer to the Proxy Card and the accompanying Proxy Statement for information regarding your voting options. Even if you plan to attend the 2018 Annual Meeting of Shareholders, please take advantage of one of the advance voting options (see page 88) to ensure that your shares are represented at the 2018 Annual Meeting of shareholders. You may revoke your proxy at any time before it is voted by following the procedures described in the accompanying Proxy Statement.
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By Order of the Board of Directors
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Leslie B.C. Wolfgang
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Senior Vice President,
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Chief Ethics and Compliance Officer, and Corporate Secretary
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Germantown, Tennessee
April 9, 2018
Important Notice Regarding the Availability of Proxy Materials for the 2018 Annual Meeting of Shareholders To Be Held on May 22, 2018: The Proxy Statement and Annual Report to Shareholders including our Form 10-K are available at http://materials.proxyvote.com/59522J.
TABLE OF CONTENTS
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MID-AMERICA APARTMENT COMMUNITIES, INC.
2018 ANNUAL MEETING OF SHAREHOLDERS
Mid-America Apartment Communities, Inc. is soliciting proxies, and your vote is very important. For this reason, our Board of Directors requests that you allow your shares to be represented at the 2018 Annual Meeting of Shareholders by the proxies named on the enclosed Proxy Card. In connection with our solicitation of proxies, we are mailing this Proxy Statement, the enclosed Proxy Card, and our Annual Report to Shareholders (including our Form 10-K) to shareholders beginning on or about April 9, 2018.
If any other matter properly comes before the 2018 Annual Meeting of Shareholders, the proxy holders will vote as recommended by the Board of Directors or, if no recommendation is given, in accordance with their best judgment.
In this Proxy Statement, terms such as “MAA,” “we,” “us” and “our” refer to Mid-America Apartment Communities, Inc. Furthermore, “Annual Meeting” refers to the Mid-America Apartment Communities, Inc. 2018 Annual Meeting of Shareholders and “Board” refers to the Board of Directors of Mid-America Apartment Communities, Inc.
The below schedule provides summary information regarding the matters on which shareholders will consider and vote at the 2018 Annual Meeting of Shareholders. It does not contain all of the information that you should consider, and you should read the entire Proxy Statement before voting.
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BOARD |
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RECOMMENDATION |
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PROPOSAL 1:
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ELECTION OF DIRECTORS
See full discussion beginning on Page 13
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FOR each
Nominee
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The Board and Nominating and Corporate Governance Committee believe that the 12 director nominees will effectively represent the long-term interests of shareholders through their oversight and quality counsel to MAA’s management reflecting their extensive and diverse business experience and acumen.
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PROPOSAL 2:
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ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
See full discussion beginning on Page 27
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FOR
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This is a non-binding advisory vote to approve the compensation of MAA’s Named Executive Officers as outlined in this Proxy Statement. The Board and Compensation Committee value the opinions of our shareholders and will take into account the outcome of this vote when considering future compensation decisions.
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PROPOSAL 3:
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APPROVE SECOND AMENDED AND RESTATED STOCK INCENTIVE PLAN
See full discussion beginning on Page 60
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FOR
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The Board and Compensation Committee believe that utilizing equity incentive plans with awards tied to the successful execution of pre-determined performance goals is in the best long-term interest of shareholders as it better aligns employees’ focus and efforts with shareholder interests. We are seeking shareholder approval of an amended and restated stock incentive plan to, among other things, increase the number of shares available for issuance under the plan to 2,000,000 shares, in order to continue to attract and retain key individuals essential to MAA’s long-term strength and success.
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PROPOSAL 4:
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RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
See full discussion beginning on Page 86
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FOR
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As a matter of good corporate governance, we are asking our shareholders to ratify the selection of our independent audit firm. The Board and Audit Committee believe that the appointment of Ernst & Young LLP as MAA’s independent audit firm for fiscal year 2018 is in the best long-term interests of MAA and our shareholders.
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Shareholders will also consider any other business as may properly come before the meeting or any adjournment thereof. As of the date of this Proxy Statement, we are not aware of any other matters that will be presented for action at the 2018 Annual Meeting of Shareholders.
We believe that effective corporate governance is critical to our long-term health and our ability to create value for our shareholders. We have continued to review our corporate governance policies and practices and to compare them to the practices of other public companies. We will continue to monitor emerging developments in corporate governance and enhance our policies and procedures when required or when our Board determines that it would benefit us and our shareholders. Based on this review, the Board has established several governance-related documents which are outlined below.
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CORPORATE
GOVERNANCE
GUIDELINES
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Reflects the principles by which MAA and the Board operate and includes detailed specifications for director qualification, board responsibilities, share ownership requirements for directors and named executive officers, and equity retention requirements for named executive officers.
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CODE OF
CONDUCT
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Applicable to our executive officers, including the Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, as well as our directors and all employees. We intend to post amendments to or waivers from our Code of Conduct (to the extent applicable to our CEO, Principal Financial Officer or Principal Accounting Officer) on our website. No waivers to the Code of Conduct have been made as of the date of this Proxy Statement.
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WHISTLEBLOWER
POLICY
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Sets forth the procedures established by the Audit Committee for (i) the receipt, retention and treatment of complaints received by MAA regarding accounting, internal accounting controls or auditing matters; and (ii) the confidential, anonymous submission of concerns regarding questionable accounting and auditing matters.
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AUDIT
COMMITTEE
CHARTER
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Outlines the duties and responsibilities of the committee in fulfilling its responsibility to oversee (i) the integrity of MAA’s financial statements, (ii) MAA’s compliance with legal and regulatory requirements, (iii) the independent public accounting firm’s qualification and independence; and (iv) the performance of MAA’s internal audit department and independent public accounting firm.
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COMPENSATION
COMMITTEE
CHARTER
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Outlines the duties and responsibilities of the committee in fulfilling its responsibilities to (i) discharge the responsibilities of the Board relating to compensation of MAA’s executive officers, (ii) establish compensation policies and incentive and equity-based award plans to attract, motivate and retain high quality leadership and compensate them in a manner consistent with the interests of MAA’s shareholders, (iii) oversee MAA’s risk assessment and risk management relative to compensation structures, (iv) review and discuss the Compensation Discussion & Analysis to be included in the Proxy Statement; and (v) provide the Compensation Committee Report for inclusion in the Proxy Statement that complies with the rules and regulations of the Securities and Exchange Commission, or SEC.
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NOMINATING
AND CORPORATE
GOVERNANCE
COMMITTEE
CHARTER
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Outlines the duties and responsibilities of the committee to (i) provide assistance to the Board in identifying and recommending individuals qualified to serve as directors of MAA, (ii) review the composition of the Board, (iii) review and recommend corporate governance policies for MAA; and (iv) oversee the evaluation of the Board and management.
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REAL ESTATE
INVESTMENT
COMMITTEE
CHARTER
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Outlines the duties and responsibilities of the committee to consider and approve or disapprove specific property acquisitions, dispositions or development projects for MAA.
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AVAILABILTY OF GOVERNANCE DOCUMENTS
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You can find a copy of all of the documents included in the above table by clicking on “Governance Documents” in the “Corporate Overview” section of the “For Investors” page on our website at http://ir.maac.com.
Information from our website is not incorporated by reference into this Proxy Statement.
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We will also provide a copy of any of the documents included in the above table without charge upon written request sent to: MAA, Attention: Investor Relations, 6815 Poplar Avenue, Suite 500, Germantown, Tennessee 38138.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have adopted a Code of Conduct, which specifies our policy relating to conflicts of interest. The Code of Conduct states that a “conflict of interest” exists when an individual’s private interests interfere in any way or appear from the perspective of a reasonable person to interfere in any way with the interests of the company. Under the Code of Conduct, an employee who becomes aware of a potential conflict of interest must report the conflict to a supervisor, our legal department, internal audit department or human resources group. If the potential conflict of interest involves our CEO, any of our executive officers, or a director, our Board will determine whether to grant a waiver if a conflict of interest exists. On an annual basis, the Nominating and Corporate Governance Committee, as well as the full Board, reviews the independence of each director, all transactions involving related parties and any potential conflicts of interests. All transactions involving related parties must be approved by a majority of the disinterested members of our Board.
Based on the information presented to it, the Board and the Nominating and Corporate Governance Committee determined that no related party transactions occurred or were proposed since the beginning of 2017.
INDEBTEDNESS OF MANAGEMENT
None of our executive officers or directors were indebted to us during 2017.
RISK MANAGEMENT
Both the Board as a whole and its respective committees serve an active role in overseeing management of our risks. Our Board regularly reviews, with members of our senior management and outside advisors, information regarding our strategy and key areas of the company including operations, finance, legal and regulatory, as well as the risks associated with each. Senior management as well as outside advisors also periodically meet with each committee and make representations associated with the risks relevant to the respective committee’s area of focus. The Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation plans and reviewing the risks associated with our overall compensation practices and policies for all of our employees. The Audit Committee oversees risks associated with financial matters such as accounting, internal control over financial reporting, tax (including real estate investment trust, or REIT, compliance), fraud assessment and financial policies. The Nominating and Corporate Governance Committee manages risks associated with corporate governance policies, the independence of our Board and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, our Board is regularly informed through committee reports about such risks.
COMMUNICATING DIRECTLY WITH OUR BOARD
Shareholders and other interested parties may communicate in writing with our Board, any of its committees, its non-management directors as a group or its independent directors as a group by using the following address:
MAA
ATTN: Corporate Secretary
6815 Poplar Avenue, Suite 500
Germantown, TN 38138
RE: {group being addressed}
If all of our director nominees are elected by our shareholders, the leadership structure of our Board will include a combined Chairman of the Board and Chief Executive Officer, two additional non-independent directors and nine independent directors. All of our directors serve with equal importance and have an equal vote on all matters. Our independent directors meet without management present at regularly scheduled executive sessions.
Mr. Graf serves as the Lead Independent Director. Our Board believes that we have been and continue to be well served by having our Chief Executive Officer also serve as Chairman of the Board. Our Audit, Compensation, and Nominating and Corporate Governance Committees are all led by chairmen who are independent directors and the membership of these three committees is 100% comprised of independent directors. We believe that the current board leadership model, when combined with the experience of our Board, the strong leadership of our Lead Independent Director and other independent directors, the committees of the Board and the corporate governance policies already in place, strikes an appropriate balance between consistent leadership and independent oversight of our business and affairs.
OVERVIEW OF 2017 BOARD
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Committee Membership (4)
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Other
Public
Company
Boards
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Name
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Age (3)
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Director
Since
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Primary Occupation
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A
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C
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NCG
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REI
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H. Eric Bolton, Jr.
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61
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1997
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Chairman of the Board of Directors and Chief Executive Officer of MAA
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XC
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1
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Russell R. French (1)
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72
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2016
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Special Limited Partner of Moseley & Co. VI, LLC and Class B Partner of Moseley & Co. VII, LLC and Moseley & Co. SBIC, LLC
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X
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-
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Alan B. Graf, Jr. (1)
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64
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2002
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Executive Vice President and Chief Financial Officer of FedEx Corporation
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L, XC
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1
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Toni Jennings (1)
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69
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2016
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Chairman of the Board of Jack Jennings & Sons, Inc. and Jennings & Jennings, Inc.
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X
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X
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2
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James K. Lowder (1)
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68
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2013
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Chairman of the Board of Directors of The Colonial Company
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X
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X
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Thomas H. Lowder
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68
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2013
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Past Chairman of the Board of Trustees and Chief Executive Officer of Colonial Properties Trust
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X
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Monica McGurk (1)
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48
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2016
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Past Chief Growth Officer of Tyson Foods, Inc.
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X
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X
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Claude B. Nielsen (1)
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67
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2013
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Chairman of the Board of Directors and Past Chief Executive Officer of Coca-Cola Bottling Company United, Inc.
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X
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XC
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Philip W. Norwood (1)
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70
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2007
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Past President and Chief Executive Officer of Faison Enterprises, Inc.
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XC
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X
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X
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W. Reid Sanders (1)
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68
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2010
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President of Sanders Properties, LLC and Sanders Investments, LLC
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X
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X
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2
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William B. Sansom (1) (2)
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76
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2006 – May 23,
2017 |
Chairman of the Board of Directors, Chief Executive Officer and President of H.T. Hackney Co.
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Gary Shorb (1)
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67
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2012
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Past President and Chief Executive Officer of Methodist Le Bonheur Healthcare
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X
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David P. Stockert
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56
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2016
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Past Chief Executive Officer of Post Properties, Inc.
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X
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1
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(1) Indicates an Independent Director
(2) Mr. Sansom retired from the Board on May 23, 2017
(3) Age is as of May 22, 2018, the meeting date for the Annual Meeting
(4) The chart reflects committee assignments as of April 9, 2018:
A = Audit Committee, C = Compensation Committee, L = Lead Independent Director, NCG = Nominating and Corporate Governance Committee, REI = Real Estate Investment Committee, XC = Committee Chair
INDEPENDENT DIRECTORS
Our Board has affirmatively determined that nine of our current 12 directors are independent: Russell R. French; Alan B. Graf, Jr.; Toni Jennings; James K. Lowder; Monica McGurk; Claude B. Nielsen; Philip W. Norwood; W. Reid Sanders; and Gary Shorb. Each of these nine directors meets the independence standards of our Corporate Governance Guidelines, the listing standards of the New York Stock Exchange, or the NYSE, and applicable SEC rules.
A director is considered independent if our Board affirmatively determines that the director has no direct or indirect material relationship with us. Consistent with the requirements of the SEC and the NYSE, our Board reviews all relevant transactions or relationships between each director, or any of his or her family members, and us, our senior management and our independent auditors. Our Board has adopted the following categorical standards:
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A director who is an employee or whose immediate family member is one of our executive officers is not independent until three years after the end of such employment relationship.
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A director who receives, or whose immediate family member receives, more than $120,000 per year in direct compensation from us, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), is not independent until three years after he or she ceases to receive more than $120,000 per year in such compensation.
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A director who is affiliated with or employed by, or whose immediate family member is affiliated with or employed in a professional capacity by, any of our present or former internal or external auditors is not independent until three years after the end of the affiliation or the employment or auditing relationship.
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A director who is employed, or whose immediate family member is employed, as an executive officer of another company where any of our present executive officers serve on that company’s Compensation Committee is not independent until three years after the end of such service or the employment relationship.
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A director who is an executive officer or an employee, or whose immediate family member is an executive officer, of a company that makes payments to, or receives payments from, us for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues, is not independent until three years after falling below such threshold.
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Our Board consults with our General Counsel to ensure that the Board’s determinations are consistent with all relevant securities and other laws and regulations regarding the definition of “independent”, including those set forth in pertinent listing standards of the NYSE, as in effect from time-to-time.
MATERIAL RELATIONSHIPS
None of our non-management directors had relationships with us during 2017 that the Board determined were material.
NUMBER OF BOARD MEETINGS
Our Board met four times during 2017.
DIRECTOR ATTENDANCE
All of the directors attended more than 75% of the meetings of our Board and their respective committees during the calendar year 2017.
REGULAR MEETINGS WITHOUT MANAGEMENT
Both our non-management directors and our independent directors regularly meet without management present. The Board has determined that Messrs. Thomas H. Lowder and Stockert are not independent directors because each was the Chief Executive Officer of a company that MAA acquired within the past five years. We consider Messrs. Thomas H. Lowder and Stockert to be non-management directors, who meet from time-to-time with the independent directors without the participation of management. As Lead Independent Director, Mr. Graf presides over the meetings of both the non-management directors and the independent directors. The non-management directors and the independent directors both held four executive sessions during 2017.
STANDING COMMITTEES
Our Board has four standing committees: Audit Committee; Compensation Committee; Nominating and Corporate Governance Committee; and Real Estate Investment Committee. All of the members of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are independent, pursuant to the standards set forth in our Corporate Governance Guidelines, the NYSE listing standards and applicable SEC rules. The Real Estate Investment Committee consists of two independent members and three non-independent members. Each standing committee of our Board has a charter, which can be found in the “Governance Documents” section of the “Corporate Overview” link on the “For Investors” page of our website at http://ir.maac.com. Information from our website is not incorporated by reference into this Proxy Statement.
Additional information about each committee of our Board is outlined below.
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AUDIT COMMITTEE
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Current Members:
Alan B. Graf, Jr.,
Chairman
Russell R. French
W. Reid Sanders
Gary Shorb
100% independent
composition
8 meetings in 2017
2 Audit Committee
Financial Experts (1):
Alan B. Graf, Jr.
Russell R. French
(1) Messrs. Graf and French meet the definitions of both Audit Committee financial expert under applicable SEC rules and independent director under applicable NYSE rules.
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Committee Functions:
· appoints, determines the compensation of, oversees and evaluates the work of the independent registered public accounting firm;
· pre-approves all auditing services and permitted non-audit services, including the fees and terms thereof, to be performed by the independent registered public accounting firm;
· reviews and discusses with management and the independent registered public accounting firm the annual audited and quarterly unaudited financial statements and our disclosure under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-Qs and Form 10-Ks;
· discusses earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information, and discusses generally the financial information and earnings guidance which has been or will be provided to analysts and rating agencies;
· reviews and discusses with management and the independent registered public accounting firm the adequacy and effectiveness of our systems of internal accounting and financial controls;
· establishes procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;
· reviews with management and the independent registered public accounting firm our compliance with the requirements for qualification as a REIT;
· reviews and reassesses annually the Audit Committee Charter and submits any recommended changes to the Board for its consideration; and
· issues a report annually as required by the SEC’s proxy solicitation rules.
