1SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant |X|[X]
Filed by a party other than the registrant | |[ ]
Check the appropriate box:
|X|[X] Preliminary proxy statement
| |[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
| |[ ] Definitive proxy statement
| |[ ] Definitive additional materials
| |[ ] Soliciting material pursuant to Section 240.14a-11(c) or Section 240.14a-12under Rule 14a-12
Name of Registrant as Specified in Itsits Charter:
Manufactured Home Communities, Inc.
Name of Person(s) Filing Proxy Statement if other than the Registrant:
N/A
Payment of filing fee (Check(check the appropriate box):
|X|[X] No fee required
| |required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
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2. Aggregate number of securities to which transaction applies.applies:
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computed pursuant to Exchange Act Rule 0-11:(1)0-11 (set forth the
amount on which the filing fee is calculated and state how it
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| |[ ] Fee paid previously with preliminary materials.
| |[ ] Check box if any part of the fee is offset as provided by Exchange Act
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statement number, or the form or schedule and the date of its filing.
1. Amount previously paid:
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4. Date filed:
[FN]
_____________
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
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MANUFACTURED HOME COMMUNITIES, INC.
TWO NORTH RIVERSIDE PLAZA, SUITE 800
CHICAGO, ILILLINOIS 60606
---------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 1999
------------------13, 2003
---------------------
You are cordially invited to attend the 19992003 Annual Meeting of Stockholders
("Meeting"(the "Meeting") of MANUFACTURED HOME COMMUNITIES, INC., a Maryland corporation
(the "Company"), to be held at One North Franklin Street, Third Floor, Chicago,
Illinois, on Tuesday, May 11, 1999,13, 2003, at 10:00 A.M.a.m. Central Daylight Time, fortime. At the Meeting,
we will consider and take action on the following purposes:matters:
(1) To electElection of three (3) directors ofto the Company's Board of Directors
to terms
expiring in 2002;(the "Board");
(2) To consider and vote uponapprove an amendment to the adoptionCompany's charter (the "Charter
Amendment") to eliminate the current classification of the Company's Articles of
Amendment and Restatement of its Articles of Incorporation deleting Article VI,
Section 5. -- Indemnification;Board; and
(3) To transact suchAny other business as may properly come before the meetingMeeting or any
adjournment or postponement thereof.
The Board recommends that you vote "for" each of the nominees for the Board
and "for" the approval of the Charter Amendment.
Only stockholders of record at the close of business on March 17, 1999,14, 2003 will
be entitled to vote at the Meeting or any adjournment or postponement thereof.
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
MEETING IN PERSON, PLEASE SIGN AND DATE THE ENCLOSED PROXY WHICH IS BEING SOLICITED BY THE BOARD OF
DIRECTORS, AND RETURN IT PROMPTLYAS SOON
AS POSSIBLE IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
Susan Obuchowski
Susan Obuchowski,By Order of the Board of Directors
/s/ Ellen Kelleher
Ellen Kelleher
Executive Vice President, General
Counsel
and Secretary
April , 2003
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MANUFACTURED HOME COMMUNITIES, INC.
TWO NORTH RIVERSIDE PLAZA, SUITE 800
CHICAGO, ILILLINOIS 60606
---------------------
PROXY STATEMENT
---------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Board") of Manufactured Home Communities, Inc., a
Maryland corporation ("MHC" or the(the "Company"), of proxies to be voted at the Annual
Meeting of Stockholders (the "Meeting")of the Company to be held on Tuesday, May 11,
1999,13, 2003 (the
"Meeting"), and any adjournment or postponement thereof. The Company will pay
the cost of soliciting these proxies. The Company has retained the services of
Mac KenzieMacKenzie Partners, Inc. to assist in obtainingsolicit proxies from
stockholdersand distribute materials to
brokerage firms, banks, custodians and other institutional owners. The Company
will pay MacKenzie Partners, Inc. a fee of approximately $7,500 for the Meeting. The estimated cost of such service is $5,000these
services, plus
out-of-pocket expenses. In addition, to solicitation by mail, employees of the Company will reimburse brokerage firms
and other persons representing beneficial owners of shares for their expenses in
forwarding solicitation materials to such beneficial owners. The Company may
solicit proxiesconduct further solicitation personally, by telegraph, telephone telecopyor by facsimile through
its employees, officers and personal
interviews.directors, none of whom will receive additional
compensation for assisting with the solicitation. Brokers and other nominees who
held of record stock of the Company on March 17, 1999,14, 2003 (the "Record Date"), the
record date for determining stockholders entitled to notice of and to vote at
the Meeting, will be asked to contact the beneficial owners of the shares which
they hold.
This Proxy Statement and accompanying proxy are being mailed to
stockholders commencing on or about March 31, 1999.April , 2003. The proxy, if properly
executed and returned, will be voted according to your instructions, but it may
be revoked at any time before it is exercised by giving notice of revocation in
writing to the Secretary of the Company, by voting in person at the Meeting or
by submitting a subsequently dated proxy.proxy to the Secretary of the Company at or
prior to the Meeting. The mere presence at the Meeting of a stockholder who appointedhas
granted a representative doesproxy shall not itself revoke the appointment.proxy. Shares held in street name
may be voted in person only if the stockholder obtains a signed proxy from the
record holder giving the stockholder the right to vote.
2002 ANNUAL REPORT
Stockholders are concurrently being furnished a copy of the Company's 2002
Annual Report (the "Annual Report") and of the Company's Annual Report on Form
10-K for the year ended December 31, 2002 (the "Form 10-K") as filed with the
Securities and Exchange Commission (the "SEC"). Additional copies of the Annual
Report and of the Form 10-K may be obtained by contacting Ellen Kelleher,
Executive Vice President, General Counsel and Secretary of the Company, at Two
North Riverside Plaza, Suite 800, Chicago, Illinois 60606, 312-279-1400; copies
will be furnished promptly at no additional expense.
VOTING
Only stockholders of record at the close of business on March 17, 1999 (the
"Record Date")the Record Date
will be entitled to vote at the Meeting. On such date 26,580,209the Record Date, 22,258,447 shares
of the Company's common stock, par value $.01 per share ("Common Stock"), were
outstanding. Each share of Common Stock outstanding on the Record Date entitles
the holder thereof to one vote upon each matter to be voted upon at the Meeting.
The presence in person or by proxy of stockholders entitled to cast a majority
of all the votes entitled to be cast at the Meeting (including sharesshall constitute a quorum.
Shares represented by proxies that reflect abstentions) shall constitute a quorum.
Abstentionsabstentions and broker non-votes are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. The affirmative vote of a plurality of all votes cast
at the Meeting, if a quorum is present, is sufficient to elect each nominated
director to the Board. The approval of the proposal to amend the Company's
charter (the "Charter Amendment") to eliminate the current classification of the
Board (see Proposal No. 2 below) requires the affirmative vote of the holders of
two-thirds of all the votes entitled to be cast on the proposal. An abstention
as to any particular matter when passage requires the vote of a majority of the
votes entitled to be cast at the Meeting, however, does not constitute a vote
"for" or "against" and will be disregarded in calculating the votes cast as to
such matter. With respect to approval of the Articles of Amendment and
Restatement of the Company's Articles of Incorporation, however, which requires
a vote of two-thirds of all shares outstanding, an abstention will have the same
effect as a negative vote. "Broker non-votes" (i.e., where a broker or nominee submits a proxy
specifically indicating the lack of discretionary authority to vote on a matter)
will be treated in the same manner as abstentions. Abstentions and broker
non-votes have the effect of votes against matters, such as the Charter
Amendment, requiring the affirmative vote of the holders of two-thirds of all
the votes entitled to be cast on such matters.
If there is not a quorum at the Meeting, the stockholders entitled to vote
at the Meeting, whether present in person or represented by proxy, shall only
have the power to adjourn the Meeting until such time as there is a quorum. At such time
as there is a quorum, theThe
Meeting will reconvenemay be reconvened without notice to the stockholders, other than an
announcement at the prior adjournment of the Meeting, unless the
adjournment is to a date not more thanwithin 120 days after the
Record Date.Date, and a quorum must be present at such reconvened Meeting.
If a proxy in the form enclosed is duly executed, dated and returned, and
it has not been revoked in accordance with the instructions set forth therein,
the shares of Common Stock represented thereby will be voted by Samuel Zell and
Howard Walker, the Board's proxy agents for the Meeting, in accordance with the
specifications made thereon by the stockholder. If no such specifications are
made, such proxy will be voted (i) FORfor the election of the three nominees for
directorsdirector to terms expiring in 2002;the Board, (ii) FORfor the approval of the Company's
Articles ofCharter Amendment and Restatement of its Articles of Incorporation deleting
Article VI, Section 5 -- Indemnification; and (iii)
at the discretion of SamuelMr. Zell and HowardMr. Walker the Board's designated
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representatives for the Meeting, with respect to such other business
as may properly come before the Meeting or any adjournment or postponement
thereof.
1998 ANNUAL REPORT
Stockholders are concurrently being furnished with a copy of the Company's
1998 Annual Report, which contains its audited financial statements as of
December 31, 1998. Additional copies of the Annual Report and of the Company's
Annual Report on Form 10-K for the year ended December 31, 1998 as filed with
the Securities and Exchange Commission (the "SEC") may be obtained by contacting
Cynthia McHugh, Senior Vice President -- Investor Relations of the Company, at
Two North Riverside Plaza, Suite 800, Chicago, IL 60606, 312-928-1905, and it
will be furnished promptly at no additional expense.PROPOSAL NO. 1
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Board currently consists of ten members. However, two directors, Dr.
Masotti and Mr. Torres, have resigned effective May 12, 2003, and a third
director position currently held by Mr. Podjasek, whose term expires at the
Meeting, will not be filled. In accordance with the Company's Bylaws, the Board
has determined to reduce its size from ten members to seven members effective
immediately after the Meeting. The Company's charter of the Company(the "Charter") currently
provides that the Company's directors of the Company shall be divided into three classes as
nearly equal in number as possible, with each class having a term of three
years. The Board has nominated David A. Helfand, Michael A. TorresDonald S. Chisholm, Thomas E. Dobrowski and
Samuel ZellHoward Walker for election to serve as directors of the Company until the 20022006
Annual Meeting of Stockholders and until their successors are duly elected and
qualified. If the Charter Amendment is approved, the classified Board will be
eliminated, the current term of each director in office as of the Meeting and
each director elected at the Meeting will end at the 2004 Annual Meeting of
Stockholders (the "2004 Meeting"), and all directors will, starting with the
2004 Meeting, be elected for one-year terms at each Annual Meeting of
Stockholders. Biographical information for each of the nominees is set forth
under the caption "Management."
The affirmative vote
of a plurality of all votes cast at the Meeting, if a quorum is present, is
sufficient to elect the three directors. Abstentions and broker non-votes will
have no effect on the outcome of the election of directors.
Each nominee has consented to be named in this proxy statementProxy Statement and to serve
if elected. All nominees are currently directors. In the event that any nominee
should become unable to serve as a director (which is not anticipated), the
persons designated as representatives will cast votes for the remaining nominees
and for such other person or persons as the Board may recommend.
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THE BOARD RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES NAMED ABOVE. PROXIES
SOLICITED BY THE BOARD WILL BE VOTED "FOR" THE NOMINEES UNLESS INSTRUCTIONS TO
WITHHOLD SUCH VOTE OR TO THE CONTRARY ARE GIVEN.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers and directors of the Company as of March 17, 1999.the Record Date. If the
Charter Amendment is approved, the terms of each director in office as of the
Meeting and each director elected at the Meeting will end at the 2004 Meeting.
