EXHIBIT 10.75
HOME PROPERTIES, INC. AMENDED AND RESTATED
INCENTIVE COMPENSATION PLAN
PURPOSES OF THE PLAN.
The purposes of this Amended and Restated Incentive Compensation Plan (the
"Plan") are to enable Home Properties, Inc. (the "Company") and its Subsidiary
to attract and retain the services of key employees and persons with managerial,
professional or supervisory responsibilities and to provide them with increased
motivation and incentive to achieve and exceed prior performance as a basis for
increased stockholder return and value.
GENERAL PROVISIONS.
2.1 Definitions. As used in the Plan:
(a) "Board of Directors" mans the Board of Directors of the Company.
(b) "Bonus Units" means the number calculated as described in Section
3.3(a) which is multiplied by a Participant's Bonus Factor to
determine the percentage of a Participant's base salary that is to be
paid to the Participant as incentive compensation.
(c) "Committee" means the Compensation Committee of the committee
appointed by the Board of Directors.
(d) "Common Stock" means the Company's Common Stock, $.01 par value.
(e) "Company" means Home Properties, Inc. and any of its affiliates,
predecessors or successors.
(f) "Funds from Operation" or "FFO" means income (loss) before gains
(losses) from the sale of property plus certain non-cash items,
primarily depreciation and amortization, as such term is defined by
the National Association of Real Estate Investment Trusts ("NAREIT")
and applied by the Company in its quarterly earnings press release.
(g) "Net Operating Income" or "NOI" means the Company's reported rental
income and property other income less operating and maintenance
expenses.
(h) "Operating FFO" means FFO adjusted for purposes of the bonus
calculation in order to remove certain non-recurring items from
published FFO as follows: (i) losses and/or impairment charges on the
sale of real estate will be excluded; (ii) prepayment penalties
incurred in connection with the sale of real estate will be considered
a reduction to the gain (loss) incurred and not a separate financing
transaction; (iii) issuance costs associated with preferred share
redemptions will be excluded; and (iv) such additional adjustments as
deemed necessary and approved by the Committee.
(i) "Operating FFO per share" means: (i) Operating FFO during a Plan Year
divided by: (ii) the average number of outstanding shares and
securities convertible into Common Stock (on an as-converted basis)
during the Plan Year.
(j) "Participant" means each full-time employee of the Company and its
Subsidiary, provided that employees participating in the Property
Management Incentive Plan are not eligible to participate in this Plan
except for Regional Property Managers and Regional Vice Presidents,
who will receive 10% and 20%, respectively, of their total calculated
incentive compensation awards under this Plan.
(k) "Participant Bonus Factor" means the percentage applied to a
Participant's base salary, which shall range from 1% to 13%.
(l) "Plan Year" shall be the fiscal year of the Company.
(m) "Subsidiary" means Home Properties, L.P.
2.2 Administration of the Plan.
(a) The Plan shall be administered by the Committee. The Board of
Directors may from time to time remove members from, or add members
to, the Committee. Vacancies on the Committee, howsoever caused, shall
be filled by the Board of Directors. The Committee shall select one of
its members as Chairman, and shall hold meetings at such times and
places as it may determine.
(b) The Committee shall have the full power, subject to and within the
limits of the Plan, to: (i) interpret and administer the Plan and any
incentive compensation under it; (ii) make and interpret rules and
regulations for the administration of the Plan and to make changes in
and revoke such rules and regulations (and in the exercise of this
power, shall generally determine all questions of policy and
expediency that may arise and may correct any defect, omission, or
inconsistency in the Plan); (iii) determine who shall be Participants
for any Plan Year; and (iv) generally, exercise such powers and
perform such acts in connection with the Plan as are deemed necessary
or expedient to promote the best interests of the Company. The
interpretation and construction by the Committee of any provisions of
the Plan shall be final, binding and conclusive.
(c) The Committee may act only by a majority of its members then in
office; however, the Committee may appoint such agents, who need not
be members of the Committee, as it may deem necessary for the
effective performance of its duties, and may delegate to such agents
such powers and duties as the Committee may deem appropriate.
(d) No member of the Committee shall be liable for any action taken or
omitted to be taken or for any determination made by him or her in
good faith with respect to the Plan, and the Company shall indemnify
and hold harmless each member of the Committee against any cost or
expense (including counsel fees) or liability (including any sum paid
in settlement of a claim with the approval of the Committee) arising
out of any act or omission in connection with the administration or
interpretation of the Plan, unless arising out of such person's own
fraud or bad faith.
2.3 Effective Date.
The Plan shall become effective upon its adoption by the Board of
Directors.
3. INCENTIVE AWARDS.
3.1 Establishment of Participation Levels.
Prior to the beginning of each Plan Year, the Committee shall establish the
Participant Bonus Factor for each Participant.