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COMPENSATION COMMITTEE
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Current Members:
Philip W. Norwood,
Chairman
James K. Lowder
Toni Jennings
Monica McGurk
Claude B. Nielsen
100% independent
composition
4 meetings in 2017
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Committee Functions:
· reviews and approves our compensation objectives;
· reviews and recommends the compensation programs, plans, and awards for the CEO to the Board and reviews and approves the same for the other executive officers, after taking into consideration any past “Say-on-Pay” votes by the shareholders;
· reviews and approves any employment and severance arrangements and benefits of the CEO and other executive officers;
· recommends to the Board how often MAA should submit to the shareholders the “Say-on-Pay” vote;
· recommends the compensation for directors to the Board;
· evaluates and oversees risks associated with the company’s compensation policies and practices;
· acts as administrator, as may be required, for our equity-related incentive plans;
· reviews and discusses with management the information contained in the Compensation Discussion & Analysis section of the Proxy Statement;
· assesses the independence of, retains and oversees compensation consultants, outside counsel and other advisors assisting the committee with the performance of its duties;
· reviews and reassesses annually the Compensation Committee Charter and recommends any proposed changes to the Board for approval; and
· issues a report annually related to executive compensation, as required by the SEC’s proxy solicitation rules.
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Roles of Executives in Establishing Compensation
While H. Eric Bolton, Jr., our CEO, does participate in general meetings of the Compensation Committee, he does not participate in executive sessions nor does he participate in any discussions determining his own compensation. Annually, upon request from the Compensation Committee, Mr. Bolton provides the Compensation Committee with data pertinent to his and other executive officers’ compensation. This information may from time-to-time include peer executive compensation levels, achievement of individual performance components of their annual bonus plans or data pertinent to their annual base salary increases. The Compensation Committee utilizes this information, along with input from committee members and, at times, outside consultants before making final independent compensation decisions. Mr. Bolton also provides data pertinent to the terms of our long-term incentive plans to the Compensation Committee, upon their request. At the end of any incentive or bonus plan measurement period, Mr. Bolton, along with our Chief Ethics and Compliance Officer and Corporate Secretary, prepares and presents to the Compensation Committee, the preliminary results of the plan for the committee’s review and, if necessary, further evaluation and/or adjustment. All incentive plans are ultimately developed and adopted by the Compensation Committee.
Use of Compensation Consultant
The Compensation Committee has the power and authority to hire outside advisors or consultants to assist the committee in fulfilling its responsibilities, at our expense and upon terms established by the Compensation Committee. The Compensation Committee routinely hires external consultants to review the compensation program offered to executive management, benchmark it against industry and peer levels, and offer suggestions for changes. The Compensation Committee utilized Semler Brossy to consult on executive and director compensation for 2017. Semler Brossy does not provide any other services to the company or management.
|
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
|
|
|
Current Members:
Claude B. Nielsen,
Chairman
Toni Jennings
Monica McGurk
James K. Lowder
Philip W. Norwood
100% independent
composition
3 meetings in 2017
|
Committee Functions:
· provides assistance and oversight in identifying qualified candidates to serve as members of the Board;
· reviews the qualification and performance of incumbent directors to determine whether to recommend them as nominees for re-election;
· reviews and considers candidates for directors who may be suggested by any director or executive officer, or by any shareholder if made in accordance with our charter, bylaws and applicable law;
· recommends to the Board members to serve on the committees of the Board;
· oversees the annual evaluation of the effectiveness of the current policies and practices of the Board and its committees;
· reviews and reassesses annually the Nominating and Corporate Governance Committee Charter and submits any proposed changes to the Board for approval; and
· reviews and recommends to the Board appropriate corporate governance principles that best serve the practices and objectives of the Board.
|
|
REAL ESTATE INVESTMENT COMMITTEE
|
|
|
Current Members:
H. Eric Bolton, Jr.,
Chairman
Thomas H. Lowder
Philip W. Norwood
W. Reid Sanders
David P. Stockert
5 meetings in 2017
|
Committee Functions:
· considers and approves or disapproves specific property acquisitions, dispositions or development projects within approval levels established annually by the Board;
· refers and makes a recommendation on proposed property acquisitions or development projects outside the approval levels established annually by the Board;
· reviews and reassesses annually the Real Estate Investment Committee Charter and submits to the Board any recommended changes; and
· approves disposition of individual properties not included in the annual strategic plan reviewed and approved by the Board.
|
Our Board may, from time-to-time, form other committees as circumstances warrant. Such committees will have authority and responsibility as delegated by our Board.
As part of their analysis, consultants hired by the Compensation Committee to advise on executive officer compensation programs also review our director compensation programs and offer the Compensation Committee guidance to ensure director compensation programs are appropriate relative to our peer group. Directors who are our employees do not receive additional remuneration for serving as directors. Beginning with the election of directors at the 2017 Annual Shareholder Meeting, each non-employee director is compensated as outlined in the below table, contingent upon their continuing service on the Board.
|
ANNUAL CASH FEES
|
||||
|
SERVICE FEE
|
$65,000
|
Compensation for serving on the Board
|
||
|
LEAD INDEPENDENT DIRECTOR FEE
|
$20,000
|
Compensation for additional duties related to serving as the Lead Independent Director
|
||
|
AUDIT COMMITTEE CHAIRMAN FEE
|
$17,500
|
Compensation for additional duties related to serving as the Audit Committee Chairman
|
||
|
AUDIT COMMITTEE MEMBER FEE
|
$7,500
|
Compensation for additional duties related to serving as an Audit Committee Member (committee chairman does not receive this fee)
|
||
|
COMPENSATION COMMITTEE CHAIRMAN FEE
|
$15,000
|
Compensation for additional duties related to serving as the Compensation Committee Chairman
|
||
|
COMPENSATION COMMITTEE MEMBER FEE
|
$6,250
|
Compensation for additional duties related to serving as a Compensation Committee Member (committee chairman does not receive this fee)
|
||
|
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHAIRMAN FEE
|
$10,000
|
Compensation for additional duties related to serving as the Nominating and Corporate Governance Committee Chairman
|
||
|
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE MEMBER FEE
|
$3,750
|
Compensation for additional duties related to serving as a Nominating and Corporate Governance Committee Member (committee chairman does not receive this fee)
|
||
|
REAL ESTATE INVESTMENT COMMITTEE MEMBER FEE
|
$6,250
|
Compensation for additional duties related to serving as a Real Estate Investment Committee Member
|
||
|
ANNUAL GRANT OF SHARES OF RESTRICTED COMMON STOCK Made upon election to Board
|
||||
|
$120,000
|
Shares vest at the end of the director’s year of service on the Board.
|
|||
In accordance with our Non-Qualified Deferred Compensation Plan For Outside Company Directors, the directors have the option of having phantom stock issued into a deferred compensation account in lieu of receiving their Annual Cash Fees and/or their Annual Grant of Shares of Restricted Common Stock. If directors choose to defer their compensation in this manner, the compensation is then paid out in two annual installments either in shares of our common stock or in a cash equivalent, at the director’s election, beginning in the year following the year in which the director retired from the Board.
The table below represents the compensation earned by each non-employee director during 2017.
|
Name
|
Fees
Earned
or
Paid in
Cash
($)
(1)
|
Stock
Awards
($)
(2)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
(3)
|
Total
($)
|
|||||||||||||||||||||
|
Russell R. French
|
$
|
70,000
|
$
|
119,932
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
6,497
|
$
|
196,429
|
||||||||||||||
|
Alan B. Graf, Jr.
|
$
|
97,500
|
$
|
119,932
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
87,792
|
$
|
305,224
|
||||||||||||||
|
Toni Jennings
|
$
|
72,500
|
$
|
119,932
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
192,432
|
||||||||||||||
|
James K. Lowder
|
$
|
70,937
|
$
|
119,932
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
190,869
|
||||||||||||||
|
Thomas H. Lowder
|
$
|
68,750
|
$
|
119,932
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
3,057
|
$
|
191,739
|
||||||||||||||
|
Monica McGurk
|
$
|
72,500
|
$
|
119,932
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
9,421
|
$
|
201,853
|
||||||||||||||
|
Claude B. Nielsen
|
$
|
78,750
|
$
|
119,932
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
23,677
|
$
|
222,359
|
||||||||||||||
|
Philip W. Norwood
|
$
|
87,500
|
$
|
119,932
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
51,808
|
$
|
259,240
|
||||||||||||||
|
W. Reid Sanders
|
$
|
76,250
|
$
|
119,932
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
19,851
|
$
|
216,033
|
||||||||||||||
|
William B. Sansom (4)
|
$
|
35,000
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
33,832
|
$
|
68,832
|
||||||||||||||
|
Gary Shorb
|
$
|
70,000
|
$
|
119,932
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
36,283
|
$
|
226,215
|
||||||||||||||
|
David P. Stockert
|
$
|
68,750
|
$
|
119,932
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
2,944
|
$
|
191,626
|
||||||||||||||
| (1) |
This column represents annual director fees and committee chair and committee member fees regardless of whether they were paid as cash or deferred by the director and issued as phantom stock in MAA’s Non-Qualified Deferred Compensation Plan For Outside Company Directors.
|
| (2) |
This column represents the full grant date fair value in accordance with FASB ASC Topic 718 in the year of the grant. The restricted common stock awards that were granted in 2017 include the following grants:
|
|
Name
|
Date of
Grant
|
Price
of
Grant
|
Number
of
Shares
|
Vesting
Schedule
|
2017
ASC 718
Expense
|
Full
Grant Date
Fair Value
|
|||||||||||||
|
Russell R. French
|
5/23/2017
|
$
|
100.11
|
1,198
|
100% on May 23, 2018
|
$
|
69,960
|
$
|
119,932
|
||||||||||
|
Alan B. Graf, Jr.
|
5/23/2017
|
$
|
100.11
|
1,198
|
100% on May 23, 2018
|
$
|
69,960
|
$
|
119,932
|
||||||||||
|
Toni Jennings
|
5/23/2017
|
$
|
100.11
|
1,198
|
100% on May 23, 2018
|
$
|
69,960
|
$
|
119,932
|
||||||||||
|
James K. Lowder
|
5/23/2017
|
$
|
100.11
|
1,198
|
100% on May 23, 2018
|
$
|
69,960
|
$
|
119,932
|
||||||||||
|
Thomas H. Lowder
|
5/23/2017
|
$
|
100.11
|
1,198
|
100% on May 23, 2018
|
$
|
69,960
|
$
|
119,932
|
||||||||||
|
Monica McGurk
|
5/23/2017
|
$
|
100.11
|
1,198
|
100% on May 23, 2018
|
$
|
69,960
|
$
|
119,932
|
||||||||||
|
Claude B. Nielsen
|
5/23/2017
|
$
|
100.11
|
1,198
|
100% on May 23, 2018
|
$
|
69,960
|
$
|
119,932
|
||||||||||
|
Philip W. Norwood
|
5/23/2017
|
$
|
100.11
|
1,198
|
100% on May 23, 2018
|
$
|
69,960
|
$
|
119,932
|
||||||||||
|
W. Reid Sanders
|
5/23/2017
|
$
|
100.11
|
1,198
|
100% on May 23, 2018
|
$
|
69,960
|
$
|
119,932
|
||||||||||
|
Gary Shorb
|
5/23/2017
|
$
|
100.11
|
1,198
|
100% on May 23, 2018
|
$
|
69,960
|
$
|
119,932
|
||||||||||
|
David P. Stockert
|
5/23/2017
|
$
|
100.11
|
1,198
|
100% on May 23, 2018
|
$
|
69,960
|
$
|
119,932
|
||||||||||
| (3) |
This column represents the dividend reinvestment shares acquired in our Non-Qualified Deferred Compensation Plan For Outside Company Directors during the year.
|
| (4) |
Mr. Sansom did not stand for re-election to the Board at the 2017 Annual Meeting of Shareholders.
|
|
MATTER TO BE VOTED
Election of the 12 directors named herein to serve for one year and until their successors have been duly elected and qualified.
|
Our Board proposes that H. Eric Bolton, Jr., Russell R. French, Alan B. Graf, Jr., Toni Jennings, James K. Lowder, Thomas H. Lowder, Monica McGurk, Claude B. Nielsen, Philip W. Norwood, W. Reid Sanders, Gary Shorb and David P. Stockert, all of whom are currently serving as directors, be elected for a term of one year and until their successors are duly elected and qualified. We have no reason to believe that any nominee for director will not agree or be available to serve as a director if elected. However, should any nominee become unable or unwilling to serve, the proxies may be voted for a substitute nominee or to allow the vacancy to remain open until filled by our Board.
|
|
|
VOTE REQUIRED
|
The presence of a quorum at the Annual Meeting, either in person or by written proxy, and the cast of more “For” votes than votes cast “Against” for each nominee are necessary at the meeting to elect a nominee as a director.
|
|
|
Impact of Abstentions and Broker Non-Votes
|
Neither abstentions nor broker non-votes will have any legal effect on whether this proposal is approved.
|
|
|
BOARD RECOMMENDATION
|
FOR
|
Our Board recommends a vote “FOR” each of the Director nominees.
|
Our Board believes that it is necessary for our directors to possess a variety of backgrounds and skills in order to provide a broad voice of experience and leadership. When searching for new candidates, the Nominating and Corporate Governance Committee considers the evolving needs of our Board and searches for candidates that fill any current or anticipated future gap. When evaluating new candidates, the Nominating and Corporate Governance Committee considers business management experience and education, industry knowledge, conflicts of interest, public company experience, integrity and ethics, and commitment to the goal of maximizing long-term shareholder value. The Nominating and Corporate Governance Committee does not have a policy about diversity, but does seek to provide our Board with a depth of experience and differences in viewpoints and skills. In considering candidates for our Board, the Nominating and Corporate Governance Committee considers both the entirety of each candidate’s credentials and the current and potential future needs of our Board. With respect to the nomination of continuing directors for re-election, the individual’s contributions to our Board are also considered.
DIRECTOR RECOMMENDATION POLICY
It is the policy of the Nominating and Corporate Governance Committee to review and consider all candidates for nomination and election as directors who may be suggested by any of our directors or executive officers. It is also our policy to refer to our Nominating and Corporate Governance Committee for consideration any director candidate recommended by any shareholder if recommended in accordance with our Charter, Bylaws and applicable law.
If you would like to recommend a director candidate to our Nominating and Corporate Governance Committee, the recommendation must include the information specified in our Bylaws and must be received at our executive offices no later than December 18, 2018 for consideration by our Nominating and Corporate Governance Committee.
If instead of recommending a director candidate, you would like to nominate a candidate directly for election by our shareholders other than pursuant to the proxy access provision of our Bylaws (see “Proxy Access” below), you must provide us the information required by our Bylaws, follow the procedures provided in our Bylaws and outlined below under the caption “How and When May I Submit a Shareholder Proposal for the 2019 Annual Meeting of Shareholders?” on page 19 and prepare your own proxy materials for our shareholders.
A copy of our Bylaws can be found on the SEC website (https://www.sec.gov) as an Exhibit to the Form 8-K which was filed on March 14, 2018.
PROXY ACCESS
Taking into account the Nominating and Corporate Governance Committee’s recommendation and management’s discussions with the proponent of a subsequently withdrawn proxy access shareholder proposal, effective March 13, 2018, the Board adopted amendments to our Bylaws to implement a proxy access provision. The proxy access bylaw permits a shareholder, or a group of up to 20 shareholders, owning 3% or more of MAA’s outstanding common stock continuously for at least three years, to nominate and include in our proxy materials director candidates constituting up to 20% of the Board, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in the Bylaws.
A copy of our Bylaws can be found on the SEC website (https://www.sec.gov) as an Exhibit to the Form 8-K which was filed on March 14, 2018.
MINIMUM DIRECTOR QUALIFICATIONS
The Nominating and Corporate Governance Committee along with our Board is responsible for determining the skills and characteristics that each director and director nominee needs to have to serve as a director of the company. In determining director or director nominee qualifications, general requirements applicable to all directors as well as individual skills and experiences that should be represented on the Board as a whole, but not necessarily by each director, are considered.
The Nominating and Corporate Governance Committee considers each director nominee’s integrity, judgment, experience, independence, material relationships with us, time availability, service on other boards of directors and their committees, and any other characteristics that may prove relevant at any given time as determined by the Nominating and Corporate Governance Committee. A director or director nominee’s knowledge and/or experience in areas such as, but not limited to, real estate investing or other related industries, REITs, management, leadership, public companies, equity and debt capital markets, and public company financial accounting are likely to be considered both in relation to the individual’s qualification to serve on our Board and the needs of our Board as a whole.
The Nominating and Corporate Governance Committee seeks to provide diversity on our Board with a depth of experience and differences in viewpoints and skills. While the Nominating and Corporate Governance Committee does not have a policy about diversity as it pertains solely to our Board, all of our directors are participants along with our employees in our Code of Conduct which embodies diversity as a tremendous asset and one which should be actively embraced. The Nominating and Corporate Governance Committee seeks to embody the spirit of our Code of Conduct by valuing a diversity of experiences and perspectives in our directors and director nominees.
The retirement age for our directors is 75. Our Corporate Governance Guidelines provide that no director may be nominated to a new term after his or her 75th birthday, unless the Board waives the retirement age for a specific director for special circumstances. While it is believed that a director’s knowledge and/or experience can continue to provide benefit to our Board following a director’s retirement from their primary work affiliation, it is recognized that a director’s knowledge of and involvement in ever changing business environments can weaken and therefore their ability to continue to be an active contributor to our Board will be reviewed. Upon a director’s change in employment status, they are required to notify the Chairman of our Board and the Nominating and Corporate Governance Committee of such change and to offer their resignation for review.
Members of the Nominating and Corporate Governance Committee as well as other members of the Board and members of executive management may meet with directors or director nominees for purposes of determining their qualifications.
We believe all our directors bring unique skills to our Board, integrity, high ethical standards and a dedication to representing our shareholders. Furthermore, all of our directors live in states in which we currently have real estate investments. We believe this provides them with geographic expertise related to our portfolio footprint.
Certain individual information regarding the qualifications of each of the nominees for director is set forth below. Directors’ ages are given as of the date of the Annual Meeting.