NAME AGE POSITION
- ---- --- --------
Samuel Zell 57Zell.......................... 61 Chairman of the Board of Directors (term expires in 1999)2005)
Howard Walker 59 President,Walker........................ 63 Chief Executive Officer, Vice Chairman of the Board and
Director (term expires in 2000)2003)
Thomas P. Heneghan................... 39 President and Chief Operating Officer
Ellen Kelleher 38Kelleher....................... 42 Executive Vice President, General Counsel and Assistant
Secretary
Thomas P. Heneghan 35John M. Zoeller...................... 42 Executive Vice President, Chief Financial Officer and
Treasurer
Gary W. Powell 58 Executive Vice President -- Operations
Donald S. Chisholm 64Chisholm................... 68 Director (term expires in 2000)2003)
Thomas E. Dobrowski 55Dobrowski.................. 59 Director (term expires in 2000)2003)
David A. Helfand 34 Director (term expires in 1999)
Louis H. Masotti, Ph.D. 64 Director (term expires in 2001)
John F. Podjasek Jr. 57 Director (term expires in 2000)
Sheli Z. Rosenberg 57 Director (term expires in 2001)
Michael A. TorresHelfand..................... 38 Director (term expires in 1999)
Gary L. Waterman 572005)
Louis H. Masotti, Ph.D............... 68 Director (term expires in 2001)2004)
John F. Podjasek, Jr................. 61 Director (term expires in 2003)
Sheli Z. Rosenberg................... 61 Director (term expires in 2004)
Michael A. Torres.................... 42 Director (term expires in 2005)
Gary L. Waterman..................... 61 Director (term expires in 2004)
The following is a biographical summary of the experience of the executive
officers and directors of the Company. For information concerning membership as
of the date of this Proxy Statement on committees of the Board, see "Committees
of the Board of Directors;Board; Meetings" below.
SAMUEL ZELLSamuel Zell has been Chairman of the Board of the Company since March 31, 1995
and had
beenwas Chief Executive Officer of the Company from March 31, 1995 untilto August 1996.
Mr. Zell had
beenwas Co-Chairman of the Board of the Company from its formation until
March 31, 1995. Mr. Zell was a director of Mobile Home Communities, Inc. ("MH
Inc."), the former manager of the Company's manufactured home communities, from
1983 until its dissolution in 1993. Mr. Zell ishas been chairman of the board of directors of Equity Group
Investments, L.L.C. ("EGI"), an investment company, since 1999, and, had been Chairmanuntil
December 1998, was chairman of the Boardboard of Equity Group Investments, Inc.
("EGI, Inc."), an investment company, for more than five years. Mr. Zell is
also Chairmanchairman of the Boardboard of American Classic Voyages
Co. ("American Classic"), a provider of overnight cruises in the United States; Anixter International Inc. ("Anixter"), a distributor
of electrical and cable products; Capital Trust, Inc. ("Capital Trust"), a
specialized finance company; Angelo and Maxie's, Inc., formerly known as Chart
House Enterprises, Inc., an owner and operator of restaurants; and Jacor
Communications, Inc. ("Jacor"), an ownerDanielson
Holding Corporation, a holding company for insurance and operatormarine transportation
businesses. Since July 2002, Mr. Zell has been chief executive officer of
radio stations.Danielson Holding Corporation. Mr. Zell is chairman of the board of trustees of
Equity Office Properties Trust ("Equity Office"), an equity real estate
investment trust ("REIT") primarily focused on office buildings; and chairman of
Equity Residential Properties Trust ("Equity Residential"), an equity REIT
primarily focused on multifamily residential properties. He isMr. Zell has been a
director of Davel Communications,Idine Rewards Network, Inc. ("Idine"), an operatoradministrator of pay
telephones in the United States; Fred Meyer, Inc., an ownerloyalty
based consumer reward programs, since July 2002, and operator of
grocery stores and discount stores; and Ramco Energy plc, an independent oil
company in the United Kingdom.
HOWARD WALKERhas been its chairman since
September 2002.
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Howard Walker has been a director of the Company since November 4, 1997,
President since September 5, 1997, and
has been Chief Executive Officer of the Company since December 31,
1997. HeMr. Walker
also has been Vice Chairman of the Board of the Company since May 2002. Mr.
Walker was President of the Company from September 1997 to May 2000, and
President of Realty Systems, Inc. since March 30, 1995. Realty
Systems, Inc. is, an affiliate of the Company.Company, from March 1995
to April 2000. Mr. Walker is also a member of the Company's management committee
(the "Management Committee"), which was created in 1995 and is comprised of the
Company's senior executives.executive officers. Mr. Walker had beenwas a Vice President of the
Company from January 16, 1995 untilto March 30, 1995.
From August 1994 until
JanuaryThomas P. Heneghan has been President and Chief Operating Officer of the
Company since May 2000. Mr. Heneghan is also a member of the Management
Committee. Mr. Heneghan was Executive Vice President, Chief Financial Officer
and Treasurer of the Company from April 1997 to May 2000, and Vice President,
Chief Financial Officer and Treasurer of the Company from February 1995 Mr. Walker had been the principal of Walker Realty Co., a
full-service real estate company. From January 1989
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until July 1994, Mr. Walker had been a principal and partner in The Markin
Group, a full-service real estate company.
ELLEN KELLEHERto March
1997.
Ellen Kelleher has been Executive Vice President and General Counsel of the
Company since March 1997.1997, and has been Secretary of the Company since May 2000.
Ms. Kelleher is also a member of the Company's
management committee. She had beenManagement Committee. Ms. Kelleher was
Senior Vice President, and General Counsel and Assistant Secretary of the Company
from March 1994 untilto March 1997.
Ms. Kelleher had been a vice
president of the law firm, Rosenberg & Liebentritt, P.C., from January 1993
until December 1995. Ms. Kelleher had been an associate of Rosenberg &
Liebentritt, P.C. from October 1990 until January 1993.
THOMAS P. HENEGHANJohn M. Zoeller has been Executive Vice President, Chief Financial Officer
and Treasurer of the Company since March 1997.May 2002. Mr. Heneghan is also a
member of the Company's management committee. Mr. Heneghan had beenZoeller was Vice President,
Chief Financial Officer and Treasurer from February 1995 until March
1997. Mr. Heneghan had been a member of the accounting firm of Greenberg &
Pociask, Ltd. from January 1994 until February 1995. Mr. Heneghan had been vice
president of Capsure Holdings Corp. ("Capsure") from May 1993 until June 1994
and controller of Capsure from January 1993 until November 1993.
GARY W. POWELL has been Executive Vice President -- Operations of the Company sincefrom May 1995.2000 to May 2002.
Mr. PowellZoeller is also a member of the Company's management
committee.Management Committee. From January 1999 to
May 2000, Mr. Powell had been President -- Northern Division of the Company
from August 1994 until May 1995. Mr. Powell had been President and Chief
Operating Officer of the Company from its formation until August 1994. Mr.
Powell had been with MH Inc. or its predecessors from 1971, serving as president
from 1984 until its dissolution in 1993. Mr. PowellZoeller was a directorvice president of the
Company from its formation until May 1994.
DONALDEGI. From January 1997 to December
1998, Mr. Zoeller was a vice president of EGI, Inc.
Donald S. CHISHOLMChisholm has been a director of the Company since March 1993. Mr.
Chisholm is president of Vernon Development Co., the developer of a 650-acre
golf course community, and of Ann Arbor Associates Inc., a real estate
development and management company, both for more than five years.
THOMASThomas E. DOBROWSKIDobrowski has been a director of the Company since March 1993.
Mr. Dobrowski ishas been the managing director of real estate and alternative
investments of General Motors Investment Management Corporation ("GMIMCo.").since December
1994. Mr. Dobrowski is a director of Capital Trust, Inc.; and Red Roof Inns, Inc., an
owner and operator of hotels. HeTrust. Mr. Dobrowski is also a
trustee of Equity Office.
DAVIDDavid A. HELFANDHelfand has been a director of the Company since May 1995;
President of the Company from January 1995 until September 1997; and Chief
Executive Officer of the Company from August 1996 until December 31, 1997. He
had been Chief Financial Officer of the Company from December 1992 until
February 1995 and Senior Vice President from March 1994 until January 1995. Mr.
Helfand hadhas been Vice President of the Company from December 1992 until March
1994.with Equity Office since July 1998, and serves as its chief
investment officer. Mr. Helfand had beenwas a managing director of Equity International
Properties, a division of EGI, Inc., from December 31, 1997 untilto July 1998. Since
July 1998, Mr.
Helfand has been senior vice presidentwas President of Equity Office.
LOUISthe Company from January 1995 to September 1997, and
was Chief Executive Officer of the Company from August 1996 to December 1997.
Mr. Helfand was Chief Financial Officer of the Company from December 1992 to
February 1995, and Senior Vice President of the Company from March 1994 to
January 1995.
Louis H. MASOTTI,Masotti, Ph.D., has been a director of the Company since March
1993. Dr. Masotti ishas been president of Louis H. Masotti, Ltd., a management,
real estate and urban development consultancy.consultancy, for more than five years. Dr.
Masotti was professor of management and urban development and director of the
program in real estate management for the Graduate School of Management of the
University of California at Irvine from 1992 untilto 1998. HeDr. Masotti is a professor
emeritus of Northwestern University's Kellogg Graduate School of Management. JOHNDr.
Masotti has resigned as a director of the Company effective May 12, 2003, and
his director position will not be filled.
John F. PODJASEK, JR.Podjasek, Jr., has been a director of the Company since May 1994.
Mr. Podjasek has been managing director --the Managing Director of the private asset managementequity group at
WestLB Asset Management (USA) LLC since September 2000. Mr. Podjasek was the
Managing Director and co-head of the Private Markets Group of Forstmann -- Leff
International, Inc. sincefrom July 1997.1997 to September 2000. Mr. Podjasek was retired
from November 1995 untilto July 1997. Previously, Mr. Podjasek had beenwas employed by
Allstate Insurance Company
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from 1966 untilto November 1995, most recently serving as vice president --of venture
capital and real estate. 4
7
SHELIMr. Podjasek will not stand for reelection at the
Meeting, and his director position will not be filled.
Sheli Z. ROSENBERGRosenberg has been a director of the Company since August 1996.
During 2002, Mrs. Rosenberg was appointed the Lead Director of the Company.
Since January 2000, Mrs. Rosenberg has been chief executive officer andvice chairman of EGI. Mrs. Rosenberg
was president of EGI, since
January 1999. Mrs. Rosenberg had been chief executive officer and president of
Equity Group Investments, Inc. from November 1994 untilto December 1999, and was chief
executive officer of EGI, Inc. from November 1994 to December 1998. SheMrs.
Rosenberg was a principal inof the law firm of Rosenberg & Liebentritt P.C. from 1980
untilto September 1997. Mrs. Rosenberg is a director of CVS Corporation, an owner and
operator of drug stores; Anixter; Capital Trust,Trust; Cendant Corporation, a travel related,
real estate related and direct marketing consumer and business services company;
Idine; and Ventas, Inc.; Illinova Inc. and its
subsidiary Illinois Power Company, a supplier, an owner of electricity and natural gasreal estate in Illinois; and Jacor. Shethe health care field. Mrs.
Rosenberg is a trustee of Equity Office and Equity Residential.
Mrs. Rosenberg was a vice president of First Capital Benefit Administrators,
Inc., which filed a petition under the federal bankruptcy laws on January 3,
1995, which resulted in its liquidation on November 15, 1995.
MICHAELMichael A. TORRESTorres has been a director of the Company since March 1993. Mr.
Torres has been presidentis the Chief Executive Officer and a principal of Lend Lease Rosen Real
Estate Securities LLC ("Lend Lease Rosen"), an investment management firm, sincefirm. Mr.