3.2 Calculation of Bonus Units Earned.
(a) The number of Bonus Units to be awarded for services rendered in each
Plan Year shall be based on two performance measures: (i) the
percentage of growth in the Company's Operating FFO per share from the
previous Plan Year; and (ii) the percentage of growth in same store
NOI from the previous Plan Year as compared to the Company's industry
peers. Initially, the FFO component is to receive 75% weighting and
the NOI component is to receive 25% weighting. The Committee will
review the weighting of the components on an annual basis and may
amend it in its discretion. Bonus Units earned given varying
percentages of growth are shown below:
Funds from Operations (FFO) Same Store NOI
% Growth Bonus Unit 75% % Growth Bonus Unit 25%
-2% 4.00 3.00 -2% 4.00 1.00
-1% 4.50 3.38 -1% 4.50 1.13
0% 5.00 3.75 0% 5.00 1.25
1% 6.00 4.50 1% 6.00 1.50
2% 7.00 5.25 2% 7.00 1.75
3% 8.00 6.00 3% 8.00 2.00
4% 9.00 6.75 4% 9.00 2.25
5% 10.00 7.50 5% 10.00 2.50
6% 11.00 8.25 6% 11.00 2.75
7% and above 12.00 9.00 7% and above 12.00 3.00
(b) In the event that the Company experiences FFO growth and/or relative
NOI same store growth less than minus 2% or greater than 7%, the
Committee has complete discretion in determining Bonus Unit award
levels that it will recommend for the Board's approval. The Committee
will consider various factors, including economic conditions, the
Company's performance relative to its industry peers and the
occurrence of any extraordinary events in making its determination.
3.3 Calculation and Payment of Incentive Compensation.
(a) A Participant's bonus award equals the Participant's Base Salary
multiplied by the product (expressed as a percentage) of the
Participant's Bonus Factor and the Bonus Units earned plus or minus
performance factors.
(b) The entire amount of the bonus payable to the Chief Executive Officer
is discretionary with the Committee making a recommendation to the
full Board as to which portion of the bonus should be paid. Management
of the Company is authorized to determine the portion of the bonus to
be paid to other Participants provided that each Participant is
entitled to receive at least 50% of the calculated bonus. Factors to
be considered in determining the percentage to be paid include the
Participant's performance, the results of the Participant's department
and the Participant's relative influence on the Company's performance.
(c) Incentive compensation shall be calculated as soon as practicable
after the end of the Plan Year, and all incentive compensation shall
be paid prior to the end of the first fiscal quarter of the following
Plan Year. The Company's obligations under this Plan shall be subject
to applicable federal, state and local tax withholding requirements.
Federal, state and local withholding tax due at the time of payment of
incentive compensation required to be withheld by the Company may be
deducted from any payment of any kind otherwise due to each
Participant.
3.4 Bonus Deferrals.
(a) Participants having been assigned a Participant Bonus Factor of 3% and
higher shall be subject to mandatory deferral of all amounts that are
earned in excess of eight Bonus Units. Any deferred amounts plus
interest at 6% will be paid out in the following year provided that
the Company pays a bonus in that year. If the Company does not pay a
bonus in the following year, all deferred amounts, subject to the
discretion of the Committee, will be forfeited.
(b) Participant's having been assigned a Participant Bonus Factor of 3%
and higher and who are designated as "highly compensated" as defined
in Section 414(q) of the Internal Revenue Code may also participate in
the Company's Deferred Bonus Plan.
3.5 Termination of Employment.
If a Participant's employment terminates prior the payment date of a bonus
award for any reason other than retirement, death or disability, such
Participant shall not be entitled to receive any incentive compensation.
Participants must be employed on the date of the award payment to receive a
payment for the prior Plan Year. If a Participant's employment terminates
during any Plan Year by reason of retirement, death or disability, such
Participant or such Participant's legal representative shall receive any
incentive compensation with respect to such Plan Year pro rated for the
portion of the Plan Year during which Participant was an employee.
Incentive compensation to be paid to any Participant who becomes an
employee during a Plan Year also shall be pro-rated based on the portion of
the Plan Year during which the Participant was an employee.
4. MISCELLANEOUS PROVISIONS.
4.1 Non-Transferability.
No right to receive any incentive compensation shall be transferable except
by will or the laws of descent and distribution. Any purported transfer
contrary to this provision will be null and void and without effect.
4.2 No Right to Employment.
Neither the adoption of the Plan nor its operation, nor any document
describing or referring to the Plan, or any part thereof, nor the
designation of any employee as a Participant in the Plan shall confer upon
any Participant under the Plan any right to continue in the employ of the
Company or any Subsidiary, or shall in any way affect the right and power
of the Company or any Subsidiary to terminate the employment of any
Participant at any time with or without assigning a reason therefor, to the
same extent as might have been done if the Plan had not been adopted.
4.3 Exclusion from Pension Computations.
By acceptance of any incentive compensation under the Plan, the recipient
shall be deemed to agree that any compensation paid hereunder will not be
taken into account as "base remuneration", "wages", "salary" or
"compensation" in determining the amount of any contribution to or payment
or any other benefit under any pension, retirement, incentive,
profit-sharing or deferred compensation plan of the Company or any
Subsidiary.
4.4 Interpretation of the Plan.
Headings are given to the sections of the Plan solely as a convenience to
facilitate reference, such headings, numbering and paragraphing shall not
in any case be deemed in any way material or relevant to the construction
of the Plan or any provision hereof. The use of the masculine gender shall
also include within its meaning the feminine. The use of the singular shall
also include within its meaning the plural and vice versa.
4.5 Construction of Plan.
The place of administration of the Plan shall be in the State of New York,
and the validity, construction, interpretation, administration and effect
of the Plan and of its rules and regulations, and rights relating to the
Plan, shall be determined solely in accordance with the laws of the State
of New York.
Approved by Board of Directors February 16, 2004