Terms will expire at the 2019 Annual Meeting of Shareholders.
|
H. ERIC BOLTON, JR.
Chairman of the Board and
Chief Executive Officer of MAA
|
Mr. Bolton joined MAA in 1994 as Vice President of Development and was named Chief Operating Officer in February 1996 and later promoted to President in December 1996. Mr. Bolton assumed the position of Chief Executive Officer in October 2001 and became Chairman of the Board in September 2002. Immediately prior to joining us, Mr. Bolton served as Executive Vice President and Chief Financial Officer of Trammell Crow Realty Advisors, for which he worked for more than five years. Prior to that, Mr. Bolton worked in the commercial banking industry for seven years.
|
|
Director since:
February 1997
Age: 61
Board Committees:
Real Estate Investment (Chairman)
Other Public Company Boards:
EastGroup Properties, Inc.
(2013–current)
|
Key Attributes, Experiences and Skills:
· Ethical, decisive and effective leadership
· Extensive business, operating and financial experience
· Tremendous knowledge of MAA and the multifamily real estate industry
· Additional depth to REIT and apartment experience and knowledge from service on the Advisory Board of Governors of NAREIT and the Executive Committee of the National Multifamily Housing Council
· Broad strategic vision for MAA
· Service as our Chairman and Chief Executive Officer creates a critical link between management and our Board, enabling our Board to perform its oversight function with the benefits of management's perspectives on the business
|
|
RUSSELL R. FRENCH
Special Limited Partner of
Moseley & Co. VI, LLC and
Class B Partner of
Moseley & Co. VII, LLC and
Moseley & Co. SBIC, LLC
|
Mr. French was appointed to the Board pursuant to the terms of the merger agreement between us and Post Properties, Inc., or Post. Mr. French has been a special limited partner of Moseley & Co. VI, LLC since 2007 and a Class B Partner of both Moseley & Co. VII, LLC and Moseley & Co. SBIC, LLC since 2014. In addition, Mr. French has been a member of Moseley & Co. V, LLC, the general partner of a venture capital fund, since 2000. Mr. French is a retired venture capitalist and was previously a member of Moseley & Co. III and a partner of Moseley & Co. II, positions he held for more than five years. Mr. French is an Emeritus Trustee of Emory University.
|
|
Director since:
December 2016
Age: 72
Board Committees:
Audit
Other Public Company Boards:
Post Properties, Inc.
(1993–2016)
|
Key Attributes, Experiences and Skills:
· Provides a breadth of knowledge in company oversight from his extensive experience in evaluating businesses across a range of industries
· Provides financial expertise including the evaluation of financial statements and long term company performance from his 30-year career as a venture capitalist
· Mr. French’s previous service on the Board of Directors of Post provides our Board with historical knowledge and perspective of the Post portfolio and promotes stability in our operations following our merger with Post.
|
|
ALAN B. GRAF, JR.
Executive Vice President and
Chief Financial Officer of
FedEx Corporation
|
Mr. Graf has been the Executive Vice President and Chief Financial Officer of FedEx Corporation since 1998 and is a member of FedEx Corporation’s Executive Committee. Mr. Graf served as Executive Vice President and Chief Financial Officer for FedEx Express, FedEx’s predecessor, from 1991 to 1998. Mr. Graf joined FedEx in 1980. Mr. Graf also serves on the boards of Methodist Le Bonheur Healthcare and the Indiana University Foundation and is a University of Memphis Trustee.
|
|
Director since:
June 2002
Age: 64
Board Committees:
Audit
(Chairman)
Other Public Company Boards:
NIKE, Inc.
(2002–current)
|
Key Attributes, Experiences and Skills:
· Offers valuable business leadership, management experience, and insight and guidance on strategic direction and growth opportunities from his 37-year career at FedEx Corporation
· Provides financial expertise including an understanding of financial statements, corporate finance, accounting and capital markets from his financial background and his service on the audit committee of NIKE, Inc.
|
|
TONI JENNINGS
Chairman of the
Board of Directors of
Jack Jennings & Sons, Inc. and
Jennings & Jennings, Inc.
|
Ms. Jennings was appointed to the Board pursuant to the terms of the merger agreement between us and Post. Ms. Jennings currently serves as the Chairman of the Board of Jack Jennings & Sons, Inc., a commercial construction firm, a position she has held for ten years. Ms. Jennings served as and was the first female Lieutenant Governor for the State of Florida from 2003 to 2007. Prior to that, Ms. Jennings served as President of Jack Jennings & Sons, Inc. from 1982 to 2003. During this time, Ms. Jennings also served in the Florida legislature, from 1976 to 2000, including 20 years in the Florida Senate where she served the last four years as Senate President.
|
|
Director since:
December 2016
Age: 69
Board Committees:
Compensation;
Nominating and Corporate
Governance
Other Public Company Boards:
Next Era Energy, Inc.
(2007-current);
Brown & Brown, Inc.
(2007-current & 1997-2003);
Post Properties, Inc.
(2011–2016)
|
Key Attributes, Experiences and Skills:
· Offers insight from her extensive legislative and political experience gained through four years of service as Lieutenant Governor of the State of Florida and 24 years in the Florida legislature
· Provides relevant business acumen from her 30 years of experience as an owner and operator of a successful industry-related business
· Ms. Jenning’s previous service on the Board of Directors of Post provides our Board of Directors with historical knowledge and perspective of the Post portfolio and promotes stability in our operations following our merger with Post.
|
|
JAMES K. LOWDER
Chairman of the
Board of Directors of
The Colonial Company
|
Mr. Lowder was appointed to the Board pursuant to the terms of the merger agreement between us and Colonial Properties Trust. Mr. Lowder has served as Chairman of the Board of The Colonial Company and its subsidiaries since 1995. Mr. Lowder is a member of the Home Builders Association of Alabama, the Greater Montgomery Home Builders Association, and serves on the Board of Directors of Alabama Power Company. James K. Lowder is the brother of Thomas H. Lowder, another one of our directors.
|
|
Director since:
October 2013
Age: 68
Board Committees:
Compensation;
Nominating and Corporate
Governance
Other Public Company Boards:
Colonial Properties Trust
(1993-2013)
|
Key Attributes, Experiences and Skills:
· Vast experience in the real estate development and construction industries in the Southeast
· Extensive knowledge of all phases of the commercial real estate industry and economic cycles
· Mr. Lowder’s previous service as a trustee for Colonial Properties Trust provides our Board with historical knowledge and perspective of the Colonial Properties Trust portfolio and promotes stability in our operations following our merger with Colonial Properties Trust
|
|
THOMAS H. LOWDER
Past Chairman of the
Board of Trustees and
Chief Executive Officer of
Colonial Properties Trust
|
Mr. Lowder was appointed to the Board pursuant to the terms of the merger agreement between us and Colonial Properties Trust. Mr. Lowder served as the Chairman of the Board of Trustees for Colonial Properties Trust from 1993 to October 2013 and as the Chief Executive Officer from 1993 to 2006 and again from 2008 to 2013. Mr. Lowder became President and Chief Executive Officer of Colonial Properties, Inc., Colonial Properties Trust’s predecessor, in 1976. Mr. Lowder also serves on the boards of Children's Hospital of Alabama, and Crippled Children's Foundation. Thomas H. Lowder is the brother of James K. Lowder, another one of our directors.
|
|
Director since:
October 2013
Age: 68
Board Committees:
Real Estate Investment
Other Public Company Boards:
Colonial Properties Trust
(1993-2013)
|
Key Attributes, Experiences and Skills:
· Depth of experience in the acquisition, development, management, and disposition of multifamily, office and retail properties
· Tremendous knowledge of the markets in which we operate
· Mr. Lowder’s previous service as Chief Executive Officer and Chairman of the Board for Colonial Properties Trust provides our Board with historical knowledge and perspective of the Colonial Properties Trust portfolio and promotes stability in our operations following our merger with Colonial Properties Trust
|
|
MONICA McGURK
Past Chief Growth Officer of
Tyson Foods, Inc.
|
Ms. McGurk served as the Chief Growth Officer for Tyson Foods, Inc. through September 2017, having previously joined the company in 2016 as Executive Vice President of Strategy and New Ventures & President of Foodservice. Prior to joining Tyson Foods, Inc., Ms. McGurk worked for The Coca-Cola Company as Senior Vice President, Strategy, Decision Support and eCommerce, North America Group from 2014 to 2016, and as Vice President, Strategy & eCommerce from 2012 to 2014. Prior to her employment with The Coca-Cola Company, Ms. McGurk served for eight months as the Chief Executive Officer of The Alumni Factor, a digital media and information services start up. From 1992 to 2012, Ms. McGurk served in a variety of roles at McKinsey & Company, a global management consulting firm, including eight years as a partner.
|
|
Director since:
March 2016
Age: 48
Board Committees:
Compensation;
Nominating and Corporate
Governance
Other Public Company Boards:
None
|
Key Attributes, Experiences and Skills:
· Offers valuable guidance on corporate strategy development, consumer analysis and marketing and eCommerce from her career with Tyson Foods, Inc., The Coca-Cola Company and McKinsey & Company
· Provides valuable insight and guidance on how opportunities for enhanced branding and growth in web-based services and new technologies will continue to impact our platform and operations
|
|
CLAUDE B. NIELSEN
Chairman of the
Board of Directors of
Coca-Cola Bottling Company
United, Inc.
|
Mr. Nielsen was appointed to the Board pursuant to the terms of the merger agreement between us and Colonial Properties Trust. Mr. Nielsen has served as Chairman of the Board of Directors for Coca-Cola Bottling Company United, Inc. since 2003. Mr. Nielsen served as chief executive officer of Coca-Cola Bottling Company United, Inc. from 1991 to his planned retirement in 2016. Mr. Nielsen had been appointed as president in 1990. Prior to 1990, Mr. Nielsen served as president of Birmingham Coca-Cola Bottling Company. Mr. Nielsen is currently a board member of the Birmingham Business Alliance.
|
|
Director since:
October 2013
Age: 67
Board Committees:
Compensation;
Nominating and Corporate
Governance (Chairman)
Other Public Company Boards:
Colonial Properties Trust
(1993-2013);
|
Key Attributes, Experiences and Skills:
· Unique perspective and insight as an experienced participant in the financial services and beverage industries
· Extensive experience in the capital markets from his executive leadership of the Coca-Cola Bottling Company United, Inc. and his tenure as a director of Regions Financial Corporation
· Mr. Nielsen’s previous service as a trustee for Colonial Properties Trust provides our Board with historical knowledge and perspective of the Colonial Properties Trust portfolio and promotes stability in our operations following our merger with Colonial Properties Trust
|
|
PHILIP W. NORWOOD
Past President and
Chief Executive Officer of
Faison Enterprises, Inc.
|
Mr. Norwood is a Principal of Haviland Capital, LLC, an investment company. Mr. Norwood served as the President and Chief Executive Officer of Faison Enterprises, Inc., a real estate development and investment company, from 1994 until his retirement in March 2013. Prior to joining Faison Enterprises, Inc., Mr. Norwood held several positions for Trammell Crow Company. Mr. Norwood is a member of several real estate associations and serves as the Chairman of the Board of Directors for Pacolet Milliken Enterprises, Inc.
|
|
Director since:
August 2007
Age: 70
Board Committees:
Compensation
(Chairman);
Nominating and Corporate
Governance;
Real Estate Investment
Other Public Company Boards:
None
|
Key Attributes, Experiences and Skills:
· Extensive and in-depth real estate knowledge and experience, as well as capital markets and financial expertise from his 37-year career in the real estate industry and extensive participation in some of the most prominent real estate associations
· Astute insight into operational and strategic matters as well as potential acquisitions and divestitures
· Industry specific operational experience, making him uniquely qualified to serve as the Chairman of the Compensation Committee as he has a keen understanding of executive compensation, its impact on recruitment and retention and the alignment of management and shareholder interests
|
|
W. REID SANDERS
President of
Sanders Properties, LLC and
Sanders Investments, LLC
|
Mr. Sanders is the Co-Founder and served as the Executive Vice President of Southeastern Asset Management, and the President of Longleaf Partners Funds, from 1975 to 2000. Prior to 1975, Mr. Sanders served as an investment officer and worked in credit analysis and commercial lending in the banking industry from 1971 to 1975. Mr. Sanders currently serves on the Board of Directors, Compensation Committee and Executive Committee for Independent Bank, serves on the Investment Committee at Cypress Realty, a limited partnership involved in commercial real estate, and is on the Advisory Board of SSM Venture Partners III, L.P.
|
|
Director since:
March 2010
Age: 68
Board Committees:
Audit;
Real Estate Investment
Other Public Company Boards:
Two Harbors Investment Corp.
(2009-current);
Granite Point Mortgage (2017-current);
Silver Bay Realty Trust Corp.
(2016-2017)
|
Key Attributes, Experiences and Skills:
· Financial expertise and valuable insight into the capital markets from his 42-year career in the financial industry
· Valuable insights regarding the evaluation of potential acquisitions and divestitures from his service on the Investment Committee of a commercial real estate limited partnership
· Mr. Sanders’ understanding of financial statements, corporate finance, and accounting makes him a valued member of the Audit Committee
|
|
GARY SHORB
Past President and
Chief Financial Officer of
Methodist Le Bonheur Healthcare
|
Mr. Shorb served as the President and Chief Executive Officer of Methodist Le Bonheur Healthcare, an integrated healthcare system that comprises a 7-hospital operation, from 2001 to his planned retirement in 2016. Mr. Shorb served as a Senior Advisor to the Chief Executive Officer through April 2017. Mr. Shorb joined Methodist Le Bonheur Healthcare in 1990 as Executive Vice President. Before joining Methodist Le Bonheur Healthcare, Mr. Shorb served as President of the Regional Medical Center in Memphis, Tennessee for 4 years. Prior to his work in the healthcare industry, Mr. Shorb worked as a project engineer with Exxon and served as a Lieutenant Commander in the U.S. Navy. Mr. Shorb serves on a number of civic and non-profit boards and is currently serving as the Executive Director of The Urban Child Institute.
|
|
Director since:
May 2012
Age: 67
Board Committees:
Audit
Other Public Company Boards:
None
|
Key Attributes, Experiences and Skills:
· Offers valuable business leadership with expertise and experience in organizational development, management and business finance from his long career at Methodist Le Bonheur Healthcare and senior leadership positions held prior to joining Methodist Le Bonheur Healthcare
· Insights and experience directly attributable to our service-based operations from his experience as the Chief Executive Officer of a large consumer and service-based operation
|
|
DAVID P. STOCKERT
Past Chief Executive
Officer and President of
Post Properties, Inc.
|
Mr. Stockert was appointed to the Board pursuant to the terms of the merger agreement between us and Post. Mr. Stockert served as Chief Executive Officer and President of Post from 2002 to 2016 and as President and Chief Operating Officer from 2001 to 2002. Prior to joining Post, Mr. Stockert served as Executive Vice President of Duke Realty Corporation from 1999 to 2000, and as Senior Vice President and Chief Financial Officer of Weeks Corporation from 1995 to 1999. Prior to joining Weeks Corporation, Mr. Stockert was an investment banker and a certified public accountant. Mr. Stockert currently serves on multiple civic and charitable organizations in the Atlanta area.
|
|
Director since:
December 2016
Age: 56
Board Committees:
Real Estate Investment
Other Public Company Boards:
Duke Realty Corporation
(2017-current);
Post Properties, Inc.
(2002–2016)
|
Key Attributes, Experiences and Skills:
· Depth of experience in the acquisition, development, management, and sale of multifamily, office and retail properties
· Provides a breadth of industry knowledge having spent 26 years of his career working for three publically-traded REITs, and serving on the board of another REIT
· Mr. Stockert’s previous service as Chief Executive Officer for Post provides our Board with historical knowledge and perspective of the Post portfolio and promotes stability in our operations following our merger with Post.
|
|
STOCK OWNERSHIP
|
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
|
The number of shares owned and percentage ownership in the following table is based on 113,643,165 shares of common stock outstanding on December 31, 2017. The following table sets forth information as of December 31, 2017, regarding each person known to us to be the beneficial owner of more than five percent of our common stock. The information in the following table is based solely on Schedule 13G filings with the SEC by the respective identified beneficial owners.
|
Name and Address
of Beneficial Owner
|
Amount and
Nature of
Beneficial
Ownership
|
Percent
of Class
|
Notes
|
||||||
|
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
|
20,250,800
|
17.8%
|
|
The Schedule 13G indicates the entity has sole power to vote or to direct the vote for 289,042 shares, shared power to vote or to direct the vote for 165,568 shares, sole power to dispose or to direct the disposition of 19,932,913 shares, and shared power to dispose or to direct the disposition of 317,887 shares. The shares indicated include the 7,649,289 shares beneficially owned by Vanguard Specialized Funds – Vanguard REIT Index Fund, an affiliate of Vanguard Group, Inc.
|
|||||
|
Vanguard Specialized Funds
- Vanguard REIT Index Fund
100 Vanguard Blvd.
Malvern, PA 19355
|
7,649,289
|
6.7%
|
|
The Schedule 13G indicates the entity has sole power to vote or to direct the vote for 7,649,289 shares. The shares indicated are included in the 20,250,800 shares beneficially owned by The Vanguard Group, Inc. and should not be added to those shares to indicate total beneficial ownership by The Vanguard Group, Inc.
|
|||||
|
BlackRock, Inc.
55 East 52nd St
New York, NY 10055
|
11,003,658
|
9.7%
|
|
The Schedule 13G indicates the entity has sole power to vote or to direct the vote for 10,029,929 shares and sole power to dispose or to direct the disposition of 11,003,658 shares.
|
|||||
|
State Street Corporation
State Street Financial Center
One Lincoln Street
Boston, MA 02111
|
6,466,649
|
5.7%
|
|
The Schedule 13G indicates the entity has shared power to vote or to direct the vote for 6,466,649 shares, and shared power to dispose or to direct the disposition of 6,466,649 shares.
|
|||||
SECURITY OWNERSHIP OF MANAGEMENT
The number of shares owned and percentage ownership in the following table is based on 113,696,262 shares of common stock outstanding on February 28, 2018. We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include shares of common stock issuable pursuant to the exercise of stock options that are either immediately exercisable or exercisable within 60 days of February 28, 2018. These shares are deemed to be outstanding and beneficially owned by the person holding those options for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, we believe that the persons identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them.