Torres joined Lend Lease Rosen in February 1995. Mr. Torres had been employed by Wilshire Associates Incorporated, an investment consulting
firm, from June 1990 until February 1995, most recently servingis a trustee of Lend
Lease Funds, a family of mutual funds. Mr. Torres serves on the Board of
Directors of the Robert Togo Foundation. Mr. Torres has resigned as a vice
president directing real estate consulting services for its institutional
investors.
GARYdirector
of the Company effective May 12, 2003, and his director position will not be
filled.
Gary L. WATERMANWaterman has been a director of the Company since March 1993. Since
1989, Mr. Waterman has been president of Waterman Limited, a real estate
services and investment company that he founded. Mr. Waterman is a director and
member of the Compensation Committee of Java Trading Company, a wholesale coffee
roasting company.
COMMITTEES OF THE BOARD OF DIRECTORS;BOARD; MEETINGS
Meetings: During the year ended December 31, 1998,2002, the Board held five
meetings.four
meetings and took eight actions by unanimous written consent. Each of the
present directors attended over 75% or more of the total number of the meetings of the Board
and of its committees on which they were eligible to
attend.he or she served.
Executive Committee: The Executive Committee of the Board is composed of
Messrs. Zell, Walker and Chisholm. The Executive Committee has the authority,
within certain parameters set by the Board, to acquire, dispose of and finance
investments for the Company (including the issuance of additional limited
partnership interests of MHC Operating Limited Partnership ("OP Units")) and to
execute contracts and agreements, including those related to the borrowing of
money by the Company, and generally exercise all other powers of the Board
except as prohibited by law. During the year ended December 31, 1998,2002, the
Executive Committee did not hold anyheld no meetings butand took variousthree actions pursuant
to resolutions adopted by unanimous written
consent.
Compensation Committee: The Compensation Committee of the Board is
composed of Messrs. Chisholm, Masotti and Waterman and Mrs. Rosenberg. The
Compensation Committee determines compensation for the Company's executive
officers and it exercises all powers of the Board in connection with compensation
matters, including incentive compensation and benefit plans. The Compensation
Committee also has the authority to grant stock options, stock appreciation
rights and restricted stock awards in accordance with the Second Amended and RestatedCompany's 1992 Stock
Option and Stock Award Plan, as amended and restated (the "Plan"), to the
management of the Company and its subsidiaries, other employees and consultants.
During the year ended December 31, 1998,2002, the Compensation Committee held one meetingtwo
meetings and took variousno actions
pursuant to resolutions adopted by unanimous written consent.
Audit Committee: The Audit Committee of the Board is composed of Messrs.
Dobrowski Podjasek and Torres.Torres and Mrs. Rosenberg. The Audit Committee makes
recommendations concerning the engagement of independent public accountants,
reviews with the Company's independent public accountants the plans for and
results of the audit engagement, approves professional services provided by the
Company's independent public accountants, reviews the independence of the
Company's independent public accountants, considers the range of audit and
non-audit fees and reviews the adequacy of the
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Company's internal accounting controls. Each of the Audit Committee members is
an "independent" director within the meaning of "independent" set forth in The
New York Stock Exchange ("NYSE") listing standards. During the year ended
December 31, 1998,2002, the Audit Committee held two meetings.
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8five meetings and took one action by
unanimous written consent.
EXECUTIVE COMPENSATION
The following tables showtable shows information with respect to the annual
compensation (including option grants) for services rendered to the Company for the fiscal years ended
December 31, 1998,2002, December 31, 19972001 and December 31, 19962000 by the chief executive officerCompany's
Chief Executive Officer and those persons who were, at December 31, 1998,2002, the
othernext three most highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------------------------------
AWARDS
ANNUAL -------------------------
COMPENSATION RESTRICTED SECURITIES
RESTRICTED------------------- COMMON UNDERLYING NAME ANDALL OTHER
BONUS STOCK AWARDS OPTIONS ALL OTHERCOMPENSATION
NAME AND PRINCIPAL OCCUPATIONPOSITION YEAR SALARY ($) BONUS ($SALARY($) ($)(1) GRANTED(#) COMPENSATION ($)(2)
--------------------(3) GRANTED(#) ($)(4)
- --------------------------- ---- ---------- --------- ------- ------------ ---------- -------------------------------
Howard Walker, ............... 1998 240,000 75,000 1,049,978Walker................... 2002 500,000 223,897 697,888 0 10,000
9,600Chief Executive Officer, 2001 273,000 103,000 53,980 0 8,500
Vice Chairman, Director 2000 262,650 175,000 604,750 0 10,200
and Member of Management
Committee(5)(6)
Thomas P. Heneghan.............. 2002 270,000 175,000 560,700 0 10,000
President, Chief Executive 1997 200,000 75,008 684,086Operating 2001 261,500 113,600 0 6,5000 8,500
Officer and Member of 1996 200,000 41,014 744,9862000 251,320 298,964 493,000 0 9,00010,200
Management Committee
Thomas P. Heneghan,........... 1998 230,000 75,000 928,103Committee(6)
Ellen Kelleher.................. 2002 252,000 195,910 490,613 0 9,60010,000
Executive Vice President, 1997 215,000 75,008 622,4922001 244,500 103,000 0 9,5000 8,500
General Counsel, Secretary 2000 234,840 275,000 431,375 0 10,174
and Member of Management
Committee(6)
John M. Zoeller................. 2002 252,000 194,946 490,613 0 10,000
Executive Vice President, 2001 244,500 113,600 695,325 0 8,500
Chief Financial Officer, 1996 200,000 41,014 1,008,9862000 147,227 198,964 431,375 0 9,0008,819
Treasurer and Member of
Management Committee
Ellen Kelleher, .............. 1998 215,000 75,000 684,353 0 9,600
Executive Vice President, 1997 200,000 75,008 560,898 0 9,500
General Counsel and Member 1996 200,000 41,014 744,986 0 9,000
of Management
Committee
Gary W. Powell, .............. 1998 215,000 75,000 684,353 0 9,600
Executive Vice 1997 200,000 75,008 560,898 0 9,500
President -- Operations 1996 200,000 41,014 744,986 0 9,000
and Member of
Management CommitteeCommittee(6)(7)
- ---------------
(1) Actual payment of 2001 bonuses was made in 2002. Bonuses for 2000 and 2002
were paid in the year during which they were earned.
(2) The total number and value of shares of Common Stock ("Restricted Common
Stock") awarded pursuant to restricted stock grants ("Restricted Common
Stock Awards") in various years, pursuant to the plans and programs
described below under "Compensation Committee Report on Executive
Compensation", and held by each named executive officer and the valueas of such shares at December 31,
1998, the
last trading date of the year, was2002 were as follows:
NUMBER OF SHARES VALUE AT 12/31/98VALUE($)
---------------- --------------------------
Howard Walker.......... 64,249 $1,610,241Walker........................................ 33,189 983,390
Thomas P. Heneghan..... 63,486 1,591,118Heneghan................................... 27,500 814,825
Ellen Kelleher......... 48,124 1,206,108
Gary W. Powell......... 48,124 1,206,108
The total number of shares of Restricted Common Stock which were granted on
November 24, 1998 and vest 60% on December 31, 2001; 20% on December 31,
2002; and 20% on December 31, 2003, if certain performance benchmarks are
achieved are as follows:
Howard Walker............................... 40,000
Thomas P. Heneghan.......................... 35,000
Ellen Kelleher.............................. 25,000
Gary W. Powell.............................. 25,000
6
9
The number of shares of Restricted Stock Awards awarded in 1998, which will
vest in their entirety on December 11, 2000 are as follows:
Howard Walker.............................. 3,076
Thomas P. Heneghan......................... 3,076
Ellen Kelleher............................. 3,076
Gary W. Powell............................. 3,076
The total number of Restricted Common Stock Units which were granted on
December 30, 1997 and converted to Restricted Stock Awards on a one-for-one
basis on May 12, 1998; vested 50% on June 30, 1998 and 25% on December 31,
1998 and 25% will vest on December 31, 1999; are as follows:
Howard Walker.............................. 22,250
Thomas P. Heneghan......................... 20,000
Ellen Kelleher............................. 17,750
Gary W. Powell............................. 17,750
The number of shares of Restricted Stock Awards awarded in 1997, which will
vest in their entirety on December 16, 1999 are as follows:
Howard Walker.............................. 2,810
Thomas P. Heneghan......................... 2,810
Ellen Kelleher............................. 2,810
Gary W. Powell............................. 2,810
The number of shares of Restricted Stock Awards awarded in 1996 which vested
60% on December 31, 1998, and will vest 20% on December 31, 1999 and 20% on
December 31, 2000 since certain performance benchmarks were achieved are as
follows:
Howard Walker.............................. 32,000
Thomas P. Heneghan......................... 44,000
Ellen Kelleher............................. 32,000
Gary W. Powell............................. 32,000
The number of shares of Restricted Stock Awards awarded in 1996, which
vested in their entirety on December 13, 1998 are as follows:
Howard Walker.............................. 1,863
Thomas P. Heneghan......................... 1,863
Ellen Kelleher............................. 1,863
Gary W. Powell............................. 1,863Kelleher....................................... 21,813 646,319
John M. Zoeller...................................... 36,813 1,090,769
All holders of Restricted Common Stock receive any dividends paid on such
shares.
- ---------------
(2)6
(3) The number of shares of Restricted Common Stock granted to each named
executive officer effective January 4, 2002 pursuant to the 1997 Program, as
described below under "Compensation Committee Report on Executive
Compensation", was as follows (said award is subject to a vesting schedule,
with 50% of the award vesting immediately; 25% vesting one year from the
date of the award; and the remainder vesting two years from the date of the
award):
Howard Walker............................................... 20,250
Thomas P. Heneghan.......................................... 18,000
Ellen Kelleher.............................................. 15,750
John M. Zoeller............................................. 15,750
Note: The cumulative totals set forth in footnote 2 above include the
portion of this award that had not vested as of December 31, 2002.
No Restricted Common Stock was granted to executive officers in 2001,
except as described in footnotes (5) and (7) below with respect to Messrs.
Walker and Zoeller, respectively.
The number of shares of Restricted Common Stock granted to each named
executive officer in 2000 was as follows:
Howard Walker............................................... 20,250
Thomas P. Heneghan.......................................... 18,000
Ellen Kelleher.............................................. 15,750
John M. Zoeller............................................. 15,750
The Restricted Common Stock Award granted to each named executive officer
in 2000 was made in two separate grants, one on November 14, 2000 and the
second on December 29, 2000. 50% of such Restricted Common Stock Award
vested on December 29, 2000; 25% vested on December 29, 2001; and the
remainder vested on December 29, 2002.
(4) Includes employer matching contributions and/orand profit sharing contributions
pursuant to theThe MHC Advantage Retirement Savings Plan.
(5) As a member of the Board, Mr. Walker received an award of 2,000 shares of
Restricted Common Stock on May 9, 2000, on May 8, 2001, and on May 8, 2002.
Each of these awards is subject to a vesting schedule, with one-third of the
award vesting six months from the date of the award; one-third vesting one
year from the date of the award; and the remainder vesting two years from
the date of the award.
(6) Under the Company's MBO bonus plan, an officer who receives a
management-by-objective ("MBO") bonus receives 50% of the MBO bonus in cash
and 50% of the MBO bonus in the form of a stock award. The officer may
request, subject to approval by the Compensation Committee, to receive any
portion of the MBO bonus in the form of a stock award. To the extent that an
officer receives up to 50% of the MBO bonus as a stock award, the stock
award is calculated using the fair market value of a share of Common Stock
as of the date the MBO bonus is paid or (for 2002) as of the date the MBO
bonus is declared. If more than 50% of the MBO bonus is to be paid as a
stock award, the additional stock award is calculated using the most recent
purchase price for a share of Common Stock under the Company's Non-Qualified
Employee Stock Purchase Plan ("ESPP") or affiliated company's 401(k) plans.the price that would be used under
the ESPP for the offering period then in progress if the period ended the
day the MBO bonus was paid, which is less than the fair market value of a
share of Common Stock on the day the MBO bonus is paid. Bonus amounts
reflected for certain of the named executive officers for each of the years
indicated include the discount on shares of Common Stock with respect to
elections they made to receive more than 50% of the MBO bonus as a stock
award, as follows: (a) for 2000, Messrs. Heneghan and Zoeller; (b) for 2001,
Messrs. Heneghan and Zoeller; and (c) for 2002, Messrs. Walker and Zoeller
and Ms. Kelleher.