The following table sets forth the beneficial ownership of our common stock as of February 28, 2018 by (i) each director, (ii) each director nominee, (iii) each executive officer named in the Summary Compensation Table, and (iv) all directors, nominees and executive officers as a group. Unless otherwise indicated, voting power and investment power are exercisable solely by the named person. The address of each officer, director and/or nominee listed below is 6815 Poplar Avenue, Suite 500, Germantown, Tennessee 38138.
|
Name of Beneficial
Owner
|
Aggregate
Number of
Shares
Beneficially
Owned
|
Percent of Class
|
Notes
|
|||
|
H. Eric Bolton, Jr. (2)
|
339,308
|
(1)
|
Includes 110,000 shares that Mr. Bolton has the current right to acquire upon redemption of limited partnership units; 7,943 shares attributed to Mr. Bolton in our Employee Stock Ownership Plan; and 9,139 shares owned in a joint account with his wife for which Mr. Bolton has shared voting and investment power.
|
|||
|
Albert M. Campbell, III
|
54,134
|
(1)
|
Includes 2,833 shares attributed to Mr. Campbell in our Employee Stock Ownership Plan; and 1,100 shares of which Mr. Campbell has shared voting and investment power (100 shares held by Mr. Campbell through an individual retirement account, and 1,000 shares Mr. Campbell owns in a joint account with his wife).
|
|||
|
Robert J. DelPriore
|
26,000
|
(1)
|
||||
|
Russell R. French (2)
|
25,739
|
(1)
|
Includes 2,976 shares held in a deferred compensation account.
|
|||
|
Alan B. Graf, Jr. (2)
|
36,970
|
(1)
|
Includes 26,642 shares held in a deferred compensation account.
|
|||
|
Thomas L. Grimes, Jr.
|
54,160
|
(1)
|
Includes 3,575 shares attributed to Mr. Grimes in our Employee Stock Ownership Plan; and 1,311 shares owned by Mr. Grimes’ spouse in our Employee Stock Ownership Plan.
|
|||
|
Toni Jennings (2)
|
4,737
|
(1)
|
||||
|
James K. Lowder (2)
|
238,886
|
(1)
|
Includes 233,716 shares that Mr. Lowder has the current right to acquire upon redemption of limited partnership units, as to 4,990 of which Mr. Lowder would have shared voting and investment power (4,990 owned by JKL Investments, LLC); 208,726 of the limited partnership units owned by Mr. Lowder are pledged as collateral on various loans.
|
|
Name
|
Aggregate
Number of
Shares
Beneficially
Owned
|
Percent of
Class
|
Notes
|
|||
|
Thomas H. Lowder (2)
|
281,311
|
(1)
|
Includes 248,654 shares that Mr. Lowder has the current right to acquire upon redemption of limited partnership units, 19,928 of which Mr. Lowder would have shared voting and investment power (19,928 owned by THL Investments, LLC); 1,339 shares held in a deferred compensation account; 25,791 shares held by Mr. Lowder through an individual retirement account for which Mr. Lowder has shared voting and investment power; and 357 shares indirectly owned by Mr. Lowder (357 shares owned by THL Investments, LLC).
|
|||
|
Monica McGurk (2)
|
3,858
|
(1)
|
Includes 3,858 shares held in a deferred compensation account.
|
|||
|
Claude B. Nielsen (2)
|
31,780
|
(1)
|
Includes 2,111 shares that Mr. Nielsen has the current right to acquire upon redemption of limited partnership units; 7,628 shares held in a deferred compensation account; and 3,423 shares that Mr. Nielsen has the right to acquire upon the exercise of options.
|
|||
|
Philip W. Norwood (2)
|
23,993
|
(1)
|
Includes 15,906 shares held in a deferred compensation account.
|
|||
|
W. Reid Sanders (2)
|
140,072
|
(1)
|
Includes 107,000 shares that Mr. Sanders has the current right to acquire upon redemption of limited partnership units; 6,363 shares held in a deferred compensation account; 6,000 shares held by Mr. Sanders through an individual retirement account for which Mr. Sanders has shared voting and investment power; and 7,600 shares Mr. Sanders holds indirectly and for which he has shared voting and investment power, of which 5,900 shares Mr. Sanders has authority to vote as trustee or through a power-of-attorney and 1,700 shares owned by Mr. Sanders’ spouse.
|
|||
|
Gary Shorb (2)
|
16,555
|
(1)
|
Includes 11,805 shares held in a deferred compensation account.
|
|||
|
David P. Stockert (2)
|
159,915
|
(1)
|
Includes 1,915 shares held in a deferred compensation account; 53,812 shares owned by Mr. Stockert’s spouse and 27,008 shares that Mr. Stockert has the right to acquire upon the exercise of options.
|
|||
|
All Directors, Director Nominees and Executive Officers as a group (15 persons)
|
1,437,418
|
1.26%
|
Includes 701,481 shares that may be acquired upon redemption of limited partnership units; 78,432 shares held in deferred compensation accounts; 15,662 shares held in our Employee Stock Ownership Plan; and 30,431 shares that may be acquired upon the exercise of options.
|
| (1) |
Represents less than 1% of the total.
|
| (2) |
Director nominee.
|
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, or the Exchange Act, requires our directors, executive officers and certain beneficial owners of more than 10% of our common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and furnish us with copies of all forms filed.
To our knowledge, based solely on review of the copies of such reports furnished us and representations that no other reports were required, during the past fiscal year all Section 16(a) filing requirements applicable to our directors and executive officers were completed on a timely basis, except for the Forms 4 filed on September 29, 2017 which were due on September 28, 2017 for transactions on September 26, 2017 on behalf of Russell R. French, Alan B. Graf, Jr., Thomas H. Lowder, Monica McGurk, Philip W. Norwood, W. Reid Sanders, William B. Sansom, Gary Shorb and David P. Stockert, as MAA inadvertently failed to timely file the Forms 4 representing shares related to their quarterly non-employee director compensation on their behalf.
The following individuals served as our named executive officers in 2017:
|
Name and Position
|
Age
|
Experience
|
||
|
H. Eric Bolton, Jr.
Chairman of the Board
and Chief Executive Officer
|
61
|
Mr. Bolton joined us in 1994 as Vice President of Development and was named Chief Operating Officer in February 1996 and promoted to President in December 1996. Mr. Bolton assumed the position of Chief Executive Officer in October 2001 and became Chairman of the Board in September 2002. Prior to joining us, Mr. Bolton was with Trammell Crow Company for more than five years, and was Executive Vice President and Chief Financial Officer of Trammell Crow Realty Advisors. Prior to that, Mr. Bolton worked in the commercial banking industry for seven years.
|
||
|
Albert M. Campbell, III
Executive Vice President
and Chief Financial Officer
|
51
|
Prior to his appointment as Chief Financial Officer in January 2010, Mr. Campbell served as our Executive Vice President, Treasurer and Director of Financial Planning and was responsible for managing the funding requirements of the business to support corporate strategy. Mr. Campbell joined us in 1998 and was initially responsible for external reporting and financial planning. Prior to joining us, Mr. Campbell worked as a Certified Public Accountant with Arthur Andersen and served in various finance and accounting roles with Thomas & Betts Corporation.
|
||
|
Robert J. DelPriore
Executive Vice President
and General Counsel
|
50
|
Mr. DelPriore joined us in August 2013 as our Executive Vice President and General Counsel. Prior to joining us, Mr. DelPriore was a partner in the securities department of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC from February 2008 through August 2013; during which time he served as counsel to MAA. Prior to that, Mr. DelPriore was a partner in the corporate securities group of Bass, Berry & Sims PLC; during which time he served as counsel to MAA.
|
||
|
Thomas L. Grimes, Jr.
Executive Vice President
and Chief Operating Officer
|
49
|
Mr. Grimes was promoted to Chief Operating Officer in December 2011, having previously served as Executive Vice President and Director of Property Management. Prior to this position, Mr. Grimes served us as an Operations Director over the Central and North Regions. Mr. Grimes also served as Director of Business Development where he worked with our joint venture partners, managed our new development efforts and directed our ancillary income business. Mr. Grimes joined us in 1994.
|
|
MATTER TO BE VOTED
An advisory (non-binding) vote to approve the compensation of our named executive officers as disclosed in this Proxy Statement.
|
Section 14A of the Exchange Act requires that we provide our shareholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our “named executive officers”. Therefore, shareholders are asked to approve the compensation paid to our named executive officers as disclosed in this Proxy Statement pursuant to the SEC’s compensation disclosure rules, including the Compensation Discussion & Analysis, the compensation tables and the accompanying narrative discussion included in this Proxy Statement.
|
|||
|
VOTE REQUIRED
|
For the advisory (non-binding) vote on the compensation of our named executive officers to be approved, the votes cast “For” the proposal must exceed the votes cast “Against” the proposal. The vote under this proposal is advisory, and therefore, not binding on us, our Board or the Compensation Committee. However, our Board, including the Compensation Committee, values the opinions of our shareholders and, to the extent there is any significant vote against the named executive officer compensation as disclosed in this Proxy Statement, we will consider our shareholders’ concerns and evaluate what actions may be appropriate to address those concerns.
|
|||
|
Impact of Abstentions and Broker Non-Votes
|
Neither abstentions nor broker non-votes will have any legal effect on whether this proposal is approved.
|
|||
|
BOARD
RECOMMENDATION
|
FOR
|
Our Board recommends a vote “FOR” the advisory (non-binding) vote to approve the compensation of our named executive officers as disclosed in this Proxy Statement.
|
||
As described in detail under the heading “Compensation Discussion & Analysis,” we seek to closely align the interests of our named executive officers with the interests of our shareholders. Our compensation programs are designed to reward our named executive officers for the achievement of short-term and long-term strategic and operational goals and the achievement of increased total shareholder return, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking. The vote on executive compensation is an advisory, non-binding vote on the compensation of our “named executive officers,” as described in the Compensation Discussion & Analysis Section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure, set forth in this Proxy Statement. The advisory vote on executive compensation is not a vote on our general compensation policies, compensation of the Board, or our compensation policies as they relate to risk management.
Our philosophy in setting compensation policies for named executive officers has five fundamental objectives: (1) to align the financial interests of our executives’ interests with those of our shareholders both in the short and long term; (2) to provide incentives for achieving and exceeding annual and long-term performance goals; (3) to attract and retain a highly skilled team of executives by providing total compensation that is competitive with compensation at other well-managed REITs and real estate companies; (4) to reward superior corporate and individual performance achieved through ethical leadership; and (5) to appropriately reward executive officers for creating long-term shareholder value and returns. The Compensation Discussion & Analysis section provides a more detailed discussion of the executive compensation program and compensation philosophy.
The vote on this proposal is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our named executive officers, as described in this Proxy Statement in accordance with the compensation disclosure rules of the SEC.
|
INTRODUCTION
|
Our Compensation Discussion & Analysis provides a detailed discussion of our executive compensation philosophy, objectives and programs, the compensation decisions the Compensation Committee has made under those programs and the factors considered in making those decisions. Our Compensation Discussion & Analysis focuses on the compensation of our named executive officers for 2017, who were:
|
Name
|
Title
|
|
|
H. Eric Bolton, Jr.
|
Chairman of the Board and Chief Executive Officer
|
|
|
Albert M. Campbell, III
|
Executive Vice President and Chief Financial Officer
|
|
|
Robert J. DelPriore
|
Executive Vice President and General Counsel
|
|
|
Thomas L. Grimes, Jr.
|
Executive Vice President and Chief Operating Officer
|
Our compensation philosophy is that compensation for all employees, including our named executive officers, should be:
| · |
fair and equitable when viewed both internally and externally;
|
| · |
competitive in order to attract and retain the best qualified individuals; and
|
| · |
aligned with performance.
|
We have designed our compensation programs to reflect each of these characteristics. Our named executive officers receive a compensation package that primarily consists of an annual base salary, annual incentive awards and long-term incentive awards. The performance-based incentives seek to reward both short-term and long-term results and to align the interests of our named executive officers and other participants with the interests of our shareholders. Generally, our long-term compensation is in the form of restricted shares of our common stock, where the majority of the opportunity for our named executive officers is in the form of performance shares which may only be earned based on the achievement of specified total shareholder return results and other company performance metrics. Our Board has established stock ownership guidelines of three times annual base salary for our Chief Executive Officer and two times annual base salary for our other named executive officers, as well as retention requirements to retain 50% of net shares (after paying tax liabilities) following a vesting, which act to further align the interests of our named executive officers with those of our shareholders.
2017 SAY ON PAY VOTE
As previously announced at the 2017 Annual Meeting of Shareholders, our named executive officer compensation for 2016 was approved by over 94% of the votes cast on the matter. The Compensation Committee and MAA considered these results to be an endorsement by shareholders of our target level and actual executive compensation.
2017 ACHIEVEMENTS AND VALUE CREATION
Our Net Income Available for MAA Common Shareholders for 2017 was $2.86 per diluted common share, which was a 6.3% increase from $2.69 per diluted common share for 2016. Results for 2017 included $1.12 per diluted common share of gains related to the sale of real estate assets; $0.18 per diluted common share of merger and integration costs related to the merger with Post; and $0.08 per diluted common share of non-cash income related to an embedded derivative in the preferred shares issued in the merger with Post. Results for 2016 included $1.05 per diluted common share of gains related to the sale of real estate assets and $0.52 per diluted common share of merger and integration costs related to the merger with Post.
Funds From Operations, or FFO, for 2017 was $5.94 per diluted common share and unit, or per Share, which represented a 6.3% growth over $5.59 per diluted Share for 2016. Results for 2017 included $0.07 per Share of non-cash income related to an embedded derivative in the preferred shares issued in the merger with Post, and $0.17 per Share of merger and integration costs related to the merger with Post. Results for 2016 included $0.49 per share of merger and integration costs related to the merger with Post.
For a description of how we calculate FFO, and for a reconciliation of FFO to net income available to MAA common shareholders, which is the most directly comparable financial measure calculated in accordance with U.S. generally accepted accounting principles, or GAAP, see Appendix B.
We completed our merger with Post on December 1, 2016, forming a combined company with equity market capitalization of approximately $11 billion and total market capitalization of approximately $15 billion, as of the effective date of the merger. Following the merger, Standard & Poor’s Ratings Services upgraded our senior unsecured rating to BBB+ with a stable outlook and MAA was added to the benchmark S&P 500 Index. During 2017, we made significant progress towards fully integrating our operating, financial reporting and technology platforms to obtain synergies in gross overhead costs, and capture additional opportunities and savings from enhanced efficiencies due to increased portfolio scale, reconciling various operating practices, significant redevelopment opportunities at a number of the legacy Post communities, and improved cost of capital due to increased strength and liquidity of the combined balance sheet.
During 2017, we redeveloped a total of 8,375 apartment units at an average cost of $5,463 per unit, achieving average rental rate increases of 8.8% above non-renovated units.
We continued to recycle capital in 2017, acquiring 2 communities for a combined purchase price of $134.3 million, and selling 5 communities for combined gross proceeds of $186.3 million and recorded gains on sale of $127.4 million.
Total shareholder return for 2017 was 6.3%, inclusive of approximately $395.3 million paid to common shareholders in the form of cash dividends, outperforming the SNL US REIT Multifamily Index, a benchmark index for our industry.
|
2017 Total Shareholder Return
|
Total shareholder return is a measure of the performance of shares of stock over time. It combines share price appreciation and the reinvestment of dividends paid to show the total return to the shareholder expressed as an annualized percentage.
SUMMARY OF 2017 NAMED EXECUTIVE OFFICERS’ COMPENSATION
The following charts provide a summary of the various elements of compensation awarded to our named executive officers for 2017. Further discussion regarding the amounts and how they were determined can be found in “What We Pay and Why: Elements of Compensation” beginning on page 42.
Base Salary
The following table indicates the base salaries and percent increases from the prior year for our named executive officers:
|
Base Salary
|
Percent
|
|||||||||||
|
2017
|
2016
|
Increase
|
||||||||||
|
Mr. Bolton
|
$
|
704,000
|
$
|
640,000
|
10.0
|
%
|
||||||
|
Mr. Campbell
|
$
|
440,000
|
$
|
400,000
|
10.0
|
%
|
||||||
|
Mr. DelPriore
|
$
|
429,000
|
$
|
390,000
|
10.0
|
%
|
||||||
|
Mr. Grimes
|
$
|
451,000
|
$
|
410,000
|
10.0
|
%
|
||||||
Annual Incentive Compensation
Annual incentive compensation is intended to compensate our named executive officers for achieving our annual financial goals. Our named executive officers earned the following annual bonuses for 2017:
|
2017 Annual Bonus Paid in 2018
|
||||||||||||
|
Cash
Amount
|
Percent of 2017
Base Salary
|
Percent of Maximum
Opportunity Earned
|
||||||||||
|
Mr. Bolton
|
$
|
1,536,480
|
218
|
%
|
87
|
%
|
||||||
|
Mr. Campbell
|
$
|
580,635
|
132
|
%
|
88
|
%
|
||||||
|
Mr. DelPriore
|
$
|
574,163
|
134
|
%
|
89
|
%
|
||||||
|
Mr. Grimes
|
$
|
640,591
|
142
|
%
|
71
|
%
|
||||||
Long-Term Incentive Compensation
Equity-based plans provide for longer-term incentives that both align executive officer performance with our long-term goals and offer a retention component to the compensation package. Under our 2017 Long Term Incentive Program, or 2017 LTIP, our named executive officers have received the following awards to date:
|
Maximum
|
Earned to Date
|
Additional
Shares
|
||||||||||||||
|
Potential
Shares
|
Number of
Shares
|
Issue
Date
|
That Can
Be Earned
|
|||||||||||||
|
Mr. Bolton
|
||||||||||||||||
|
Time vested shares (1)
|
6,505
|
6,505
|
1/9/2017
|
0
|
||||||||||||
|
Performance-based shares
|
||||||||||||||||
|
FFO less MI Expense per Share (2)
|
9,757
|
9,757
|
4/2/2018
|
0
|
||||||||||||
|
3-Year total shareholder return (3)
|
16,262
|
0
|
N/A
|
16,262
|
||||||||||||
|
Mr. Campbell
|
||||||||||||||||
|
Time vested shares (1)
|
3,162
|
3,162
|
1/9/2017
|
0
|
||||||||||||
|
Performance-based shares
|
||||||||||||||||
|
FFO less MI Expense per Share (2)
|
4,743
|
4,743
|
4/2/2018
|
0
|
||||||||||||
|
3-Year total shareholder return (3)
|
7,905
|
0
|
N/A
|
7,905
|
||||||||||||
|
Mr. DelPriore
|
||||||||||||||||
|
Time vested shares (1)
|
2,642
|
2,642
|
1/9/2017
|
0
|
||||||||||||
|
Performance-based shares
|
||||||||||||||||
|
FFO less MI Expense per Share (2)
|
3,964
|
3,964
|
4/2/2018
|
0
|
||||||||||||
|
3-Year total shareholder return (3)
|
6,606
|
0
|
N/A
|
6,606
|
||||||||||||
|
Mr. Grimes
|
||||||||||||||||
|
Time vested shares (1)
|
3,241
|
3,241
|
1/9/2017
|
0
|
||||||||||||
|
Performance-based shares
|
||||||||||||||||
|
FFO less MI Expense per Share (2)
|
4,861
|
4,861
|
4/2/2018
|
0
|
||||||||||||
|
3-Year total shareholder return (3)
|
8,103
|
0
|
N/A
|
8,103
|
||||||||||||
| (1) |
The time vested shares represent 20% of the total award opportunity under the 2017 LTIP for named executive officers. The shares vest 20% annually on the first, second, third, fourth and fifth anniversary of the issue date subject to continued employment through each vest date. No additional shares can be issued under this tranche of the 2017 LTIP. See pages 47 through 51 for additional information.
|
| (2) |
The “FFO less MI Expense per Share” performance shares represent 30% of the total award opportunity under the 2017 LTIP for named executive officers. The performance period for this tranche was from January 1, 2017 through December 31, 2017. The shares vest 50% annually on the first and second anniversary of the issue date subject to continued employment through each vest date. No additional shares can be earned under this tranche of the 2017 LTIP. See pages 47 through 51 for additional information.
|
| (3) |
The “3-year total shareholder return” performance shares represent 50% of the total award opportunity under the 2017 LTIP for named executive officers. The performance period for this tranche is from January 1, 2017 through December 31, 2019. Any shares earned under this tranche will be issued on April 1, 2020 and will immediately vest at that time subject to continued employment through the issue date. See pages 47 through 51 for additional information.
|
One-Time Grant Related to the Merger with Post
On March 23, 2017, in response to the completion of the merger between MAA and Post, and after consultation with its external compensation consultant, the Compensation Committee approved an equity incentive program, the MAA-Post Merger Executive Incentive Program, or Merger Plan, to incentivize key executive management to complete a successful integration of the resources, systems and operations of MAA and Post in order to obtain expense synergies, efficiencies of scale and improved balance sheet strength for our shareholders. The program is 100% performance based and provides award opportunities based on results achieved during performance periods in 2017 and 2018. No awards can be earned under the Merger Plan unless specific company-based performance metrics are achieved. Under the Merger Plan, our named executive officers have received the following awards to date:
|
Maximum
|
Earned to Date
|
Additional
Shares
|
||||||||||||||
|
Potential
Shares
|
Number of
Shares
|
Issue
Date
|
That Can
Be Earned
|
|||||||||||||
|
Mr. Bolton
|
||||||||||||||||
|
Time vested shares (1)
|
0
|
0
|
N/A
|
0
|
||||||||||||
|
Performance-based shares
|
||||||||||||||||
|
Overhead expense synergy (2)
|
10,297
|
0
|
10,297
|
|||||||||||||
|
New development (3)
|
2,574
|
0
|
2,574
|
|||||||||||||
|
Incremental NOI improvement (4)
|
2,574
|
0
|
2,574
|
|||||||||||||
|
Redevolpment (5)
|
2,574
|
0
|
2,574
|
|||||||||||||
|
Cost of capital improvement (6)
|
2,574
|
0
|
2,574
|
|||||||||||||
|
Mr. Campbell
|
||||||||||||||||
|
Time vested shares (1)
|
0
|
0
|
N/A
|
0
|
||||||||||||
|
Performance-based shares
|
||||||||||||||||
|
Overhead expense synergy (2)
|
4,290
|
0
|
4,290
|
|||||||||||||
|
New development (3)
|
1,072
|
0
|
1,072
|
|||||||||||||
|
Incremental NOI improvement (4)
|
1,072
|
0
|
1,072
|
|||||||||||||
|
Redevolpment (5)
|
1,072
|
0
|
1,072
|
|||||||||||||
|
Cost of capital improvement (6)
|
1,072
|
0
|
1,072
|
|||||||||||||
|
Mr. DelPriore
|
||||||||||||||||
|
Time vested shares (1)
|
0
|
0
|
N/A
|
0
|
||||||||||||
|
Performance-based shares
|
||||||||||||||||
|
Overhead expense synergy (2)
|
4,183
|
0
|
4,183
|
|||||||||||||
|
New development (3)
|
1,045
|
0
|
1,045
|
|||||||||||||
|
Incremental NOI improvement (4)
|
1,045
|
0
|
1,045
|
|||||||||||||
|
Redevolpment (5)
|
1,045
|
0
|
1,045
|
|||||||||||||
|
Cost of capital improvement (6)
|
1,045
|
0
|
1,045
|
|||||||||||||
|
Mr. Grimes
|
||||||||||||||||
|
Time vested shares (1)
|
0
|
0
|
N/A
|
0
|
||||||||||||
|
Performance-based shares
|
||||||||||||||||
|
Overhead expense synergy (2)
|
3,298
|
0
|
3,298
|
|||||||||||||
|
New development (3)
|
824
|
0
|
824
|
|||||||||||||
|
Incremental NOI improvement (4)
|
824
|
0
|
824
|
|||||||||||||
|
Redevolpment (5)
|
824
|
0
|
824
|
|||||||||||||
|
Cost of capital improvement (6)
|
824
|
0
|
824
|
|||||||||||||
| (1) |
The Merger Plan does not allow for the issuance of any time vested shares.
|
| (2) |
The “Overhead Expense Synergy” performance shares represent 50% of the total award opportunity under the Merger Plan. Any shares earned under this tranche will be issued on April 1, 2019 and will vest 50% annually on the first and second anniversary of the issue date subject to continued employment through each vest date. See page 51 for additional information.
|
| (3) |
The “New Development” performance shares represent 12.5% of the total award opportunity under the Merger Plan. Any shares earned under this tranche will be issued on April 1, 2019 and will vest 50% annually on the first and second anniversary of the issue date subject to continued employment through each vest date. See page 51 for additional information.
|
| (4) |
The “Incremental NOI Improvement” performance shares represent 12.5% of the total award opportunity under the Merger Plan. Any shares earned under this tranche will be issued on April 1, 2019 and will vest 50% annually on the first and second anniversary of the issue date subject to continued employment through each vest date. See page 51 for additional information.
|
| (5) |
The “Redevelopment” performance shares represent 12.5% of the total award opportunity under the Merger Plan. Any shares earned under this tranche will be issued on April 1, 2019 and will vest 50% annually on the first and second anniversary of the issue date subject to continued employment through each vest date. See page 51 for additional information.
|
| (6) |
The “Cost of Capital Improvement” performance shares represent 12.5% of the total award opportunity under the Merger Plan. Any shares earned under this tranche will be issued on April 1, 2019 and will vest 50% annually on the first and second anniversary of the issue date subject to continued employment through each vest date. See page 51 for additional information.
|
As previously announced at the 2017 Annual Meeting of Shareholders, our named executive officer compensation for 2016 was approved by over 94% of the votes cast on the matter. We believe our programs are effectively designed and working well in alignment with the interests of our shareholders and are instrumental to achieving our business strategy. In determining executive compensation for 2017, the Compensation Committee considered the overwhelming shareholder support for each “Say-on-Pay” proposal that MAA has submitted to its shareholders. As a result, the Compensation Committee continued to apply the same effective principles and philosophy it has used previously in determining executive compensation and will continue to consider shareholder concerns and feedback in the future.
At the Annual Meeting, we are again holding an annual advisory vote to approve named executive officer compensation (see page 27). The Compensation Committee will continue to consider the results from this year’s and future advisory votes on executive compensation, as well as feedback from shareholders throughout the course of such year.
HOW PAY IS TIED TO COMPANY PERFORMANCE
Our compensation programs are designed to reward employees for producing sustainable growth, to attract and retain world-class talent and to align compensation with the long-term interests of our shareholders. The Compensation Committee strongly believes that executive compensation — both pay opportunities and pay actually realized — should be tied to our performance. The Compensation Committee views performance in two primary ways:
| · |
our operating performance; and
|
| · |
return to shareholders over time relative to other multifamily REITs and other peer companies.
|
Operating Performance
We had strong financial results in 2017, as more specifically described in our Annual Report on Form 10-K filed with the SEC on February 23, 2018, including under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operation”. Highlights for 2017 include:
| · |
Net Income Available for MAA Common Shareholders for 2017 was $2.86 per diluted common share, which was a 6.3% increase from $2.69 per diluted common share for 2016. Results for 2017 included $1.12 per diluted common share of gains related to the sale of real estate assets; $0.18 per diluted common share of merger and integration costs related to the merger with Post; and $0.08 per diluted common share of non-cash income related to an embedded derivative in the preferred shares issued in the merger with Post. Results for 2016 included $1.05 per diluted common share of gains related to the sale of real estate assets and $0.52 per diluted common share of merger and integration costs related to the merger with Post;
|
| · |
FFO for 2017 was $5.94 per Share, which represented a 6.3% growth over $5.59 per diluted Share for 2016. Results for 2017 included $0.07 per Share of non-cash income related to an embedded derivative in the preferred shares issued in the merger with Post, and $0.17 per Share of merger and integration costs related to the merger with Post. Results for 2016 included $0.49 per share of merger and integration costs related to the merger with Post;
|
| · |
Made significant progress in merging the platforms of MAA and Post following the completion of the merger on December 1, 2016;
|
| · |
Acquired two multifamily apartment communities for a total combined capital investment of $134 million;
|
| · |
Sold five multifamily apartment communities for total combined gross proceeds of $186 million and a combined total gain on sale of approximately $127 million, achieving a combined leveraged IRR of 14.5%;
|
| · |
Invested approximately $173 million in new development during 2017 and had three development projects underway containing 937 units, with a total projected cost of approximately $214 million, of which, approximately $46 million remained to be spent, as of December 31, 2017;
|
| · |
As of December 31, 2017, MAA had five apartment communities, consisting of a total of 1,538 units, in various stages of lease-up with an overall average physical occupancy of 62.5%;
|
| · |
Completed the redevelopment of 8,375 apartment units for a total investment of approximately $46 million, achieving average rental rate increases of 8.8% above non-renovated units;
|
| · |
Ended the year with total debt to total assets (as defined in the covenants for the bonds issued by MAA’s primary operating partnership, Mid-America Apartments, L.P.) of 33.2%, compared to 33.9% as of December 31, 2016;
|
| · |
As of December 31, 2017, total debt outstanding was $4.5 billion at an average effective interest rate of 3.6%, and 83% was fixed or hedged against rising interest rates for an average of 4.7 years.
|
FFO, a non-GAAP financial measure, represents Net Income Available for Common Shareholders (computed in accordance with GAAP) excluding Extraordinary Items, Asset Impairment, and Gains or Losses on Disposition of Real Estate Assets, plus Net Income Attributable to Noncontrolling Interest, Depreciation and Amortization of Real Estate, and adjustments for joint ventures to reflect FFO on the same basis.
While MAA's definition of FFO is in accordance with the National Association of Real Estate Investment Trusts’ definition, it may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to such other REITs. FFO should not be considered as an alternative to Net Income Available for MAA Common Shareholders as an indicator of operating performance. MAA believes that FFO is helpful in understanding operating performance in that FFO excludes depreciation and amortization of real estate assets. MAA believes that GAAP historical cost depreciation of real estate assets is generally not correlated with changes in the value of those assets, whose value does not diminish predictably over time as historical cost depreciation implies. A reconciliation of FFO to Net Income Available for MAA Common Shareholders, which is the most directly comparable GAAP financial measure, is set forth on Appendix B of this Proxy Statement.
Return to Shareholders
Since April 1994, MAA has never failed to pay a quarterly dividend to our common shareholders. In addition, MAA has never decreased the common shareholder dividend rate. In 2017, MAA distributed $395.3 million to common shareholders in the form of dividends.
|
Quarterly Dividend Rate per Common Share
|
We have consistently returned significant value to shareholders over the long term, based on total shareholder return. The below graph discloses MAA’s annualized total shareholder return rates over various periods of time against the SNL US REIT Equity Index and the SNL US REIT Multifamily Index, both of which are comparative indexes for our industry. The SNL US REIT Multifamily Index is the index used to measure relative total shareholder return performance in our long-term incentive plans, as it represents other REITs specializing in the multifamily industry.
|
Annualized Total Shareholder Return
|
Total shareholder return is a measure of the performance of shares of stock over time. It combines share price appreciation and the reinvestment of dividends paid to show the total return to the shareholder expressed as an annualized percentage.
The following chart shows how a $100 investment in our common stock on December 31, 2012 would have grown to $188.37 on December 31, 2017, with dividends reinvested quarterly. The chart also compares the total shareholder return on our common stock to the same investment in the S&P 500 Index and the FTSE NAREIT Equity REIT Index prepared by the National Association of Real Estate Investment Trusts, or NAREIT. The performance chart is not necessarily indicative of future investment performance.
|
Total Return Performance
|
UNDERSTANDING MR. BOLTON’S PAY
This section provides additional detail on the rationale for Mr. Bolton’s pay.
Mr. Bolton’s Accomplishments as Chief Executive Officer
Under the leadership of Mr. Bolton, who became Chief Executive Officer in October 2001 and Chairman of the Board in September 2002, we have performed very well and delivered significant value to shareholders. In addition, the Compensation Committee believes that Mr. Bolton’s strategic vision and focus on long-term sustainable growth has laid a solid foundation for future growth. The Compensation Committee believes that Mr. Bolton’s leadership has directly contributed to our excellent performance over the last several years and should be appropriately rewarded.
Recent MAA Milestones
| 2017 |
Achieved FFO of $699.6 million, or $5.94 per Share, a 6.3% increase over the prior year
|
Reached material milestones in the implementation of the operation and platform integration strategy related to the merger with Post to obtain expense synergies, efficiencies of scale and cost of capital improvements
Received upgrade to Baa1 with stable outlook from Moody’s Investors Service
Acquired multifamily properties totaling approximately $134 million and invested an additional $173 million in development
Completed the disposition of approximately $186 million in multifamily properties to support strategic re-cycling efforts while recognizing a gain of approximately $127 million
Distributed $395.3 million to common shareholders in dividends
Raised annual dividend rate for 2018 by 6% to $3.69 per share
| 2016 |
Consummated the merger with Post moving MAA to total market capitalization of approximately $15 billion as of December 1, 2016, the closing date of the merger
|
Received upgrade to BBB+ with stable outlook from Standard & Poor's Ratings Services
Named to S&P 500 Index
Acquired multifamily properties totaling approximately $334 million and invested an additional $59 million in development
Completed the disposition of approximately $265 million in multifamily properties to support strategic re-cycling efforts while recognizing a gain of approximately $80 million
Distributed $248 million to common shareholders in dividends
Raised annual dividend rate for 2017 by 6% to $3.48 per share
| 2015 |
Acquired multifamily properties and development land totaling approximately $321 million and invested an additional $56 million in development, completing two multifamily projects
|
Completed the disposition of approximately $354 million in multifamily properties and an additional $9 million in non-apartment assets and land to support strategic re-cycling efforts while recognizing a gain of approximately $190 million
Distributed $232.1 million to common shareholders in dividends
Raised annual dividend rate for 2016 by 6.5% to $3.28 per share
Compensation Committee Actions
After considering our operating performance and return to shareholders, Mr. Bolton’s strong leadership and individual accomplishments, and findings of the Compensation Committee’s compensation consultant (see page 57), the Compensation Committee took the following actions with respect to Mr. Bolton’s 2017 compensation:
|
BASE SALARY
Base salary for 2017 was increased from $640,000 to $704,000.
|
The Compensation Committee engaged Semler Brossy to provide compensation benchmarking data relative to our revised peer group and other market sources following our merger with Post to assist in evaluating our executive compensation. Based on their analysis, Semler Brossy reported that Mr. Bolton’s base salary was significantly below median for both the revised peer group following the merger with Post and other survey data reviewed. Considering the increased complexity and size of MAA following the merger with Post, and taking into account the results of the benchmarking analysis performed by Semler Brossy, the Compensation Committee recommended, and the Board approved, a 10% increase in Mr. Bolton’s base salary for 2017. While the increased base salary is still well below the median salaries of the peer group and other survey data reviewed, the Compensation Committee felt it was a balanced and measured first step in adjusting Mr. Bolton’s compensation.
|
|
ANNUAL INCENTIVE
The percent of salary opportunity available as an annual incentive for 2017 was held consistent with the prior year at 250%.
|
The comparison provided by Semler Brossy indicated the annual cash opportunity for Mr. Bolton was significantly below the median of the revised peer group and other survey data reviewed. However, taking into account the impact of the increase in base salary, which only partially bridges the gap between Mr. Bolton’s opportunity and that of the revised peer median, and Mr. Bolton’s compensation package as a whole, the Compensation Committee determined not to increase Mr. Bolton’s annual incentive opportunity for 2017.
|
|
LONG-TERM EQUITY COMPENSATION
The total percent of salary opportunity available for 2017 in the form of restricted stock awards through our long-term incentive program was increased from 400% to 450%.
|
The Compensation Committee believes that compensation derived from equity awards directly aligns management with the interests of our shareholders and is most closely linked to accomplishing our strategic vision to provide a stable and growing dividend to shareholders over the long term. The comparison provided by Semler Brossy of Mr. Bolton’s compensation as compared to the revised peer group and other survey data indicated the lion’s share of shortfalls to median compensation fell in the equity component. The amount of opportunity awarded reflects the Compensation Committee’s continued confidence in Mr. Bolton’s strategic vision and leadership, and the increased complexity and size of MAA following the merger with Post.