(7) Mr. Zoeller became an executive officer of the Company in May 2000 (the
salary figure shown for Mr. Zoeller for 2000 is a pro rated amount).
Effective January 1, 2001, Mr. Zoeller was awarded
7
1025,000 shares of Restricted Common Stock pursuant to the "1998 Program"
described below under "Compensation Committee Report on Executive
Compensation."
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES EXERCISE OR TERM
OPTIONS IN FISCAL BASE PRICE EXPIRATION ---------------------------
NAME GRANTED(#)(1) YEAR ($/SH) DATE 5% ($)(2) 10% ($)(3)
---- ------------- ---------- ----------- ---------- --------- ----------
Howard Walker............... 10,000 3.0 26.75 5/12/08 168,229 426,326
Thomas P. Heneghan.......... 0 0 0 -- 0 0
Ellen Kelleher.............. 0 0 0 -- 0 0
Gary W. Powell.............. 0 0 0 -- 0 0
- ---------------
(1) One-thirdThere were no option grants in fiscal year 2002 to any of the options granted on May 12, 1998, are exercisable six months
after initial grant, one-third are exercisable one year following such grant
date and one-third are exercisable two years following such grant date.
(2) Assumes stock price of $43.57.
(3) Assumes stock price of $69.38.executive
officers named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF NUMBER OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES UNEXERCISED IN-THE-MONEYAT FY-END(#) AT FY-END($)(1)
ACQUIRED OPTIONS AT OPTIONS AT ON VALUE FY-END(#) FY-END($)(1)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- -------- -------- ------------- ------------------------ ----------- ------------------- --------------------
Howard Walker................................... Walker................... 25,000 347,530 0/0 0 18,333/6,667 139,688/0/0
Thomas P. Heneghan..............................Heneghan.............. 0 0 33,000/12,000/0 265,313/107,310/0
Ellen Kelleher..................................Kelleher.................. 21,000 266,474 0/0 0/0
John M. Zoeller................. 0 0 21,000/4,000/0 99,188/0
Gary W. Powell.................................. 14,000 192,500 50,000/0 444,375/30,958/0
- ---------------
(1) Assumes aCalculated by determining the difference between (a) $29.63, the per share
value equal toof the year-end stock priceCompany's Common Stock on December 31, 2002, the last trading
day of $25.0625 lessthe year, and (b) the exercise price of in-the-money options.
DIRECTOR COMPENSATION OF DIRECTORS
The Company paid each of its non-employee directors an annual fee of
$30,000 in 1998.2002. In addition, directors who serve on the Audit Committee,
Executive Committee or Compensation Committee receive an additional $1,000 per
annum for each committee on which they serve. Committee chairs receive an
additional $500 per annum. Directors who are employees of the Company are not
paid any directors' fees or committee fees. The Company reimburses the directors for travel
expenses incurred in connection with their activities on behalf of the Company.
Additionally, onOn the date of the first Board of Directors' meeting after each Annual Meeting of
Stockholders, each director then in office will receive at the director's
election either an annual grant of options to purchase 10,000 shares of Common
Stock at the then-current market price.price or an annual grant of 2,000 shares of
Restricted Common Stock. In March 2003, Mr. Zell was awarded options to purchase
100,000 shares of Common Stock, which he elected to receive as 20,000 shares of
Restricted Common Stock, for services rendered as Chairman of the Board during
2002, and Mrs. Rosenberg was awarded options to purchase 25,000 shares of Common
Stock, which she elected to receive as 5,000 shares of Restricted Common Stock,
for services rendered as Lead Director during 2002. One-third of the shares of
Restricted Common Stock covered by these grants vests on each of December 31,
2003, December 31, 2004 and December 31, 2005.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The Compensation Committee members for 19982002 were Messrs. Chisholm, Masotti
and Waterman and Mrs. Rosenberg. No Compensation Committee interlocking
relationships existed in 1998.
8
11
Mr. Zell and Mrs. Rosenberg serve as members of the board of directors of
numerous non-public companies owned or controlled in whole or in part by Mr.
Zell or his affiliates which do not have compensation committees, and in many
cases, the executive officers of those companies include Mr. Zell and Mrs.
Rosenberg.2002. For a description of certain transactions with
Board members or their affiliates, see "Certain Relationships and Related
Transactions."
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate future filings, including this
Proxy Statement, in whole or in part, the Compensation Committee Report on
Executive Compensation presented below and the Performance Graph following such
report shall not be incorporated by reference into any such filings.8
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board determines the compensation of the Company's
executive officers, including those named in the Summary Compensation Table.Table, and
guides the Company's overall philosophy towards compensation of its employees.
The Compensation Committee believes that the compensation of the Company's Chief
Executive Officer and all of the Company's executive officers should be both
competitive and based on individual and Company performance.
The Company's compensation policy takes into account a review of local and
national peer group salary surveys focusing primarily on the SNL Executive
Compensation Review 19982002 for REITs ("SNL Survey"). The SNL Survey contains
detailed compensation and performance data on publicly traded REITs. The
Compensation Committee believes the SNL Survey provides comparable salary data
for the Company. The Compensation Committee believes that itsthe Company's
compensation levels compare favorably to itsthe Company's peer groups described in
the surveys and targets median to high compensation levels for itsthe Company's
executive officers. This is not the same peer group that is used in the
Performance Graph on page 12.13.
During the fiscal year ended December 31, 1998,2002, there were three major
components of executive compensation: base salary, bonuses and restricted
stock. This salary structure is designed to attractRestricted Common
Stock Awards.
The Compensation Committee believes that attracting and retainretaining highly
qualified executives. Thisexecutives is accomplished by providing competitive base salaries and
meaningful incentives, includingboth short-term mid-term and long-term, incentives, intended to reward
performance.performance and retain experienced management. Benchmarks for determining base
salary and bonus levels include targeted funds from operations ("FFO") levels,
strength of the balance sheet and creation of stockholder value. Each
performance measure carries equal weight.
The Company's overallexecutive salary structure is reviewed annually by the
Compensation Committee using the SNL Survey for guidance. In addition, the
entire Company's salary structure is reviewed annually. Where salary information
is unavailable for a particular position, other positions having similar
responsibilities either within the Company or in companies of comparable size
are used. Salary increases are based bothupon overall Company performance and upon
each executive's, includingexecutive officer's (including the Chief Executive Officer's,Officer's) performance
and contribution to the Company's performance. Also, the Compensation Committee
has deliberately kept base salaries at levels which may compare less favorably
with comparable positions in other companies. This allows the Compensation
Committee to reward executive officers' performance through bonuses and
long-term incentives such as Restricted Common Stock Awards.
Further short-term and mid-term incentives for executive officers are
accomplished through the Company's management-by-objective ("MBO")MBO bonus plan. The MBO bonus plan involves
the Company and the executive officer jointly setting goals for such executive
officer at the beginning of each year.
The Compensation
Committee establishedIn 2002, the following bonus ranges for its executive officers
based on salary for 1998:
President and Chief Executive Officer 0 -- 75%
Executive Vice Presidents 0 -- 50%
Senior Vice Presidents 0 -- 35%
Vice Presidents 0 -- 20%
9
12
In determining the amount of the bonuses for 1998, the following criteria
were taken into account: achieving targeted FFO levels; identifying and
consummating acquisitions;Company and the strength ofREIT industry encountered a challenging
economic environment. Despite the balance sheet. In 1998, the
Company exceeded targeted FFO levels through reduction of expenses, and
increases in revenue achieved through increases in rental rates and increases in
occupancy atpoor economy, the Company's communities. In addition, during 1998 thecore business
continued to deliver solid operating income growth. The Company successfully
integratedredeployed approximately 21,100 sites into its portfolio. While
achieving this$90 million of capital from all age communities in
average growth markets to age qualified communities in Florida and Arizona that
are more in line with the Company's long term strategic plan. The Company has
maintained its balance sheet at an appropriate debt-to-equity level.
Itdebt to equity level and has
continued its efforts to obtain market rent levels that achieve an equitable
balance between the expectations of residents and those of stockholders. In
light of the foregoing, the Compensation Committee determined that the MBO
bonuses should be paid to the executive officers of the Company. In determining
the total MBO bonus for each executive officer, the Compensation Committee also
considered the amount of other awards and benefits which were included in the
total compensation of such executive officer.
MBO bonuses, if paid, are paid to the executive officers of the Company 50%
in cash and 50% in a stock award calculated using the fair market value of a
share of Common Stock on the date the bonus is
9
paid. The officer may request, subject to the Compensation Committee's intentionapproval,
to tie executive officers',
including the Chief Executive Officer's, compensation to the continued
performancereceive more or less of the Company. The Company accomplishes this by awarding each
executivebonus in the form of a stock award. To the extent
that the officer receives more than 50% of histhe MBO bonus in restricted Common Stock. Requiring
executive officers to "invest" 50%as a stock award, the
stock award is calculated using the most recent purchase price for a share of their bonuses in
Common Stock facilitates
better alignment of such executive officer's compensation withunder the Common
Stock's performance. These restricted stock awards accomplishESPP or the Company's
objective of mid-term incentives.price that would be used under the ESPP for
the offering period then in progress if the period ended the day the MBO bonus
was paid.
To provide long-term incentives for executive officers and as a means to
retain qualified executives,executive officers, the Company has created two performance basedand
tenure-based Restricted Common Stock Award Programs ("Programs"), one based on targeted increases in
FFO per share from an identified base year and another based on the creation of
stockholder value. Under these Programs, in 1996,programs.
In 1997, the Company implemented a five-year incentive program by issuing Restricted Stock Awardstied to
increases in stockholder value (the "1997 Program"). Shares were awarded under
the 1997 Program only if annual performance benchmarks (based upon increases in
share price plus distributions to stockholders) were achieved. Shares awarded
were then subject to a vesting schedule (50% immediately and 25%, respectively,
on the next two anniversaries of the award). Executive officers received awards
under the 1997 Program in 1997 and 2000. In addition, effective January 4, 2002,
executive officers received awards under the 1997 Program as follows: Mr. Walker
was awarded 20,250 shares; Mr. Heneghan was awarded 18,000 shares; and Ms.
Kelleher and Mr. Zoeller were each awarded 15,750 shares.
In 1998, the Company implemented an incentive program tied to achieving
targeted levels of FFO per share through the year 2000 (the "1996 Program").
Based on the Company's performance through 1998, the targeted level of FFO per
share has already been exceeded, as a result the executives have earned
Restricted Stock issued in the 1996 Program, subject to vesting. As of December
31, 1998, the vesting on 60% of these Restricted Stock Awards had lapsed. In
1997, a five-year incentive program tied to increases in stockholder value was
implemented (the "1997 Program"). Under the 1997 Program, based on dividends
paid and the increase in the Company's Common Stock price during 1997, the
executives earned an award of Restricted Stock, subject to vesting. As of
December 31, 1998, the vesting on 75% of these Restricted Stock Awards had
lapsed. As a result of the Company's Common Stock price decline during 1998, no
Restricted Stock Awards were granted to executive officers under the 1997
Program.