The total amount of the opportunity in the long-term incentive program linked to performance-based metrics remained flat at 80%, with 50% of the overall opportunity remaining linked to the performance-based metric of 3-year total shareholder return performance. Performance-based long-term incentive compensation represents a significant component of Mr. Bolton’s pay.
|
Our compensation philosophy is to drive and support our long-term goal of sustainable growth and total shareholder return by paying for performance, with due consideration to balancing risk and reward. By “sustainable growth” we mean investing in our long-term opportunities while meeting our short-term commitments. The main objective of our executive officer compensation program is to align the interests of our executive officers with the interests of shareholders. To achieve this alignment, we must attract and retain individuals with the appropriate expertise and leadership ability, and we must motivate and reward them to build long-term shareholder value. We and our competitors recruit from a limited pool of resources for individuals who are highly experienced, successful and well rewarded. Accordingly, our executive officer compensation program is designed to link annual and long-term cash and stock incentives to the achievement of measurable corporate, business unit and individual performance objectives and to align executive officers’ interests with shareholder value creation. To achieve these objectives, the Compensation Committee reviews and approves corporate goals and objectives relevant to compensation of our executive officers, evaluates executive officer performance in light of those goals and sets executive officer compensation levels based on this evaluation.
The Compensation Committee generally sets executive compensation programs to be competitive with other well-managed, multifamily REITs, and other REITs and real estate companies of comparable enterprise value size, taking into account individually each component of compensation. The Compensation Committee intends for each component and the aggregate of the compensation program to be competitive and to address the Compensation Committee’s general underlying philosophy and policies for executive officer compensation:
| · |
to align the financial interests of the executive officers with those of our shareholders, both in the short and long term;
|
| · |
to provide incentives for achieving and exceeding annual and long-term performance goals;
|
| · |
to attract, retain and motivate highly competent executives by providing total compensation that is competitive with compensation at other well-managed REITs and real estate companies;
|
| · |
to reward superior corporate and individual performance achieved through ethical leadership; and
|
| · |
to appropriately reward executive officers for creating long-term shareholder value and returns.
|
Our Compensation Committee evaluates the effectiveness of our compensation programs by reviewing our performance as a whole and the performance of individual named executive officers. In doing so, the Compensation Committee may take into account our strategy as annually presented to our Board; the total return being delivered to our shareholders as well as the return being earned by the shareholders of our peers or market or industry-related indices; our fiscal performance both annually and for longer-term periods; as well as the named executive officer’s individual goals. The Compensation Committee reviews all plans annually and adopts plans designed to align management interests with those of our shareholders.
Our compensation program is designed to reward our executive officers when they achieve our annual business goals, build shareholder value and maintain long-term careers with us. We reward these three aspects so that the team will make balanced annual and long-term decisions that result in consistent financial performance, innovation and collaboration.
Below, we summarize certain executive compensation practices, both the practices we have implemented to drive performance and the practices we have not implemented because we do not believe they would serve our shareholders’ long-term interest.
What We Do
| · |
Pay for performance (see pages 35 through 39)
|
| · |
Mitigate undue risk in compensation programs (see pages 53 through 54)
|
| · |
Include vesting periods on performance share awards (see pages 48 through 49)
|
| · |
Adopted share ownership guidelines (see page 57)
|
| · |
Adopted holding period requirements for equity compensation (see page 58)
|
| · |
Prohibit hedging transactions, pledging and short sales by executive officers or directors (see page 58)
|
| · |
Utilize an independent compensation consulting firm which provides no other services for us (see pages 56 through 57)
|
| · |
Provide reasonable post-employment/change in control provisions (see pages 79 through 81)
|
| · |
Adopted a clawback policy (see page 58)
|
What We Don’t Do
| · |
No dividends or dividend equivalents on unearned performance shares
|
| · |
No repricing underwater stock options
|
| · |
No exchanges of underwater stock options for cash
|
| · |
No multi-year guaranteed bonuses
|
| · |
No inclusion of the value of equity awards in severance calculations
|
| · |
No evergreen provisions in equity plans
|
| · |
No tax “gross ups” for excess parachute payments
|
| · |
No “single trigger” employment or change in control agreements
|
OVERVIEW
We have three elements of total direct compensation: base salary, annual incentive, and long-term incentive compensation. As illustrated in the below chart, in 2017, 85% of the reported named executive officers’ total direct compensation opportunity as a group was performance-based and not guaranteed, including 56% in the form of long-term incentive compensation.
|
2017 Total Compensation Opportunity
|
Our target total direct compensation table below summarizes the levels established by our Compensation Committee with respect to salary, target annual and long-term incentives, and target total direct compensation. We discuss each element of the table in the narrative that follows.
|
Mr. Bolton
|
Mr. Campbell
|
Mr. DelPriore
|
Mr. Grimes
|
|||||||||||||
|
Base Salary (1)
|
$
|
704,000
|
$
|
440,000
|
$
|
429,000
|
$
|
451,000
|
||||||||
|
Annual Incentive Program (2)
|
||||||||||||||||
|
Potential Percent of Base Salary
|
0% - 250
|
%
|
0% - 150
|
%
|
0% - 150
|
%
|
0% - 200
|
%
|
||||||||
|
Target Percent of Base Salary
|
167.500
|
%
|
112.875
|
%
|
112.875
|
%
|
178.220
|
%
|
||||||||
|
Dollar Target (3)
|
$
|
1,179,200
|
$
|
496,650
|
$
|
484,234
|
$
|
803,772
|
||||||||
|
2017 LTIP
|
||||||||||||||||
|
Potential Percent of Base Salary
|
0% - 450
|
%
|
0% - 350
|
%
|
0% - 300
|
%
|
0% - 350
|
%
|
||||||||
|
Target Percent of Base Salary
|
324
|
%
|
252
|
%
|
216
|
%
|
252
|
%
|
||||||||
|
Dollar Target (4)
|
$
|
2,280,960
|
$
|
1,108,800
|
$
|
926,640
|
$
|
1,136,520
|
||||||||
|
Total Target Compensation
|
$
|
4,164,160
|
$
|
2,045,450
|
$
|
1,839,874
|
$
|
2,391,292
|
||||||||
| (1) |
Values reflect the base salaries awarded by the Compensation Committee for 2017.
|
| (2) |
Does not reflect the 25% increase of award if participant elects to receive the award as shares of restricted stock.
|
| (3) |
Represents the target potential bonus payment under the Annual Incentive Program. More information on the Annual Incentive Program can be found in the narrative that follows.
|
| (4) |
Represents the target award under the 2017 LTIP. More information on the 2017 LTIP can be found in the narrative that follows.
|
The amount of past compensation, including annual bonus awards and amounts realized or realizable from prior long-term, equity-based incentives, is generally not a significant factor in the Compensation Committee’s considerations, because these awards would have been earned based on prior years’ performance. The Compensation Committee does, however, consider the timing of prior awards when reviewing the retention aspects of compensation packages.
BASE SALARY
We pay base salaries to attract talented executives and to provide a fixed base of cash compensation. Because several other elements of compensation are driven by base salary, the Compensation Committee is careful to set the appropriate level of base salary. A survey of our comparator group’s pay practices was considered in determining the salary range for each named executive officer. These ranges are used as guidelines in determining individual salaries, but there is no targeted amount in the range.
Base salaries for the named executive officers are individually determined by the Compensation Committee within the appropriate salary range after consideration of:
| · |
breadth, scope and complexity of the role;
|
| · |
fairness (employees with similar responsibilities, experience and historical performance are rewarded comparably) and affordability;
|
| · |
current compensation; and
|
| · |
individual and corporate performance.
|
We do not set the base salary of any employee, including any named executive officer, at a certain multiple of the salary of another employee.
Generally speaking, there are two situations that may warrant an adjustment to base salary:
|
ANNUAL MERIT INCREASES
|
All employees’ base salaries are reviewed annually for possible merit increases, but merit increases are not automatic nor guaranteed. Any adjustments take into account the individual’s performance, responsibilities and experience, as well as fairness and external market practices.
|
|
PROMOTIONS OR CHANGES IN ROLE
|
Base salary may be increased to recognize additional responsibilities resulting from a change in an employee’s role or a promotion to a new position. Increases are not guaranteed for a promotion nor change in role.
|
The following table indicates the base salaries and percent increases from the prior year for our named executive officers:
|
Base Salary
|
Percent
|
|||||||||||
|
2017
|
2016
|
Increase
|
||||||||||
|
Mr. Bolton
|
$
|
704,000
|
$
|
640,000
|
10.0
|
%
|
||||||
|
Mr. Campbell
|
$
|
440,000
|
$
|
400,000
|
10.0
|
%
|
||||||
|
Mr. DelPriore
|
$
|
429,000
|
$
|
390,000
|
10.0
|
%
|
||||||
|
Mr. Grimes
|
$
|
451,000
|
$
|
410,000
|
10.0
|
%
|
||||||
Increases for the named executive officers were approved in December 2016 and effective January 1, 2017, along with the merit increases for other employees. The Compensation Committee believed the increases to the named executive officer salaries reflected not only the executives’ continued contributions to the company’s achievements, strong leadership, the company’s strong performance and each executive’s individual achievements in 2016, but also reflected the results of Semler Brossy’s peer benchmarking review in light of the merger with Post and the resultant increase in the size and complexity of MAA. The peer benchmarking indicated that the base salaries for Messrs. Campbell, DelPriore and Grimes were 15%, 16% and 25%, respectively, below the peer group median. While the increases do not bring management salaries up to the level of the peer group median, the Compensation Committee felt these increases were an appropriate and balanced first step to reflect each named executive officer’s respective level of experience, past performance for us, tenure in their positions, and expanded depth and scope of responsibilities following the merger with Post, and are in line with how the company approaches salary to market comparables on a company-wide basis.
ANNUAL INCENTIVE COMPENSATION
We pay annual incentives to drive the achievement of key business results and to recognize individuals based on their contributions to those results. The Compensation Committee believes that this feature of compensation motivates executive officers to strive to attain our annual goals. Annual incentives were determined under the 2017 Annual Incentive Program, or 2017 AIP.
For 2017, total annual bonus plan opportunities for our named executive officers were based on 2017 base salaries as follows:
|
Base Salary
|
Percentage
of 2017
Base Salary (1)
|
Maximum Payment
Based on 2017
Performance (1)
|
||||||||||
|
Mr. Bolton
|
$
|
704,000
|
250
|
%
|
$
|
1,760,000
|
||||||
|
Mr. Campbell
|
$
|
440,000
|
150
|
%
|
$
|
660,000
|
||||||
|
Mr. DelPriore
|
$
|
429,000
|
150
|
%
|
$
|
643,500
|
||||||
|
Mr. Grimes
|
$
|
451,000
|
200
|
%
|
$
|
902,000
|
||||||
| (1) |
Does not include the impact of the option for participants to elect to have all or a part of their award issued as shares of restricted stock. Any portion elected to be issued as shares of restricted stock would be awarded at 125% of the award earned.
|
The annual incentive program for our named executive officers for 2017 was based on both FFO less Merger and Integration Expense per Share, or FFO less MI per Share, and the achievement of individual and/or business unit goals. The percent of total award opportunity assigned to each metric for our named executive officers is outlined in the below table:
|
Percent of Award
|
||||||||||||
|
FFO less MI
per Share
|
Individual
Goals
|
Total
|
||||||||||
|
Mr. Bolton
|
100
|
%
|
N/A
|
100
|
%
|
|||||||
|
Mr. Campbell
|
75
|
%
|
25
|
%
|
100
|
%
|
||||||
|
Mr. DelPriore
|
75
|
%
|
25
|
%
|
100
|
%
|
||||||
|
Mr. Grimes
|
33
|
%
|
67
|
%
|
100
|
%
|
||||||
The Compensation Committee feels it is appropriate to tie 100% of Mr. Bolton’s opportunity to FFO per Share as it is a key financial result focused on by analysts and investors in the REIT industry.
FFO is a generally accepted measure of overall performance in the REIT industry because it excludes depreciation expense of real estate assets which is generally not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies. The Compensation Committee feels that FFO is a good measure of actual operating performance. For 2017, the Compensation Committee felt it was appropriate to adjust FFO per Share to remove the impact of merger and integration expenses related to the merger with Post, in order to reflect the core operating results of MAA.
The Compensation Committee felt it was appropriate to base the 2017 annual incentive on specific and quantifiable company performance metrics because the award is intended to reward the executive officer for achieving our corporate financial goals established for the year. When setting the goals for these performance metrics, the Compensation Committee established annual performance targets that, if achieved, would continue to promote the long-term health and strength of the company. In determining the final award, the Compensation Committee reserves the right to apply a discretionary modifier to adjust the amount of the award up or down, by up to 25%, provided, however, that in no event shall the award exceed 250% of salary for Mr. Bolton, 150% of salary for Messrs. Campbell and DelPriore, and 200% of salary for Mr. Grimes, except according to the following sentence. The executive officers have the option to elect to receive all or any portion of their award in shares of restricted stock instead of cash. For any portion of the award elected to be issued in shares of restricted stock, the executive officer will receive shares of restricted stock valued at 125% of that portion of the award. The shares of restricted stock would then vest one third each year on the first, second and third anniversaries of the grant date, subject to continued employment through each vest date.
The Compensation Committee approved the following payout schedule for FFO less MI per Share performance under the 2017 AIP:
|
Performance
|
FFO less MI
per Share
|
Percent of
Bonus Opportunity
|
||||||
|
High
|
$
|
6.07
|
100
|
%
|
||||
|
Target
|
$
|
5.97
|
67
|
%
|
||||
|
Threshold
|
$
|
5.87
|
25
|
%
|
||||
The Compensation Committee set the FFO less MI per Share performance levels to reflect the guidance we provided at the beginning of the year to align named executive officer performance with market and shareholder expectations. No award was eligible to be earned below the threshold level which represented the bottom of the range provided. Awards earned between the levels were to be calculated using linear interpolations.
Summary of Payments
In March 2018, the Compensation Committee met to consider the payment of bonuses under the 2017 AIP. The Compensation Committee reviewed the actual FFO less MI per Share performance result of $6.11, noting $0.08 of the result related to non-cash income from an embedded derivative for preferred shares. The Compensation Committee determined to exercise its negative discretion in accordance with the terms of the 2017 AIP to reduce the award resulting from the FFO less MI per Share metric to the amount which would have been earned without the impact of the non-cash mark-to-market adjustment for the embedded derivative; thereby decreasing the award by 12.7%.
The Compensation Committee reviewed the achievement of the 2017 individual and/or business unit goals for Messrs. Campbell, DelPriore and Grimes and determined they had achieved 90%, 95% and 63%, respectively for 2017.
Following these determinations, the Compensation Committee awarded the following annual bonuses to our named executive officers for 2017:
|
Base Salary
|
Maximum
Percentage
of Base Salary
|
Percent of
Maximum Bonus
Opportunity Earned
|
Annual
Incentive
Payment
|
|||||||||||||
|
Mr. Bolton
|
$
|
704,000
|
250
|
%
|
87
|
%
|
$
|
1,536,480
|
||||||||
|
Mr. Campbell
|
$
|
440,000
|
150
|
%
|
88
|
%
|
$
|
580,635
|
||||||||
|
Mr. DelPriore
|
$
|
429,000
|
150
|
%
|
89
|
%
|
$
|
574,163
|
||||||||
|
Mr. Grimes
|
$
|
451,000
|
200
|
%
|
71
|
%
|
$
|
640,591
|
||||||||
None of the named executive officers elected to have a portion of their award issued in shares of restricted stock.
LONG-TERM INCENTIVE COMPENSATION
General
We provide performance-based long-term incentive compensation to certain employees, including our named executive officers, to directly tie the interests of these individuals to the interests of our shareholders. We believe that long-term equity compensation is an important retention tool. We also encourage stock ownership which we regard as important for commitment, engagement and motivation and have adopted stock ownership guidelines and retention requirements for our named executive officers. In 2017, we granted long-term incentive compensation to approximately 4% of employees, including the named executive officers, identified as key personnel with critical knowledge and skills important to the success of MAA.
Potential Value of Long-Term Incentive Compensation Awarded
The Compensation Committee believes that a significant percentage of our long-term incentive compensation should be performance based. The 2017 LTIP included two performance tranches, representing 80% of the award opportunity for the named executive officers. One tranche will award shares on a sliding scale dependent on relative annualized total shareholder return, or Relative TSR, over a three-year performance period from January 1, 2017 through December 31, 2019. The other tranche awarded shares on a sliding scale dependent upon FFO less MI per Share performance for 2017. The 2017 LTIP also included time vested shares dependent on continued employment. The following chart indicates the maximum award opportunities as a percentage of base salary and the split between the different tranches of the 2017 LTIP:
|
Relative TSR
(50% of
opportunity)
|
FFO less MI
per Share
(30% of
opportunity)
|
Time
Vested
(20% of
opportunity)
|
Total
Potential
Percent
of Salary
|
|||||||||||||
|
Mr. Bolton
|
225%
|
|
135%
|
|
90%
|
|
450%
|
|
||||||||
|
Mr. Campbell
|
175%
|
|
105%
|
|
70%
|
|
350%
|
|
||||||||
|
Mr. DelPriore
|
150%
|
|
90%
|
|
60%
|
|
300%
|
|
||||||||
|
Mr. Grimes
|
175%
|
|
105%
|
|
70%
|
|
350%
|
|
||||||||
The Compensation Committee sets ranges for long-term incentive compensation for each of our named executive officers. A survey of our comparator group’s pay practices is considered in determining the ranges. The Compensation Committee does not target a specific percentile ranking against our comparator group.