Since the targeted levels of FFO per share under the 1996 Program have been
exceeded, the Company implemented a new five-year incentive program in 1998 tied
to achieving targeted levels of FFO per share through the year 2003 (the "1998 Program"). On November
24, 1998, Restricted Common Stock Awards were granted to executive officers and
other members of senior management. The restricted stockmanagement under the 1998 Program. In 1999 and 2001,
awards were made under the 1998 Program to certain additional members of senior
management (excluding executive officers who had received awards in 1998). Any
Restricted Common Stock awarded under the 1998 Program will vest over a
five-year period, with lapsing of restrictions tied to achieving targeted levels
of FFO per share. Vesting with respect to 80% of the Restricted Common Stock
awarded under the 1998 Program had occurred as of December 31, 2002.
In December 2001, the Compensation Committee created the 2004 Long Term
Restricted Stock Plan (the "2004 Program"), which provides for shares of
Restricted Common Stock to be granted on January 5, 2004 to individuals who are
employed by the Company on November 15, 2001 and on January 5, 2004 and who hold
the respective titles of Chief Executive Officer, Chief Operating Officer,
General Counsel and Chief Financial Officer, as well as certain other titles on
such grant date. Any shares granted on January 5, 2004 would be subject to a
further three year vesting schedule, with one-third vesting December 10, 2004,
one-third vesting December 10, 2005 and one-third vesting December 10, 2006,
with vesting based solely on an individual's tenure in such titled positions.
These shares have not been issued and there can be no assurance that any person
listed in the Summary Compensation Table would be eligible for a grant of shares
under the 2004 Program. Mr. Walker will not be eligible for the 2004 Program. In
lieu of the 2004 Program for Mr. Walker and in order to provide for an orderly
transition of senior management, Mr. Walker received an employment contract
ending May 17, 2004 providing for an annual base salary of $500,000 and annual
bonus range not to exceed $250,000.
To encourage Mr. Walker to remain employed by the Company, the Company has
entered into a deferred compensation agreement with Mr. Walker. The agreement,
entered into in December 2000, provides Mr. Walker with a salary benefit
commencing May 17, 2004. Pursuant to the agreement, commencing on such date Mr.
Walker will receive an annual deferred compensation payment in the amount of
$200,000 for a ten year period. The Company has purchased an annuity for
approximately $1,200,000 to fund its future obligations under the agreement. The
annuity is held by a trust for the benefit of Mr. Walker and is subject to the
claims of creditors of the Company.
In 2002, the Compensation Committee did not implement any new programs, and
the only shares awarded to management in 2002 were awarded under the 1997
Program as described above as a result of attainment of the performance
benchmarks contained in the 1997 Program.
10
The vesting of Restricted Common Stock Awards under the 1996, 1997 and 1998
Programs is subject to acceleration in
the case of death, disability and involuntary termination not for cause or
change of control.control of the Company. The Compensation Committee recognizes the while the MBO bonus program provides for positive
short-term and mid-term performance,that the
interests of stockholders are best served by giving key employees the
opportunity to participate in the appreciation of the Company's Common Stock.
At the end of 1998, the Compensation CommitteeNo options were granted options to purchase
Common Stock to many of the Company's employees. The executiveemployees or officers of the Company were not granted options. Mr. Walker was granted an option to purchase
10,000 shares in his capacity as a director as were all other directors of the
Company on May 12, 1998.during
2002.
The Compensation Committee believes that the compensation program properly
rewards its executivethe Company's officers for achieving improvements in the Company's
performance and serving the interestinterests of its stockholders.
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Code"),
generally disallows a Federal income tax deduction for compensation in excess of
$1 million paid in any year to any of the Company's executive officers listed in
the Summary Compensation Table who are employed by the Company on the last day
of a taxable year. Section 162(m), however, does allow a deduction for
10
13
payments of "performance based" compensation, which includes most stock options
and other incentive arrangements, the material terms of which have been approved
by stockholders. Stock awards under the Company's Amended and Restated 1992
Stock Option and Stock Award Plan may, but need not, satisfy the requirements of
Section 162(m). The Company believes that because it qualifies as a REIT under
the Code and therefore is not subject to Federal income taxes, the payment of
compensation that does not satisfy the requirements of Section 162(m) will not
affect the Company's taxable income, although to the extent that compensation
does not qualify for deduction under Section 162(m), a larger portion of
stockholder distributions may be subject to Federal income taxation as dividend
income rather that return of capital. The Company does not believe that Section
162(m) will materially affect the taxability of stockholders' distributions,
although no assurance can be given in this regard due to the variety of factors
that affect the tax position of individual stockholders. For the above reasons,
the Company may or may not structure compensation arrangements to satisfy
the requirements for performance basedperformance-based compensation under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code").
Respectfully submitted,
Donald S. Chisholm, Chairman
Louis H. Masotti, Ph.D.
Sheli Z. Rosenberg
Gary L. Waterman
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board. Management has the primary responsibility for the financial
reporting process, including the system of internal controls, and for the
preparation of consolidated financial statements in accordance with generally
accepted accounting principles. The Audit Committee is governed by a written
charter approved by the Board. In accordance with this charter, the Audit
Committee oversees the accounting, auditing and financial reporting practices of
the Company. In fulfilling its oversight responsibilities, the Audit Committee
reviewed the audited financial statements in the Form 10-K with management,
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The Audit Committee reviewed with the Company's independent accountants,
who are responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing standards. In
addition, the Audit Committee has discussed with the independent accountants the
matters required to be discussed by SAS 61 (Codification of Statements on
Auditing Standards) and the accountants' independence from the Company and
management, including the matters in the written disclosures required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and considered the compatibility of non-audit services provided to
the Company by the independent accountants with the accountants' independence.
The Audit Committee discussed with the Company's independent accountants
the overall scope and plans for their audit. The Audit Committee met with the
independent accountants, with and without management present, to discuss the
results of their examinations, their evaluation of the Company's internal
controls and the overall quality of the Company's financial reporting.
11
14In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board (and the Board has approved) that the audited
financial statements be included in the Form 10-K for filing with the SEC.
Respectfully submitted,
Michael A. Torres, Chairman
Thomas E. Dobrowski
Sheli Z. Rosenberg
AUDIT FEES
The aggregate fees billed (or expected to be billed) for professional
services rendered by the independent accountants for the audit of the Company's
financial statements for fiscal year 2002 and the reviews by the independent
accountants of the financial statements included in the Company's Forms 10-Q for
fiscal year 2002 were $175,000.
ALL OTHER FEES
There were no fees billed for professional services rendered by the
independent accountants for any financial systems design and implementation in
fiscal year 2002. The aggregate fees billed (or expected to be billed) for
services rendered by the independent accountants to the Company and not
otherwise described under "Audit Fees" for fiscal year 2002 were $84,000.
The Audit Committee has determined that the independent accountants'
provision of the non-audit services described above is compatible with
maintaining the independent accountants' independence.
12
PERFORMANCE GRAPH
The following performance graph compares total stockholders' return on the
Common Stock since February 24, 1993, the date of commencement of the Company's
initial public offering ("IPO")December 31, 1997 with the Standard and Poors ("S&P") 500
Stock Index and the index of equity REITs prepared by the National Association
of Real Estate Investment Trusts ("NAREIT"). The Common Stock price performance
graph assumes that an investment of $100 was made on December 31, 1997 in the
Common Stock on December 31, 1993 and an
investmentin each of $100 in the two indexes on December 31, 1993 and further assumes the reinvestment
of all dividends. The graph also shows the amount that would
have needed to be invested on the IPO date in the Company and the two indexes to
achieve a $100 investment as of December 31, 1993. The Company believes its
performance since the IPO is a relevant performance indicator for its
stockholders. Equity REITs are defined as those REITs which derive more than
75% of their income from equity investments in real estate assets. The NAREIT
equity index includes all tax qualified REITs listed on the New York Stock Exchange,NYSE, the American
Stock Exchange or the NASDAQ Stock Market. Common Stock price performance
presented for the period from February 24, 1993December 31, 1997 through December 31, 19982002 is not
necessarily indicative of future results.
Performance GraphCOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
ASSUMES INITIAL INVESTMENT OF $100
DECEMBER 31, 2002
(PERFORMANCE GRAPH)
Feb. 1993 Dec. 1993 Dec. 1994 Dec. 1995 Dec. 1996 Dec.- --------------------------------------------------------------------------------------------------------------
1997 Dec. 1998 CAGR (1)
--------- --------- --------- --------- --------- --------- --------- --------1999 2000 2001 2002
- --------------------------------------------------------------------------------------------------------------
MHC (%) 74.04 -2.29 -5.41 41.44 22.57 -1.70 18.84
MHC ($) $57.46Company Return % -1.69 3.31 27.37 14.36 0.65
Cumulative $ $100.00 $97.71 $92.43 $130.73 $160.23 $157.50$120.49 $124.48 $158.55 $181.32 $148.90
S&P 500 Stock Index(%) 9.17 1.32 37.58 22.96 33.36Return % 28.58 22.09
S&P 500 Stock Index($) $91.6021.05 -9.10 -11.88 -22.10
Cumulative $ $100.00 $101.32 $139.40 $171.40 $228.59 $293.91$171.47 $207.56 $188.66 $166.24 $ 97.11
NAREIT Index (%) 6.70 3.17 15.27 35.27 20.26Equity Return % -17.50 9.54
NAREIT Index ($) $93.72-4.62 26.37 13.89 3.81
Cumulative $ $100.00 $103.17 $118.92 $160.87 $193.46 $159.60$ 99.21 $ 94.63 $119.58 $136.19 $117.57
(1) CAGR is the Compounded Annual Growth Rate for the Company's Common Stock
from the IPO through December 31, 1998.
1213
15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of March 17, 1999the Record Date (except as
noted), with respect to each person who is known by the Company's management of the
Company to
be the beneficial owner of more than 5% of the outstanding shares of Common
Stock.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND BUSINESS ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
------------------------- -------------------- ----------- --------------------------------------------- ------------ --------
Samuel Zell and entities controlled by Samuel Zell.......... 3,042,019 10.6%Zell and
Ann Lurie and entities controlled by Ann Lurie(2)(3)......... 3,495,032 15.7%
Two North Riverside Plaza
Chicago, Illinois 60606
General Motors Hourly-Rate Employes.........................Employes Global Group Pension Trust(3)....... 2,271,198 8.5%
Pension Trust and
General Motors Salaried
Employes Pension Trust (4)10.2%
c/o General Motors Investment
Management Corporation
767 Fifth Avenue
New York, New York 10153
Goldman Sachs & Co. and..................................... 1,578,408 5.9%
The Goldman Sachs Group, L.P.(5)
85 Broad StreetMorgan Stanley(4)........................................... 1,822,498 8.2%
1585 Broadway
New York, NY 10004New York 10036
FMR Corp(6)................................................. 1,326,900 5.0%Corp (5)................................................ 1,245,655 5.6%
82 Devonshire Street
Boston, MAMassachusetts 02109
- ---------------
(1) MHC Operating Limited Partnership (the "Operating Partnership") is the
entity through which the Company conducts substantially all of its
operations. The amountslimited partners of the Operating Partnership own units of
limited partnership interest ("OP Units") which are convertible into an
equivalent number of shares of Common Stock beneficially owned is reported on the basis ofStock. In accordance with SEC
regulations of the SEC governing the determination of beneficial ownership of
securities. Thesecurities, the percentage of Common Stock beneficially owned by a person
assumes that all OP Units held by the person are exchanged for Common Stock,
that none of the OP Units held by other persons are so exchanged, that all
options exercisable within 60 days of March 17, 1999the Record Date to acquire Common
Stock held by the person are exercised and that no options to acquire Common
Stock held by other persons are exercised.