The actual value of long-term incentive compensation within such ranges awarded to each named executive officer is individually determined, at the discretion of the Compensation Committee, after considering:
| · |
skills, experience and time in role;
|
| · |
individual performance and potential; and
|
| · |
company performance in the prior year.
|
In determining the value of long-term incentive compensation awards to the named executive officers in December 2016, the Compensation Committee also took into consideration, among other things, the company’s strong operating performance and return to shareholders, and the expanded scope and depth of responsibilities of each named executive officer related to the increased complexity and size of MAA following the merger with Post.
Mix of Equity Vehicles
As described above, we use a mix of time vested restricted stock and performance shares when making annual long-term equity awards. Once the value of the 2017 LTIP award was determined, the Compensation Committee granted the named executive officers 80% of the value in performance shares and 20% in time vested restricted stock. Of the performance shares, 62.5% (or 50% of the total award opportunity) may be earned based on Relative TSR; 37.5% (or 30% of the total award opportunity) may be earned based on FFO less MI per Share.
|
Time Vested Restricted Stock
|
Performance Shares |
 |
 |
The Compensation Committee believes this mix of equity vehicles strikes the appropriate balance between the achievement of performance measures (performance shares) and rewarding increases in the market value of, and dividends paid on, our common stock (time vested restricted stock).
As noted above, we currently measure performance based on return to shareholders and overall company performance. As a pay for performance measure, we believe that an allocation of 80% of the potential award opportunity to performance shares creates an appropriate pay for performance alignment with shareholders. Furthermore, the vesting period assigned to the time vested restricted stock also further aligns management with shareholders, as employees will benefit from increases in the company’s stock price.
Performance Shares
Performance shares provide an opportunity for employees to receive common stock if a performance measure is met for a pre-defined performance period. No outstanding performance share awards provide for the payment of dividends or dividend equivalents during the performance period. There are two types of performance shares awarded under the 2017 LTIP: performance shares based on Relative TSR and performance shares based on FFO less MI per Share.
The following chart shows the performance metrics for the Relative TSR performance shares:
|
Performance
Level
|
MAA TSR in excess of
SNL US REIT Multifamily Index
|
Percent of
Relative TSR
Opportunity Earned
|
||||
|
High
|
≥ 400 basis points
|
100%
|
||||
|
Target
|
0 basis points
|
65%
|
|
|||
|
Threshold
|
-300 basis points
|
25%
|
|
|||
|
< -300 basis points
|
0%
|
|||||
The performance period for the Relative TSR tranche is from January 1, 2017 through December 31, 2019. No awards will be issued for Relative TSR below the Threshold level and awards related to results between the Threshold and High levels will be straightline interpolated. Any award earned will be issued as shares of restricted stock on or about April 1, 2020, and will immediately vest.
The following chart shows the performance metrics for the FFO less MI per Share performance shares:
|
Performance
Level
|
FFO less MI
per Share
|
Percent of FFO
less MI per Share
Opportunity Earned
|
||||||
|
High
|
$
|
6.07
|
100%
|
|||||
|
Target
|
$
|
5.97
|
65%
|
|
||||
|
Threshold
|
$
|
5.87
|
25%
|
|
||||
|
|
< $5.87
|
0%
|
|
|||||
The performance levels for the FFO less MI per Share tranche were based on the company’s guidance provided at the beginning of the year to align named executive officer compensation with the expectations of shareholders and the market. The performance period for the FFO less MI per Share tranche was 2017. Awards related to results between the Threshold and High levels were straightline interpolated.
Summary of Payments
In March 2018, the Compensation Committee met to review the actual FFO less MI per Share performance result for 2017 of $6.11. The Compensation Committee noted this result was at the High performance level, resulting in the maximum award available under this metric.
As a result of the FFO less MI per Share results, the following performance shares were awarded to our named executive officers under the 2017 LTIP:
|
Shares of
Restricted
Stock
|
||||
|
Mr. Bolton
|
9,757
|
|||
|
Mr. Campbell
|
4,743
|
|||
|
Mr. DelPriore
|
3,964
|
|||
|
Mr. Grimes
|
4,861
|
|||
Shares of restricted stock earned under the FFO less MI per Share tranche were issued on April 2, 2018 and will vest 50% on each of the first and second anniversary of the issue date, dependent upon continued employment through each vest date.
No awards under the Relative TSR tranche are recognizable until the end of the performance period on December 31, 2019.
Time Vested Restricted Stock
We believe that time vested restricted stock is performance-based because its value is solely tied to the company’s stock price, which directly correlates to our shareholders’ interests. We grant time vested restricted stock for several reasons, including:
| · |
restricted shares that vest over time encourage named executive officers to focus on the long term when making decisions to enhance shareholder value;
|
| · |
declines in stock price following the grant of time vested restricted stock have a negative impact on named executive officer pay; and
|
| · |
feedback from named executive officers has indicated that time vested restricted stock is highly valued and is an important retention tool.
|
We have significant share ownership and holding period requirements (see pages 57 and 58). These requirements, along with our vesting period requirements, work to ensure our executives are aligned with investors. This alignment, by virtue of sustained ownership, helps to mitigate excessive risk-taking in addition to other program features (see pages 53 through 54).
Our named executive officers were awarded the following time vested restricted shares under the 2017 LTIP:
|
Shares of
Restricted
Stock
|
||||
|
Mr. Bolton
|
6,505
|
|||
|
Mr. Campbell
|
3,162
|
|||
|
Mr. DelPriore
|
2,642
|
|||
|
Mr. Grimes
|
3,241
|
|||
The shares were awarded on January 9, 2017 and will vest 20% a year on the first, second, third, fourth and fifth anniversary of the issuance, dependent upon continued employment through each vest date.
Special Grant Related to the Merger with Post
On March 23, 2017, the Compensation Committee, and in respect to Mr. Bolton’s participation, the Board, approved the MAA-Post Merger Executive Incentive Program, or Merger Plan. The opportunity available under the Merger Plan is intended to incentivize key personnel central to the successful integration of the merger with Post to capture the value potential of the merger for shareholders by successfully executing MAA’s plans to recognize expense synergies, efficiencies of scale and balance sheet improvement from the combined company.
The total opportunity under the Merger Plan is 100% performance based and is tied 50% to realized overhead expense synergies, and 12.5% each to capturing net operating income, or NOI, from the Post development pipeline, incremental same store NOI improvement, incremental NOI through the redevelopment of the Post portfolio and lower cost of capital as a result of our strengthened balance sheet.
The performance period for all performance share awards under the Merger Plan is 2018, except for the performance shares related to lowering the cost of capital for which the performance period is January 1, 2017 through December 31, 2018. All of the performance share awards will be earned on a sliding scale ranging from 0% to 100% of the opportunity. Any performance shares earned will be issued on April 1, 2019 and will vest 50% on the first and second anniversary of the issuance date, dependent on continued employment with MAA.
The following chart represents the maximum award opportunities under the Merger Plan as a percent of base salary:
|
Overhead
Spend
Synergy
(50% of
opportunity)
|
New
Development
Pipeline
(12.5% of
opportunity)
|
Incremental
Same Store NOI
Improvement
(12.5% of
opportunity)
|
Incremental
Redevelopment
NOI
(12.5% of
opportunity)
|
Lowered
Cost
of Capital
(12.5% of
opportunity)
|
Total
Potential
Percent
of Salary
|
|||||||||||||||||||
|
Mr. Bolton
|
150
|
%
|
37.50
|
%
|
37.50
|
%
|
37.50
|
%
|
37.50
|
%
|
300
|
%
|
||||||||||||
|
Mr. Campbell
|
100
|
%
|
25.00
|
%
|
25.00
|
%
|
25.00
|
%
|
25.00
|
%
|
200
|
%
|
||||||||||||
|
Mr. DelPriore
|
100
|
%
|
25.00
|
%
|
25.00
|
%
|
25.00
|
%
|
25.00
|
%
|
200
|
%
|
||||||||||||
|
Mr. Grimes
|
75
|
%
|
18.75
|
%
|
18.75
|
%
|
18.75
|
%
|
18.75
|
%
|
150
|
%
|
||||||||||||
ADDITIONAL COMPENSATION ELEMENTS
Benefits
In general, benefits are designed to provide a safety net of protection against the financial catastrophes that can result from illness, disability or death, and to provide a reasonable level of retirement income based on years of service with us. The named executive officers generally participate in the same benefit plans as our broader employee population.
Employment Agreement
Mr. Bolton is our only named executive officer with an employment agreement. The material terms of his employment agreement and amounts payable under that agreement are described in “Employment Agreements and Potential Payments Upon Termination or Change in Control” on pages 79 through 81.
Change in Control Agreements
Messrs. Campbell, DelPriore and Grimes have change in control agreements. These change in control agreements are described in “Employment Agreements and Potential Payments Upon Termination or Change in Control” on pages 79 through 81.
401(K) Plan
During 2017, Messrs. Bolton, Campbell, DelPriore and Grimes were eligible to participate in our MAA 401(K) Savings Plan, or 401(K) Plan. The 401(K) Plan is a qualified retirement plan made available to all of our eligible employees that allows participants to make pre-tax elective deferral contributions as a percentage of their compensation as well as catch-up contributions in any year in which the participant will be at least 50 by the end of the year. For 2017, MAA made matching contributions under the 401(K) Plan of 100% of a participant’s contribution on the first 3% of their compensation and 50% of a participant’s contribution on the next 2% of their compensation. Participants may defer up to 75% of their compensation under the 401(K) Plan until they reach the limitation imposed by Section 401(a) of the Internal Revenue Code of 1986, as amended, or the Code, for the given year.
Under the terms of the 401(K) Plan, benefits generally start on or after the date the participant reaches the age of 65. Under the law, participants must begin receiving benefits by April 1st following the later of the calendar year in which a participant reaches the age of 70 ½, or stops working for MAA.
More information on the 401(K) Plan can be found in “401(K) Savings Plan” on pages 75 through 76.
Deferred Compensation Plan
During 2017, Messrs. Bolton, Campbell, DelPriore and Grimes were eligible to participate in our MAA Non-Qualified Executive Deferred Compensation Retirement Plan as Amended and Restated effective January 1, 2016, or the Deferred Comp Plan. The Deferred Comp Plan is a supplemental nonqualified deferred compensation plan made available to all executive employees to enable them to accumulate additional retirement benefits beyond the limitations on participant contributions placed on the 401(K) Plan. MAA, at its discretion, may make matching contributions in accordance with the matching contribution formula in the 401(K) Plan. As such, in 2017, MAA made matching contributions under the Deferred Comp Plan of 100% of a participant’s contribution on the first 3% of their compensation and 50% of a participant’s contribution on the next 2% of their compensation. The matching contributions were made only on compensation that was in excess of the limitation imposed by Section 401(a) of the Code on the 401(K) Plan that would have been eligible for the match. Participants may defer up to 50% of their compensation and 90% of their annual bonus.
In accordance with the Deferred Comp Plan, distributions for balances prior to 2016 are made in five equal annual installments beginning on the first day following the sixth full month occurring after the earliest of death, disability, or separation from service. Balances from 2016 and forward will be distributed in compliance with the participant’s previous elections for the specific contributions in the form of either a lump-sum payment or substantially equal annual installments amortized over a period not to exceed ten years beginning on the later of January 1st or six months and a day after the participant’s separation from service. Notwithstanding the foregoing, in the case of a participant who becomes entitled to receive benefits on account of disability, the balances from 2016 and forward will be paid in a lump sum on or after the 15th of the first month following determination of disability.
Unlike contributions made in the 401(K) Plan, the deferred compensation amounts contributed by Messrs. Bolton, Campbell, DelPriore and Grimes, and any resultant matches by MAA, are considered general assets of the company and are subject to claims of MAA’s creditors. In 2016, MAA transferred the assets of the Deferred Comp Plan to an irrevocable rabbi trust to offer additional security to the participants. While assets in the rabbi trust are still subject to creditors’ claims in a corporate bankruptcy, they cannot be accessed by MAA for any purpose other than to pay participant benefits under the Deferred Comp Plan.
More information on the Deferred Comp Plan can be found in “Non-Qualified Deferred Compensation” on pages 77 through 78.
RISK CONSIDERATIONS
The Compensation Committee reviews the risks and rewards associated with our compensation programs. The programs are designed with features that mitigate risk without diminishing the incentive nature of the compensation. We believe our compensation programs encourage and reward prudent business judgment and appropriate risk-taking over the short term and the long term.
Management and the Compensation Committee regularly evaluate the risks involved with compensation programs and do not believe any of our compensation programs create risks that are reasonably likely to have a material adverse impact on us. In 2017, we conducted a review of incentive plans and programs and considered factors such as the plan metrics, number of participants, maximum payments and risk mitigation factors.
The Compensation Committee evaluates risks and rewards associated with our overall compensation philosophy and structure. Management discusses with the Compensation Committee the systems that have been put in place to identify and mitigate, as necessary, potential risks. With respect to specific elements of compensation:
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Base salary does not encourage risk-taking as it is a fixed amount and but one component of a balanced, multi-component approach to compensation and rewards.
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| · |
The annual incentive program for executive officers is designed to reward achievement of short-term performance metrics. Through a combination of plan design and management procedures, undue risk-taking is mitigated. Specifically, the plan has a cap on the award for any individual and constitutes only a portion of the total direct compensation for our executive officers. The plan is also structured to be self-funding in that portions of the incentive that are based on performance measurements must be obtained after the expense of the incentive is considered.
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| · |
Annual and quarterly incentive plans for employees other than executive officers are also designed to reward achievement of short-term performance metrics. Through a combination of plan design and management procedures, undue risk-taking is mitigated. Specifically, the plans are capped on the award for any individual and constitute only a portion of the total direct compensation for our employees.
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Our long-term incentive plans are materially based on total shareholder return and certain other performance metrics. The plans have caps on the award for any individual and constitute only a portion of the total direct compensation for our executive officers and the other participants.
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DECISION-MAKING PROCESS AND ROLE OF EXECUTIVE OFFICERS
While we believe that the levels of compensation we provide should be competitively reasonable and appropriate for our business needs and circumstances, our approach is to consider competitive compensation practices and relevant factors rather than establishing compensation at specific benchmark percentiles. This enables us to respond to dynamics in the labor market and provides us with flexibility in maintaining and enhancing our executive officers’ engagement, focus, motivation and enthusiasm for our future.
We follow a two-phase process. In the first phase, the Compensation Committee periodically engages a compensation consultant to conduct a competitive compensation analysis. In 2016, the Compensation Committee hired a consultant to benchmark individual compensation levels and opportunities for base salary, annual bonus, long-term incentive compensation and total remuneration (salary plus bonus plus annualized value of long-term incentives), taking into account the merger with Post, to assist in establishing compensation for 2017. In general, the Compensation Committee does not believe it is competitively reasonable or appropriate for executive compensation to be materially outside of comparative benchmark ranges (either above or below); however, benchmark information is only one factor that is considered by the Compensation Committee when establishing executive compensation.
In the second phase, the Compensation Committee considers additional factors in determining appropriate compensation levels for each executive officer. These considerations may include:
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our analyses of competitive compensation practices;
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the Compensation Committee’s evaluation of the executive officers;
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individual performance and contributions to performance goals, which could include, but are not limited to FFO per Share, and total shareholder return;
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company performance, including comparisons to market and peer benchmarks;
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operational management, such as project milestones and process improvements;
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internal working and reporting relationships and our desire to encourage collaboration and teamwork among our executive officers;
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individual expertise, skills and knowledge;
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leadership, including developing and motivating employees, collaborating within the company, attracting and retaining employees and personal development;
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labor market conditions, the need to retain and motivate, the potential to assume increased responsibilities and the perceived long-term value to the company; and
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| · |
information and advice from an independent, third-party compensation consultant engaged by the Compensation Committee.
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We do not have a pre-defined framework that determines which of these factors may be more or less important, and the emphasis placed on specific factors may vary among the executive officers and from year to year. Ultimately, it is the Compensation Committee’s judgment of these factors along with competitive data that form the basis for determining the CEO’s compensation. The Compensation Committee and the CEO follow a similar practice to determine the basis of the other executive officers’ compensation.
While Mr. Bolton, our CEO, did participate in general meetings of the Compensation Committee in 2017, he did not participate in executive sessions nor did he participate in any discussions determining his own compensation. Annually, upon request from the Compensation Committee, our CEO provides the Compensation Committee with data pertinent to his and the other executive officers’ compensation. This information may from time-to-time include peer executive compensation levels, achievement of individual performance components of their annual incentive plans, or data pertinent to their annual base salary increases. The Compensation Committee utilizes this information, along with input from committee members, and, at times, outside consultants, and in the case of our CEO, input from all of the members of the Board, before making final independent compensation decisions. Our CEO also provides data pertinent to the terms of our long-term incentive plans to the Compensation Committee, upon their request. At the end of any incentive or incentive plan measurement period, our CEO, along with our Chief Ethics and Compliance Officer and Corporate Secretary, prepares and presents to the Compensation Committee, the preliminary results of the plan for the committee’s review and, if necessary, further evaluation and/or adjustment. All incentive plans are ultimately developed and adopted by the Compensation Committee. All compensation related to our CEO is recommended by the Compensation Committee to our full Board, which ultimately has responsibility for approving CEO compensation.