1314
16
(2) Includes Common Stock, OP Units which are exchangeable for Common Stock, and
options to purchase Common Stock which are currently exercisable or
exercisable within 60 days of the Record Date owned as follows:
COMMON
STOCK OP UNITS OPTIONS
------------ --------------- --------- -------
ENTITIES CONTROLLED BY SAMUEL ZELL:
Samuel Zell......................................... 3,540Zell....................................... 45,446 -- 173,332566,665
Samuel Zell Revocable Trust.........................Trust....................... 10,551 -- --
Samstock/SZRT, L.L.C................................L.L.C. ............................ 294,133 13,641 --
Samstock/ZGPI, L.L.C................................L.L.C. ............................ 6,003 -- --
Samstock, L.L.C.....................................L.L.C. ................................. 346,000 601,665 --
Samstock/ZFT, L.L.C.................................L.L.C. ............................. 8,887 187,278 --
187,278Samstock/Alpha, L.L.C. ........................... 8,887 -- --
EGI Holdings, Inc. ............................... -- 579,873 --
Donald S. Chisholm Trust............................Trust.......................... 7,000 -- --
ENTITIES CONTROLLED BY ANN LURIE:
Anda Partnership....................................Partnership.................................. -- 233,694 --
LFT Partnership.....................................Partnership................................... -- 5,436 --
ENTITIES CONTROLLED BY SAMUEL ZELL & ANN LURIE:
EGI Holdings, Inc...................................EGIL Investments, Inc............................. -- 579,873 --
EGIL Investments, Inc............................... -- 579,873 --
------- --------- -------
TOTALS:............................................. 667,227........................................... 726,907 2,201,460 173,332566,665
======= ========= =======
Mr. Zell disclaims beneficial ownership of 7,000 shares of Common Stock and
819,003 OP Units. Mrs. Lurie disclaims beneficial ownership of 667,227Units because the economic benefits with respect to such shares
of Common Stock 1,382,457and OP Units are attributable to other persons. EGIL
Investments, Inc. ("EGIL") has beneficial ownership of 579,873 OP Units.
Under a stockholders' agreement dated December 31, 1999 among certain Zell
family trusts and optionscertain Lurie family trusts, (a) the Zell trusts have the
power to purchase 173,332
sharesvote and to dispose of Common Stock.
(3) Includes 1,962,330the OP Units (exchangeable into 1,962,330beneficially owned by EGI
Holdings, Inc. ("EGI Holdings") and (b) the Lurie trusts have the power to
vote and to dispose of the OP Units beneficially owned by EGIL. Chai Trust
Company L.L.C., shares the power to vote or to direct the vote and shares
the power to dispose or to direct the disposition of Common
Stock) and 646,1362,318,466 shares of
Common Stock the ownership of which are pledged as collateral
for loansis disclosed with respect to
five financial institutions. UnderSamstock/ZGPI, L.L.C., Samstock, L.L.C., Samstock/ZFT, L.L.C.,
Samstock/Alpha, L.L.C., EGI Holdings and EGIL. In addition, Ann Lurie and
Mark Slezak each share the loan agreements,power to vote or to direct the institutions cannot vote (assuming exchangeand share
the power to dispose or to direct the disposition of the OP Units for Common
Stock) or exercise ownership rights relating to the pledged OP Units or1,393,440 shares of
Common Stock unless therethe ownership of which is an eventdisclosed with respect to EGI
Holdings, EGIL and Anda Partnership, and Ann Lurie shares the power to vote
or to direct the vote and shares the power to dispose or to direct the
disposition of default.
(4)5,436 shares of Common Stock the ownership of which is
disclosed with respect to LFT Partnership.
(3) The shares of Common Stock reported herein are held of record by MellonState
Street Bank N.A.& Trust Company, acting as
the trustee (the "Trustee") for the
General Motors Hourly-Rate Employes Global Group Pension Plan and the General Motors Salaried Employes Pension Plan
(collectively, theTrust (the "GM Trusts"Trust Fund"). The GM Trusts are trusts, a
trust formed under and for the benefit of certain employee benefit plans of
General Motors Corporation ("GM") and its subsidiaries and a former GM
affiliate and its subsidiaries. These shares may be deemed to be owned
beneficially by GMIMCo,General Motors Investment Management Corporation ("GMIMCo"),
a wholly owned subsidiary of GM. GMIMCo's principal business is providing
investment advice and investment management services with respect to the
assets of certain employee benefit plans of GM and its subsidiaries and
associated entities. GMIMCo is serving asformer affiliates. The Trustee may vote and dispose of the shares held by
the GM Trusts'
investment manager with respect to these shares and in that capacity it has
the sole power to direct the Trustee asTrust Fund only pursuant to the votingdirection of GMIMCo personnel, and
disposition of
these shares. Because of the Trustee's limited role,accordingly beneficial ownership of the shares by the Trustee is disclaimed.
(5)(4) Pursuant to a Schedule 13G13G/A filed with the SEC for calendar 1998,year 2002,
Morgan Stanley and its wholly-owned subsidiary, Morgan Stanley Dean Witter
Investment Management Inc. ("Morgan Stanley, Inc."), are the Goldman
Sachs Group, L.P. ("GS Group")beneficial
owners of 1,822,489 and Goldman Sachs & Co. ("Goldman Sachs")
each disclaim beneficial ownership1,609,594 shares of the Common Stock,
beneficially owned15
respectively, through accounts managed by (i) managed accountsthem on a discretionary basis. Morgan
Stanley has shared voting power over 1,529,295 shares of Common Stock and (ii) certain investment limited partnerships,shared
dispositive power over 1,822,498 shares of which a subsidiaryCommon Stock. Morgan Stanley, Inc.
has shared voting power over 1,316,400 shares of GS Group or Goldman Sachs is the general partner or
managing general partner, to the extent partnership interests in such
partnerships are held by persons other than GS Group, Goldman Sachs or their
affiliates.
(6)Common Stock and shared
dispositive power over 1,609,594 shares of Common Stock.
(5) Pursuant to a Schedule 13G13G/A filed with the SEC for calendar 1998,year 2002,
Fidelity Management & Research Company, ("Fidelity"), a wholly ownedwholly-owned subsidiary of FMR
Corp. ("FMR") and an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940 ("Investment Act"), 14
17
is the beneficial owner
of 1,326,9001,178,100 shares of Common Stock as a result of acting as investment
advisor to various investment companies under the Investment Act. Fidelity
Management Trust Company, a wholly ownedwholly-owned subsidiary of FMR, Corp.
and a bank as defined in Section 3(a)(6) of the Securities Exchange Act of
1934, is the
beneficial owner of 20076,500 shares of Common Stock as a result of its serving as
investment manager of institutional account(s).
15
18accounts. Geode Capital Management, LLC,
an investment advisor registered under Section 203 of the Investment Act
owned by certain shareholders and employees of FMR, beneficially owns 55
shares of Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 17, 1999,the Record Date, certain information
with respect to the Common Stock that may be deemed to be beneficially owned by
each director of MHC,the Company, by the four executive officers named in the
Summary Compensation Table and by all directors andsuch executive officers and directors as a
group:group. The address for each of the executive officers and directors is c/o
Manufactured Home Communities, Inc., Two North Riverside Plaza, Suite 800,
Chicago, Illinois 60606. Unless otherwise indicated, each person has sole
investment and voting power, or shares such power with his or her spouse, with
respect to the shares set forth in the following table.
SHARES OF SHARES UPON
PERCENT
COMMON EXERCISE OF OFPERCENTAGE
NAME OF BENEFICIAL HOLDER STOCK(1) OPTIONS(2) TOTAL(1) CLASSTOTAL OF CLASS(3)
- ------------------------- ---------- ----------- --------- ----------- -------- -------
Donald S. Chisholm.............................. 26,607(3) 46,666 73,273Chisholm(4).................. 64,339 30,000 94,339 *
Thomas E. Dobrowski............................. 0 56,666 56,666Dobrowski(5)................. -- 46,666 46,666 *
David A. Helfand................................ 138,107 138,666 276,773 1.0%Helfand....................... 127,834 76,000 203,834 *
Thomas P. Heneghan.............................. 168,676 33,000 201,676 *Heneghan..................... 286,995 12,000 298,995 1.3%
Ellen Kelleher.................................. 146,764 21,000 167,764 *Kelleher......................... 245,433 -- 245,433 1.1%
Louis H. Masotti................................ 1,870 30,000 31,870Masotti....................... 17,020 -- 17,020 *
John F. Podjasek, Jr............................ 4,487 46,666 51,153Jr................... 15,768 70,000 85,768 *
Gary W. Powell.................................. 286,307 50,000 336,307 1.3%
Sheli Z. Rosenberg.............................. 64,297(4) 60,665 124,962 *Rosenberg(6).................. 108,587 143,999 252,586 1.1%
Michael A. Torres............................... 4,178 51,666 55,844Torres...................... 17,712 50,000 67,712 *
Howard Walker................................... 158,311 21,666 179,977 *Walker.......................... 229,810 229,810 1.0%
Gary L. Waterman................................ 3,487 56,666 60,153Waterman....................... 49,654 30,000 79,654 *
Samuel Zell..................................... 2,629,557(3)(5) 173,332 2,802,889 9.8%Zell(4)(7)...................... 2,928,367 566,665 3,495,032 15.7%
John M. Zoeller........................ 88,981 4,000 92,981 *
All directors and executive officers as
a group (14(13 persons) including the
above-named persons....................................... 3,625,984 792,658 4,418,642 15.1%persons.................. 4,180,500 1,029,330 5,209,830 23.4%
========== ========== ========= ====
- ---------------
* Less than 1%
(1) The amountsshares of Common Stock beneficially owned includes OP Units that can be
exchanged for an equivalent number of shares of Common Stock.
(2) The amounts shown in this column reflect shares of Common Stock subject to
options which are reported on the basis of
regulationscurrently exercisable or exercisable within 60 days of the
Record Date.
16
(3) In accordance with SEC regulations governing the determination of beneficial
ownership of securities. Thesecurities, the percentage of Common Stock beneficially owned
by a person assumes that all OP Units held by the person are exchanged for
Common Stock, that none of the OP Units held by other persons are so
exchanged, that all options exercisable within 60 days of March 17, 1999the Record Date to
acquire Common Stock held by the person are exercised and that no options to
acquire Common Stock held by other persons are exercised.
(2) The amounts shown in this column reflect(4) Includes 7,000 shares of Common Stock subject to
options granted under the Company's Second Amended and Restated 1992 Stock
Option and Stock Award Plan which are currently exercisable or exercisable
within 60 days of the date of this table.
(3) Includes 7,000 shares owned by the Donald S. Chisholm Trust
(the "Chisholm Trust"), Samuel Zell, Trustee. Under theSEC regulations, of the SEC, Mr.
Zell may be deemed to be the beneficial owner of all the shares which are
beneficially owned by the Donald S. Chisholm Trust. Mr. Zell disclaims beneficial
ownership of the shares owned by the Donald S. Chisholm Trust.
(4)(5) The securities of the Company of which Mr. Dobrowski is named as beneficial
holder in the foregoing table are held by Mr. Dobrowski as nominee for
certain pension trusts. Accordingly, he has no personal interest in such
securities.
(6) Includes 11,530 OP Units beneficially owned by Mrs. Rosenberg which are
exchangeable into 11,530 shares of Common Stock. (5) Includes 1,962,330 OP Units which are exchangeable into 1,962,330 shares of
Common Stock and 646,136Also includes 15,786 shares
of Common Stock beneficially owned by entities inMrs. Rosenberg's spouse, as to which
Mrs. Rosenberg disclaims beneficial ownership.
(7) Mr. Zell has a pecuniary interest or which he may be
deemeddisclaims beneficial ownership of 7,000 shares of Common Stock and
819,003 OP Units included above because the economic benefits with respect
to control.such shares of Common Stock and OP Units are attributable to other
persons. See "Security Ownership of Certain Beneficial Owners."