The Compensation Committee has not awarded any stock options since 2002. When the Compensation Committee was utilizing stock options as part of the compensation package they consistently maintained a practice to award stock options only at specific times in order to avoid any claim that grants to executive officers were initiated during periods potentially advantageous to them. During its winter meeting, the Compensation Committee would grant stock options to a broad group of employees, including executive officers, in amounts determined by the Compensation Committee. These grants were effective on the day awarded by the Compensation Committee with exercise prices equal to the closing price of our common stock on the NYSE on that day. Other than the annual grants described above, the Compensation Committee only considered additional grants for new employees. These grants were made in conjunction with the hiring of the employee and after Compensation Committee approval with the exercise price being equal to the closing price of our common stock on the NYSE on the day of grant. None of our named executive officers had outstanding options in 2017.
COMPENSATION COMPARATOR GROUP
We use a comparator group of companies when making certain compensation decisions. Our comparator group is used:
| · |
as an input in developing base salary ranges, annual incentive targets and long-term incentive award ranges;
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| · |
to benchmark the mix of cash and equity awarded to named executive officers;
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| · |
to assess the competitiveness of total direct compensation awarded to senior executives;
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| · |
to validate whether executive compensation programs are aligned with our performance and total shareholder return; and
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| · |
as an input in designing compensation plans, benefits and perquisite programs.
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While the Compensation Committee examines data about executive compensation at other comparator companies, compensation paid at other companies is only one factor considered during the decision-making process.
Following the merger with Post, the Compensation Committee directed Semler Brossy to review MAA’s peer group and propose any recommended changes as a result of the increase in size and enterprise value following the merger with Post. Semler Brossy performed a peer screen, reviewing various metrics such as enterprise value, revenue, number of employees, number of properties and number of units of all publicly traded REITs (excluding highly focused sub-industries such as forest and casino management, companies that exhibited significant, sustained financial distress, and companies with clear pay-related governance fouls). The proposed revised peer group consisted of six multifamily REITs, representing MAA’s sub-industry and comparable to MAA in operational structure and talent needs, and 12 additional REITs of similar size and metric statistics to MAA, to which MAA was generally positioned within the median of the metrics reviewed. Upon review by the Compensation Committee, two companies were removed from the proposed peer group; one which was identified as having pay governance issues related to being a consistently high payer which the Compensation Committee did not feel was in line with its philosophy on executive compensation, and one with a unique operating model unaligned with MAA’s structure.
The final comparator group adopted by the Compensation Committee for review of 2017 compensation elements is listed below:
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Apartment investment & Management Co.
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Essex Property Trust, Inc.
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AvalonBay Communities, Inc.
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Extra Space Storage, Inc.
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Boston Properties, Inc.
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Federal Realty Investment Trust
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Brixmor Property Group, Inc.
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Host Hotels & Resorts, Inc.
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Camden Property Trust
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Kimco Realty Corp.
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DDR Corp.
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Macerich Co.
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Duke Realty Corp.
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Taubman Centers, Inc.
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Equity Residential
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UDR, Inc.
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ROLE OF COMPENSATION CONSULTANT
Pursuant to its charter, the Compensation Committee is authorized to retain and terminate any consultant, as well as to approve the consultant’s fees and other terms of the engagement. The Compensation Committee also has the authority to obtain advice and assistance from internal or external legal, accounting or other advisors. In 2016, the Compensation Committee engaged Semler Brossy as its compensation consultant with respect to 2017 compensation decisions.
Prior to the retention of a compensation consultant or any other external advisor, and from time-to-time as the Compensation Committee deems appropriate, the Compensation Committee assesses the independence of such advisor from management, taking into consideration all factors relevant to such advisor’s independence, including the factors specified in the NYSE listing standards.
The Compensation Committee assessed Semler Brossy’s independence, taking into account the following factors:
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the policies and procedures the consultant has in place to prevent conflicts of interest;
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| · |
any business or personal relationships between the consultant and the members of the Compensation Committee;
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| · |
any ownership of our common stock by the individuals at Semler Brossy performing consulting services for the Compensation Committee; and
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| · |
any business or personal relationship of Semler Brossy with any of our executive officers.
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Semler Brossy has provided the Compensation Committee with appropriate assurances and confirmation of its independent status pursuant to the factors indicated above. The Compensation Committee believes that Semler Brossy has been independent throughout its service for the Committee and that there is no conflict of interest between Semler Brossy and the Compensation Committee.
FINDINGS OF COMPENSATION CONSULTANT
Semler Brossy provided the final results of their review at the December 2016 Compensation Committee meeting and the Compensation Committee considered Semler Brossy’s review in setting the 2017 compensation programs.
Semler Brossy assessed target total pay levels against the revised peer group reflecting the change in size and complexity of the company following the merger with Post as well as other available market data for the named executive officers, specifically reviewing salary, target annual cash and target total pay. Semler Brossy reported that, in all cases, salary, target annual cash and target total pay opportunities for the named executive officers fell well below median with target total pay for all of the named executive officers falling 23% or more below the median of the peer group, well outside the competitive range identified by Semler Brossy (+-15% to median) to attract and retain talent. Furthermore, Semler Brossy noted that while shortfalls were present in both the cash and equity components of compensation for all named executive officers, the lion’s share of the shortfall was the equity component.
Overall, given the change in size and complexity of the company and the expanded scope of responsibility of the named executive officers following the merger with Post, the Compensation Committee believed these results indicated that compensation was generally lagging, in relation to both cash and equity incentives. As a result, the Compensation Committee felt it was appropriate to adopt increases in base salaries and to increase the total award opportunity as a percent of salary available under the long term incentive plan in 2017. In considering the increase in the total award opportunity for the long-term incentive plan, the Compensation Committee maintained the percentage of the award related to performance based metrics overall to align management’s compensation with the attainment of company results and to the Relative TSR metric to ensure management’s continued alignment with the long term best interests of our shareholders.
SHARE OWNERSHIP GUIDELINES
We have share ownership guidelines for our named executive officers. These guidelines are designed to align the named executive officers’ long-term financial interests with those of shareholders. Under these guidelines, Mr. Bolton, as the CEO, is required to own MAA stock worth three times his annual base salary and our other named executive officers are required to own MAA stock worth two times their respective annual base salaries. Each named executive officer has three years from the date they become subject to the share ownership guidelines to meet their target. If a named executive officer is promoted and the target is increased, an additional three-year period is provided to meet the target. Stock options do not count toward the ownership guideline and performance shares count only after the performance criteria has been met.
All named executive officers exceed their share ownership guidelines.
HOLDING PERIOD REQUIREMENTS
Effective April 1, 2017, our Board adopted share retention requirements for our named executive officers. These requirements are intended to further strengthen alignment of interests between our named executive officers and that of our shareholders. Following designation as a named executive officer, the named executive officer is required to retain ownership of at least 50% of the net shares (after paying tax liabilities) acquired from the exercise of stock options or the vesting of shares of restricted stock awarded pursuant to our equity incentive plans. Named executive officers are required to continue to retain these shares until retirement or other termination of the named executive officer’s employment, or until the executive is no longer designated as a named executive officer.
All of our named executive officers have remained in compliance with the holding period requirements since their adoption.
TRADING CONTROLS AND HEDGING, PLEDGING AND SHORT SALE POLICIES
Executive officers, including the named executive officers, are required to receive the permission of our General Counsel (and our General Counsel is required to receive the permission of our Chief Ethics and Compliance Officer) prior to entering into any transactions in our securities. Generally, trading is permitted only during announced trading periods. Employees who are subject to trading restrictions, including the named executive officers, may enter into a trading plan under Rule 10b5-1 of the Exchange Act. These trading plans may be entered into only during an open trading period and must be approved by MAA. We require trading plans to include a waiting period and the trading plans may not be amended during their term. The named executive officer bears full responsibility if he violates our policy by permitting shares to be bought or sold without pre-approval or when trading is restricted.
Executive officers are prohibited from entering into hedging and short sale transactions or pledging common stock.
CLAWBACK PROVISIONS
We have adopted a clawback policy. Under this policy, if we are required to prepare and file an accounting restatement with the SEC, the Compensation Committee may require our named executive officers to repay to MAA any portion of incentive compensation paid in the preceding three years that would not have been paid if such compensation had been determined based on the financial results reported in the restated financial statement.
TAX AND ACCOUNTING IMPLICATIONS OF COMPENSATION
Section 162(m) of the Code historically limited the tax deductibility of annual compensation paid by a publicly held corporation to its “covered employees,” being its principal executive officer or any of its three other most highly compensated executive officers (other than its principal financial officer), to $1 million, unless the compensation qualified as performance-based compensation under Section 162(m). Under the Tax Cuts and Jobs Act of 2017, this “performance-based” exception was eliminated, and the definition of “covered employees” generally was expanded to cover all named executive officers, including the principal financial officer. These new rules generally apply to taxable years beginning after December 31, 2017, but do not apply to compensation provided pursuant to a written binding contract in effect on November 2, 2017 that is not modified in any material respect after that date.
We believe that because of the structure of MAA and its affiliates, we do not have “covered employees” whose compensation is subject to the $1 million deduction limit under Section 162(m). In addition, since MAA qualifies as a REIT under the Code and is generally not subject to Federal income taxes, we believe the payment of compensation that may exceed the deduction limit under Section 162(m) would not have a material adverse consequence to us, provided we continue to distribute 100% of our taxable income. If we make compensation payments subject to Section 162(m) limitations on deductibility, we may be required to make additional distributions to shareholders to comply with our REIT distribution requirements and eliminate our U.S. federal income tax liability or, alternatively, a larger portion of shareholder distributions that would otherwise have been treated as a return of capital may be subject to federal income tax expense as dividend income. Any such compensation allocated to MAA’s taxable REIT subsidiaries whose income is subject to federal income taxes would result in an increase in income taxes due to the inability to deduct such compensation. Although we are mindful of the limits imposed by Section 162(m), even if it is determined that Section 162(m) applies or may apply to certain of our compensation packages, we have reserved, and will continue to reserve, the right to structure our compensation packages and awards in a manner that may exceed the limitation on deduction imposed by Section 162(m).
The Compensation Committee believes that our executive leadership is a key element to our success and that the compensation package offered to the executive officers is a key element in attracting, retaining and motivating the appropriate personnel.
The Compensation Committee believes it has historically maintained compensation for our executive officers at levels that are reflective of the talent and success of the individuals being compensated, and with the inclusion of additional compensation directly tied to performance, the Compensation Committee believes executive compensation will be sufficiently comparable to our industry peers to allow us to retain our key personnel at costs which are appropriate for MAA.
The Compensation Committee will continue to develop, analyze and review its methods for aligning executive management’s long-term compensation with the benefits generated for shareholders. The Compensation Committee believes the idea of creating ownership in MAA helps align management’s interests with the interests of shareholders. The Compensation Committee has no pre-determined timeline for implementing new or ongoing long-term incentive plans. New plans are reviewed, discussed and implemented as the Compensation Committee feels it is necessary or appropriate as a measure to incent, retain and reward our executive officers.
The Compensation Committee of the Board of Directors of Mid-America Apartment Communities, Inc. reviewed and discussed with management the information contained in the Compensation Discussion & Analysis section of this Proxy Statement and recommended to the Board that the Compensation Discussion & Analysis be included in this Proxy Statement and our Annual Report on Form 10-K.
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COMPENSATION COMMITTEE:
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Philip W. Norwood (Chair)
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Toni Jennings
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James K. Lowder
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Monica McGurk
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Claude B. Nielsen
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MATTER TO BE VOTED
To approve the Second Amended and Restated Mid-America Apartment Communities, Inc.
2013 Stock Incentive Plan.
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Shareholders are being asked to approve the Second Amended and Restated Mid-America Apartment Communities, Inc. 2013 Stock Incentive Plan to, among other things, increase the number of shares available for issuance under the plan to 2,000,000.
Absent an increase in the number of authorized shares under the plan, we do not expect to have sufficient shares to meet our anticipated equity compensation needs beyond 2018. We believe increasing the number of shares issuable under the plan is necessary in order to allow MAA to continue to utilize equity awards to attract and retain key individuals essential to our long-term growth and financial success and to further align management interests with those of our shareholders.
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VOTE REQUIRED
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For the proposal to be approved, the votes cast “For” the proposal must exceed the votes cast “Against” the proposal.
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Impact of
Abstentions and
Broker Non-Votes
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Abstentions will have the legal effect of votes against the proposal. Broker non-votes will not have any legal effect on whether this proposal is approved.
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BOARD
RECOMMENDATION
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FOR
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Our Board recommends a vote “FOR” approval of the Second Amended and Restated Mid-America Apartment Communities, Inc. 2013 Stock Incentive Plan.
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OVERVIEW
The Mid-America Apartment Communities, Inc. 2013 Stock Incentive Plan, or the Original Plan, was approved by shareholders on September 27, 2013. At the 2014 Annual Meeting of Shareholders, our shareholders approved the Amended and Restated Mid-America Apartment Communities, Inc. 2013 Stock Incentive Plan, or the Current Plan, to increase the number of shares authorized to be issued under the Original Plan. The Current Plan provides that the maximum aggregate number of shares of MAA common stock that may be issued pursuant to awards granted under the plan is 625,000 shares.
On March 13, 2018, our Board, upon recommendation from the Compensation Committee, adopted the Second Amended and Restated Mid-America Apartment Communities, Inc. 2013 Stock Incentive Plan, or the Amended Plan, subject to shareholder approval, to:
| 1. |
Increase the number of shares available for issuance to 2,000,000;
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| 2. |
Prohibit certain share recycling practices (the Amended Plan does not allow any shares which are tendered or held back upon exercise of a stock option or settlement of an award to cover the exercise price or tax withholding, or repurchased by us on the open market, to be added back to the shares of stock available to be issued);
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| 3. |
Amend the annual limit on independent director compensation such that (i) the aggregate grant date fair value of all equity awards granted to an independent director during any single calendar year may not exceed $400,000 and (ii) the aggregate cash compensation paid to an independent director may not exceed $250,000; and
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| 4. |
Amend the maximum performance-based award payable to any one Covered Employee for a Performance Cycle commencing after the effective date of the Amended Plan to 150,000 shares, or $5,000,000 in the case of a performance-based award that is a cash-based award.
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The Board recommends that our shareholders approve the Amended Plan. As a matter of good governance, we feel it is appropriate to allow shareholders to vote to authorize additional share availability under the plan, rather than utilize shares surrendered to cover the exercise price or taxes associated with an award, which we believe inappropriately increases the number of shares actually authorized by shareholders. As a matter of practice, MAA has never utilized recycled shares under the Current Plan.
Absent an increase in the number of shares authorized for issuance, we do not expect to have sufficient shares under the Current Plan to meet our anticipated equity compensation needs for 2019. We believe that increasing the number of shares issuable is necessary in order to allow MAA to continue to utilize equity awards (generally, restricted stock awards and performance share awards) to retain and attract the services of key individuals essential to MAA’s long-term growth and financial success and to further align management interests with those of MAA’s shareholders. Equity-based compensation is a critical component of our compensation program and MAA relies on such awards to retain and attract key employees and non-employee directors. We believe that equity incentives are necessary for us to remain competitive in regard to retaining and attracting highly qualified individuals upon whom, in large measure, the future growth and success of MAA depends.
The following factors were taken into account by the Compensation Committee and the Board in adopting the Amended Plan:
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MAA’s historical burn rate;
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the number of shares remaining available under the Current Plan for future awards (194,916 or 0.17% of outstanding shares of common stock as of December 31, 2017);
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the number of shares issuable upon the exercise of outstanding stock options (108,438 or 0.10% of outstanding shares of common stock as of December 31, 2017);
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the number of outstanding unvested restricted shares (180,692 or 0.16% of outstanding shares of common stock as of December 31, 2017);
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dilution resulting from the proposed increase in authorized shares;
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the shareholder value transfer resulting from the proposed increase; and
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the conformance of the Amended Plan to good governance practices:
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fixed term of 10 years from the date of shareholder approval;
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no annual “evergreen” provision (the Amended Plan limits the number of shares to 2,000,000 and does not provide annual or automatic increases to the number of shares authorized to be issued);
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prohibits the ability to pay dividends or dividend equivalents on performance-based awards until the performance-based conditions have been met;
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prohibits dividends or dividend equivalents on stock options and stock appreciation rights;
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prohibits repricing of awards without shareholder approval;
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restricts transfers of restricted stock awards, restricted stock units, unrestricted stock awards; and performance share awards during a participant’s lifetime;
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prohibits liberal recycling of shares;
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is administered by our Compensation Committee, which is solely comprised of independent, non-employee directors; and
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requires shareholder approval for any material amendment (other than an amendment that curtails the scope of the plan).
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As of February 28, 2018, there were stock options to acquire 95,838 shares of common stock outstanding under our equity compensation plans, with a weighted average exercise price of $75.99 and a weighted average remaining term of 6.49 years. In addition, as of February 28, 2018, there were 189,299 unvested full value awards with time-based vesting and no unvested full value awards with performance vesting outstanding under our equity compensation plans. Other than the foregoing, no awards under our equity compensation plans were outstanding as of February 28, 2018. Based solely on the closing price of our common stock as reported by the NYSE on February 28, 2018 and the maximum number of shares that would have been available for awards as of such date under the Plan, the maximum aggregate market value of the common stock that could potentially be issued under the Plan is $12,828,459.
EQUITY COMPENSATION PLAN INFORMATION AND BURN RATE
OUTSTANDING AWARDS AND AVAILABLE SHARES
The following table provides information regarding the shares of MAA common stock that may be issued under the Current Plan as of December 31, 2017. The number of securities reported in column (c) as available for future issuance does not include any of the 1,375,000 additional shares that our shareholders are being asked to approve at the 2018 Annual Meeting of Shareholders.
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(a)
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(b)
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(c)
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Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
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Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
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Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column
(a))
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Equity compensation plans approved by security holders (1)
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108,438
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$
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72.93
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194,916
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Equity compensation plans not approved by security holders
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0
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