Mr. Zell disclaims beneficial ownership of 579,873 OP Units owned which are
exchangeable into 579,873 shares of Common Stock.
16
19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company occupies office space owned by an affiliate of EGI, an entity
controlled by Mr. Zell, at Two North Riverside Plaza, Chicago, Illinois 60606.
In addition, pursuant to an administrative services agreement, EGI or certain of
its affiliates providesprovide the Company and its subsidiaries with office space and certain
administrative, office facility and other services with respect to certain
aspects of the Company's business, including, but not limited to, administrative
support real estate tax evaluation services, and marketing
consulting and research services and other services. Amounts incurred for these services amounted tototaled
approximately $104,000$1,000 for the year ended December 31, 1998. Amounts2002. There were no
significant amounts due to these affiliates at December 31, 1998 were $7,000. Other
affiliates of2002. Certain
related entities, owned by persons affiliated with Mr. Zell, provided legalinvestor
relations services insurance brokerage services
(excluding reimbursements for insurance premiums paid to third parties), and office space to the Company.Company and its subsidiaries during
2002. Amounts incurred for these services amounted tototaled approximately $850,000$719,000 for the
year ended December 31, 1998. Amounts2002. The amount due to these affiliates at December 31,
1998 were $35,000.2002 was $52,000.
The independent members of the Board annually reviewhave reviewed and approveapproved the rates
charged by EGI and its affiliates in connection with the lease of the Company's
office space. Additionally, the budget for services rendered to the Company and
its subsidiaries. Additionally, the budget for such services aresubsidiaries by EGI and its affiliates is submitted to, reviewed and
approved by the Audit CommitteeCommittee.
On January 1, 2002, the Company purchased all of the Company.common stock of Realty
Systems, Inc. ("RSI"). The Company previously owned the non-voting preferred
stock of RSI and had notes receivable from RSI which were recorded as an
investment in an affiliate. The Company purchased the common stock of RSI from
EGI, which is controlled by Mr. Zell, for approximately $675,000.
The executive officers listed below are indebted to the Company as a result
of purchasing stockCommon Stock from the Company. The loans accrue interest, payable
quarterly in arrears, at the applicable federalFederal rate, as defined in the Code, in
effect at the time the loans were made. The loans are recourse to the respective
individuals; are collateralized by a pledge of the shares of Common Stock
purchased; and are due and payable ofupon the first to occur of the employee
leaving the Company or
March 3, 2003 for the loans bearing interest at 6.77% and17
January 2, 2005 for the loans bearing interest at 5.91%.2006. All dividends paid on pledged shares in excess of the then
marginal tax rate are used to pay interest and principal on the loans.loans:
LARGEST AGGREGATE BALANCE AS OF
NAME AMOUNT OWED IN 19982002 DECEMBER 31, 19982002 INTEREST RATE
- ---- ------------------- ----------------- -------------
Howard Walker................................ $896,963 $896,963Walker....................... $901,420 0 5.91%
Thomas P. Heneghan........................... 862,604 838,101Heneghan.................. $829,217 $803,692 5.91%
Ellen Kelleher............................... 869,856 863,561 5.91%
Gary W. Powell............................... 890,543 805,453 6.77%
Gary W. Powell............................... 883,801 881,691Kelleher...................... $745,427 $672,749 5.91%
PROPOSAL NO. 2
TO APPROVE AN AMENDMENT TO THE COMPANY'S CHARTER
TO ELIMINATE THE CURRENT CLASSIFICATION OF THE BOARD
The Board has determined that the Charter should be amended to eliminate
the current classification of the Board and to provide for the annual election
of all directors, has declared such amendment to be advisable and has
unanimously resolved to recommend such amendment to the stockholders. If the
proposed amendment is approved, the classified Board will be eliminated, the
current term of office of each director in office as of the Meeting and each
director elected at the Meeting will end at the 2004 Meeting and all directors
will thereafter be elected for one-year terms at each Annual Meeting of
Stockholders.
Pursuant to the Charter as currently in effect, the Board is divided into
three classes with staggered three-year terms, and one class of directors is
elected at each Annual Meeting of Stockholders. The proposed Charter Amendment
would eliminate the three classes with their staggered three-year terms, as
described below, and provide for the annual election of all directors.
Proponents of classified boards of directors believe that a classified
board helps the board of directors maintain a greater continuity of experience
because the majority of directors at any given time will have experience with
the business affairs and operations of the corporation. This continuity may
assist the corporation in long-term strategic planning. Additionally, proponents
argue that a classified board reduces the possibility of a sudden change in
control of the board of directors.
The Board believes that it is in the best interests of the Company and its
stockholders to eliminate the classified Board, thereby permitting the Company's
stockholders to elect all members of the Board annually. The Board believes that
this will promote greater accountability of each director to all stockholders
and will allow the Company's stockholders an opportunity annually to register
their views on the collective performance of the Board and the performance of
each director individually. In addition, the Board believes that, in general,
boards that are not classified are perceived by the investment community more
positively than classified boards. The proposal to eliminate the classification
of the Board is neither the result of any effort to unseat incumbent directors
nor the result of any effort by any person to take control of the Board.
Section 1 of Article VI of the current Charter provides that the directors
shall be divided into three classes, as nearly equal in number as possible, with
a term of three years each, and with the term of office of one class expiring
each year. If the proposed Charter Amendment is approved, Section 1 of Article
VI of the Charter would be deleted and replaced with the following:
SECTION 16(A)1. NUMBER AND TERM. The number of directors constituting the
entire Board of Directors shall be established in the manner provided in
the Bylaws of the Corporation; provided, however, that (a) if there is
stock outstanding and so long as there are three or more stockholders, the
number of directors shall never be less than three and (b) if there is
stock outstanding and so long as there are less than three stockholders,
the number of directors may be less than three but not less than the number
of stockholders. The directors of the Corporation shall be elected by the
stockholders entitled to vote thereon at each annual meeting of
stockholders and shall hold office until the next annual meeting of
stockholders and until their
18
successors are elected and qualify. The term of the directors in office on
May 14, 2003 shall expire at the annual meeting of stockholders next
occurring after May 14, 2003 or upon the election and qualification of
their successors.
If the proposed Charter Amendment is approved by the stockholders of the
Company, the Charter Amendment will become effective upon the filing of the
articles of amendment relating thereto with the Maryland State Department of
Assessments and Taxation, which will occur as soon as reasonably practicable
following such approval. The approval of the Charter Amendment requires the
affirmative vote of the holders of two-thirds of all the votes entitled to be
cast on the matter.
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSAL TWO. PROXIES SOLICITED BY THE
BOARD WILL BE VOTED "FOR" THIS PROPOSAL UNLESS INSTRUCTIONS TO WITHHOLD SUCH
VOTE OR TO THE CONTRARY ARE GIVEN.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 ("Section 16(a)")
requires the Company's officers and directors, and persons who own more than 10%
of its Common Stock, to file reports of ownership and changes of ownership with
the SEC and the New
York Stock Exchange.NYSE. Officers, directors and greater than 10% stockholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on the Company's review of the copies of those forms received
by the Company, or written representations from directorsofficers and officersdirectors that no
Forms 5 were required to be filed for the fiscal year ended December 31, 2002,
all appropriate Section 16(a) forms were filed in a timely manner, except as
described below.
Form 4s filed for Mrs. Rosenberg on June 3, 2002 and July 6, 2002 reported
that for 1998: Gary W. PowellMrs. Rosenberg directly purchased Common Stock through the exercise of
certain options. However, Mrs. Rosenberg transferred such options to her spouse
and Louis H.
Masotti each filed oneher spouse exercised the options to purchase the respective shares of Common
Stock reflected therein. Consequently, 15,000 shares of Common Stock reported as
directly owned by Mrs. Rosenberg were in fact indirectly owned by her.
Thereafter, Mrs. Rosenberg's spouse reinvested dividends received through the
Company's dividend reinvestment plan in October 2002. As a result of these
purchases by Mrs. Rosenberg's spouse, the Form 4 late which reported one transaction.
17
20
PROPOSAL TO AMEND AND RESTATE THE COMPANY'S ARTICLES OF INCORPORATION TO DELETE
A PROVISION RELATING TO INDEMNIFICATION OF OFFICERS AND DIRECTORS (PROPOSAL 2)
On March 18, 1999 the Boardfiled for Mrs. Rosenberg on
November 1, 2002 inadvertently failed to report 240 shares of Directors adopted a resolution to amend and
restate the Company's Articles of Amendment and Restatement of its Articles of
Incorporation (the "Articles")Common Stock
acquired by deleting Article VI, Section 5 relating to
indemnification of officers and directors. Presently, both the Company's
Articles and Bylaws contain provisions respecting the indemnification of
officers, directors, employees and agents of the Company. The Board proposes to
delete the indemnification provisions in its Articles and to rely solely on
indemnification provisions in the Company's Bylaws.
In recent years there has been an increase in the amount of litigation
seeking to impose liability on directors and officers of publicly-held
corporations. The costs of defending or settling these actions, whether or not
they are well founded, may be substantial. Although the Company has not
experienced difficulty in attracting and retaining well qualified directors and
officers in the past, the Board of Directors believes that the continued success
of the Company in attracting and retaining qualified directors, officers and
employees, is dependent, at least in part, on the Company's ability to be
competitive with other corporations which have adopted arrangements providing
directors, officers and employees with the maximum possible protection from
personal financial risks.
The Company's Articles grant the Company the "power . . . to obligate
itself" to indemnify officers and directors "to the maximum extent permitted by
Maryland law" (a copy of Article VI, Section 5 is attached as Exhibit A). Under
the Articles, indemnification is extended to present and former officers and
directors and any individual who, while a director of the Company and at the
request of the Company, serves or has served another corporation, partnership or
other enterprise as a director, officer, partner or trustee. While the Board
believes that under its current governance documents the Company's officers and
directors are entitled to indemnification and reimbursement of litigation
expenses to the fullest permissible extent, the Articles do not set forth
procedures for advancement of expenses incurred in defending or settling an
action.
The Company's Bylaws extend indemnification as a matter of right "to the
fullest extent authorized" by Maryland law to present and former officers and
directors and any individual who, at the request of the Company, serves or has
served another corporation, partnership or other enterprise as a director,
officer, partner, trustee, employee or agent. The Bylaws provide procedures for
an indemnified party to receive an advancement of permissible expenses,
including the right to bring suit to enforce such party's right to
indemnification and reimbursement of expenses. Under the Articles and Bylaws,
the Company may, with the approval of the Board of Directors, indemnify an
employee or agent of the Company. (A copy of Article XII of the
Bylaws -- Indemnification -- is attached as Exhibit B.)
The Board of Directors believes that amending and restating the Articles to
delete the indemnification provision will serve two purposes. First, it will
eliminate any inconsistency between the Company's Articles and the Bylaws.
Second, the Maryland legislature may in the future make amendments to the law
respecting indemnification. The realignment of the Company's governance
documents, by eliminating Article VI, Section 5 from the Articles and providing
for indemnification solely in the Bylaws, will provide the Company with greater
flexibility to adapt its provision relating to indemnification to any changes in
state law.
The Board of Directors acknowledges that current and future directors and
officers could benefit from the approval of the proposed amendment and
restatement of the Articles and,Mrs. Rosenberg's spouse in this connection, the directors may be
considered to have a conflict of interest.
The affirmative vote of two-thirds of the votes entitled to be castmanner. Upon such information
becoming known, amended Form 4s were filed for Mrs. Rosenberg on the
proposed amendment and restatement of the Articles is required for its approval.
As of the date of this Proxy Statement, all of the directors of the Company have
expressed the intent to vote their shares (representing approximately 6.2% of
the votes entitled to be cast) in favor of the proposed amendment.
18
21
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2. PROXIES
SOLICITED BY THE BOARD WILL BE VOTED "FOR" PROPOSAL 2 UNLESS INSTRUCTIONS TO
ABSTAIN OR TO VOTE AGAINST ARE GIVEN.
AUDITORSMarch 28, 2003.
INDEPENDENT ACCOUNTANTS
Ernst & Young LLP served as the Company's auditorsindependent accountants for the
fiscal year ended December 31, 1998. The Audit Committee intends to make a future recommendation
to the Board concerning the selection of the Company's auditors for the current
fiscal year which began January 1, 1999.2002. There have been no disagreements between
the Company and its auditorsindependent accountants relating to accounting procedures,
financial statement disclosures or related items. Representatives of Ernst &
Young LLP are expected to be available at the Meeting and will have an
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
STOCKHOLDER PROPOSALS
Under regulations adopted by the SEC, stockholder proposals intended to be
presented at the 2000 Annual2004 Meeting of Stockholders must be received by the Secretary of the Company
no later than December 2, 1999,2003, in order to be considered for inclusion in the
Company's proxy statement and on the proxy card that will be solicited by the
Board in connection with the 20002004 Meeting.
19
In addition, if a stockholder desires to bring business before an Annual
Meeting of Stockholders which is not the Bylawssubject of a proposal for inclusion in
the CompanyCompany's proxy materials, the stockholder must follow the advance notice
procedures outlined in the Company's Bylaws. The Company's Bylaws provide that
in order for a stockholder to nominate a candidate for election as a director at
a Meetingmeeting or propose business for consideration at such Meeting,meeting, notice must
generally be given to the Secretary of the Company no more than 90 days nor less
than 60 days prior to the first anniversary of the preceding year's Meeting.meeting. The
Meeting is scheduled for May 13, 2003. Therefore, if a stockholder desires to
present a proposal for the 2004 Meeting without seeking to include the proposal
in the Company's proxy materials, the Company must receive notice of the
proposal no earlier than February 8, 2004 and no later than March 9, 2004. The
fact that the Company may not insist upon compliance with these requirements
should not be construed as a waiver by the Company of its right to do so at any
time in the future. The Company reserves the right to reject, rule out of order
or take other appropriate action with respect to any proposal that does not
comply with these and other applicable requirements.
OTHER MATTERS
The Board is not aware of any business which will be presented at the
Meeting other than those matters set forth in the accompanying Notice of Annual
Meeting of Stockholders. If any other matters are properly presented at the
Meeting for action, it is intended that the persons named in the accompanying
Proxyproxy and acting thereunder will vote in accordance with their best judgment on
such matters.
By Order of the Board of Directors
SUSAN OBUCHOWSKI
Susan Obuchowski/s/ Ellen Kelleher
Ellen Kelleher
Executive Vice President, General
Counsel
and Secretary
March 31, 1999April , 2003
Chicago, Illinois
1920
22
EXHIBIT A
EXCERPT FROM COMPANY'S ARTICLES OF AMENDMENT AND RESTATEMENT OF
ARTICLES OF INCORPORATION
(PROPOSED TO BE DELETED)
ARTICLE VI, SECTION 5. INDEMNIFICATION. The Corporation shall have the
power, to the maximum extent permitted by Maryland law in effect from time to
time, to obligate itself to indemnify, and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to, (i) any individual
who is a present or former director or officer of the Corporation or (ii) any
individual who, while a director of the Corporation and at the request of the
Corporation, serves or has served another corporation, partnership, joint
venture, trust, employee benefit plan or any other enterprise as a director,
officer, partner or trustee of such corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise. The Corporation shall have the
power, with the approval of its Board of Directors, to provide such
indemnification and advancement of expenses to a person who served a predecessor
of the Corporation in any of the capacities described in (i) or (ii) above and
to any employee or agent of the Corporation or a predecessor of the Corporation.
A-1
23
EXHIBIT B
EXCERPT FROM COMPANY'S BYLAWS
ARTICLE XII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1. Right to Indemnification. (a) Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter, a "proceeding"), by
reason of the fact that he or she is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan (hereinafter, an "indemnitee"), whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, partner, trustee, employee or agent, shall be indemnified and
held harmless by the Corporation to the fullest extent authorized by the General
Corporation Law of the State of Maryland, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
permitted prior thereto), against all liability, loss and reasonable expenses
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) actually incurred or suffered by such indemnitee
in connection therewith and such indemnification shall continue as to an
indemnitee who has ceased to be a director, officer, partner, trustee, employee
or agent and shall inure to the benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided in Section 3 of this
Article with respect to proceedings to enforce rights to indemnification, the
Corporation shall be required to indemnify a person in connection with a
proceeding (or part thereof) initiated by such person only if the proceeding (or
part thereof) was authorized by the Board of Directors of the Corporation.
(b) The Corporation's obligation, if any, to indemnify any person who was
or is serving at its request as a director, officer, partner, trustee, employee
or agent of another corporation, partnership, joint venture, trust, enterprise
or nonprofit entity shall be reduced by any amount such person may collect as
indemnification from such other corporation, partnership, joint venture, trust,
enterprise or nonprofit entity.
Section 2. Right to Advancement of Expenses. The right to indemnification
conferred in Section 1 of this Article shall include the right to be paid by the
Corporation the reasonable expenses (including attorneys' fees (which may be of
counsel selected by the indemnitee)) incurred by the indemnitee in connection
with any proceeding for which such right to indemnification is applicable in
advance of its final disposition, without requiring a preliminary determination
of the ultimate entitlement to indemnification; provided, however, that the
Corporation shall have first received a written affirmation by such indemnitee
of the indemnitee's good faith belief that the standard of conduct necessary for
indemnification by the Corporation as authorized by the General Corporation Law
of the State of Maryland has been met, and a written undertaking by or on behalf
of such indemnitee to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal that such indemnitee did not meet the applicable standard of conduct.
Section 3. Right of Indemnitee to Bring Suit. The rights to
indemnification and to the advancement of expenses conferred in Sections 1 and 2
of this Article shall be contract rights. If a claim under Sections 1 and 2 of
this Article is not paid in full by the Corporation within sixty days after a
written claim therefor has been received by the Corporation, except in case of a
claim for an advancement of expenses, in which case the applicable period shall
be twenty days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of
B-1
24
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
(i) any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense of the Corporation that, and (ii)
any suit by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking the Corporation shall be entitled to recover such
expenses upon a final adjudication that, the indemnitee has not met any
applicable standard for indemnification set forth in the General Corporation Law
of the State of Maryland. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) to have made
a determination prior to the commencement of such suit that indemnification of
the indemnitee is proper under the circumstances because the indemnitee has met
the applicable standard of conduct set forth in the General Corporation Law of
the State of Maryland, nor an actual determination by the Corporation (including
its Board of Directors, independent legal counsel, or its stockholders) that the
indemnitee has not met such applicable standard of conduct, shall create a
presumption that the indemnitee has not met the applicable standard of conduct
or, in the case of such a suit brought by the indemnitee, be a defense to such
suit. In any suit brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder, or by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the indemnitee is not entitled to be
indemnified, or to such advancement of expenses, under this Section or
otherwise, shall be on the Corporation.
Section 4. Non-Exclusivity of Rights. The rights to indemnification and to
the advancement of expenses conferred in this Article shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, the Corporation's Articles of Incorporation, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 5. Insurance. The Corporation may maintain insurance (including
self-insurance), at its expense, to protect itself and any director, officer,
employee or agent of the Corporation or another corporation, partnership, joint
venture, trust or other enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the General Corporation Law of the
State of Maryland.
Section 6. Indemnification of Employees and Agents of the Corporation. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification, and to the advancement of expenses,
to any employee or agent of the Corporation to the fullest extent of the
provisions of this Article with respect to indemnification and advancement of
expenses of directors and officers of the Corporation.
Section 7. Repeals and Modifications. Any repeal or modification of the
foregoing provisions of this Article shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
B-2
25
MANUFACTURED HOME COMMUNITIES, INC.
TWO NORTH RIVERSIDE PLAZA, SUITE 800, CHICAGO, ILLINOIS 60606
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Manufactured Home Communities, Inc., a
Maryland corporation (the "Company"), hereby appoints SAMUEL ZELL and HOWARD
WALKER, or either of them, with full power of substitution in each of them, to
attend the Annual Meeting of Stockholders of the Company to be held on Tuesday,
May 11, 1999,13, 2003, at 10:00 a.m., Chicago Central time, and any adjournment or postponement
thereof, to cast on behalf of the undersigned all votes that the undersigned is
entitled to cast at such meeting and otherwise to represent the undersigned at
the meeting with all powers possessed by the undersigned if personally present
at the meeting. The undersigned hereby acknowledges receipt of the Notice of the
Annual Meeting of Stockholders and of the accompanying Proxy Statement and
revokes any proxy heretofore given with respect to such meeting.
The votes entitled to be cast by the undersigned will be cast as
instructed on the reverse side. If this proxy is executed but no instruction is
given, the votes entitled to be cast by the undersigned will be cast "for" each
of the nominees for director and "for" eachthe amendment to the Company's charter to
eliminate the current classification of the other proposalsBoard of Directors, as described in
the Proxy Statement, and in the discretion of the proxy holder on any other
matter that may properly come before the meeting or any adjournment or
postponement thereof.
_________________________________________________________________________
COMMENTS/ADDRESS CHANGE:
PLEASE MARK COMMENTS/ADDRESS BOX ON REVERSE SIDE- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- --------------------------------------- (Continued and to be signed on
other side)
- -------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
6564--MANUFACTURED HOME COMMUNITIES, INC.
26MANUFACTURED HOME COMMUNITIES, INC.
PLEASE MARK YOUR
VOTES AS INDICATEDVOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALPROPOSALS 1 AND PROPOSAL 2.
1. ELECTION OF DIRECTORS
FOR all nominees listed WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary) [ ] listed to the right [ ]
Nominees: David A. Helfand, Michael A. Torres and Samuel Zell.
WITHHELD FOR (Write name of nominee(s) in space provided below).
_________________________________________________________________________
2. APPROVAL OF THE COMPANY'S Articles of Amendment and Restatement
removing Article VI, Section 5. Indemnification.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
And on any other matter which may properly come before the meeting or any
adjournment or postponement thereof in the discretion of the Proxy holder.
I PLAN TO ATTEND MEETING [ ]
COMMENTS/ADDRESS CHANGE
PLEASE MARK THIS BOX IF YOU HAVE
ANY WRITTEN COMMENTS/ADDRESS
CHANGE ON THE REVERSE SIDE. [ ]
SIGNATURE _______________SIGNATURE____________________DATE___________________
Note: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee, guardian or officer,
please give full title under signature.
1. ELECTION OF DIRECTORS For Withhold For All
Nominees: Howard Walker, All All Except
Donald S. Chisholm, and [ ] [ ] [ ]
Thomas E. Dobrowski
Instruction: TO WITHHOLD AUTHORITY to vote for any
individual nominee, write that nominee's name in the
space provided below:
- ---------------------------------------------------------
2. CHARTER AMENDMENT For Against Abstain
[ ] [ ] [ ]
To approve an amendment to the Company's
charter to eliminate the current classification of the
Board of Directors.
And on any other matter which may properly come before the meeting or any
adjournment or postponement thereof in the discretion of the proxy holder.
I PLAN TO ATTEND THE MEETING [ ]
Date
-----------------------------
Signature
------------------------------------------------
Signature
------------------------------------------------
- ---------------------------------------------------------
NOTE: PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS
SHOULD EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN OR OFFICER, PLEASE GIVE
FULL TITLE UNDER SIGNATURE.
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
YOUR VOTE IS IMPORTANT.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE.
6564--MANUFACTURED HOME COMMUNITIES, INC.