SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ]Preliminary Proxy Statement
[ ]Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AMLI RESIDENTIAL PROPERTIES TRUST
----------------------------------------------
(Name of Registrant as Specified In Its Charter)
----------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ]No fee required.
[ ]$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
AMLI RESIDENTIAL PROPERTIES TRUST
125 South Wacker Drive, Suite 3100
Chicago, Illinois 60606
___________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
and
PROXY STATEMENT
___________
March 24, 2004
Dear Shareholder:
You are invited to attend our annual meeting of shareholders, which
will be held on Monday, April 26, 2004, beginning at eleven o'clock a.m.,
Chicago time, at 111 West Monroe Street (37th floor), Chicago, Illinois.
The formal notice of the annual meeting, and the proxy statement
describing the matters on which you may vote, can be found on the following
pages. A copy of our annual report on 2003 financial results is enclosed
for your review. Also enclosed is a proxy card and a postage-paid return
envelope.
So that your shares will be voted at the meeting, please complete and
sign the enclosed proxy card and return it in the enclosed envelope as
promptly as possible. You are encouraged to specify your choices on the
matters indicated. However, it is not necessary to specify your choice on
a matter if you wish to vote in accordance with the recommendation of the
Board of Trustees; in such event, merely executing and returning the proxy
card will be sufficient.
I hope that you will be able to attend the annual meeting. If you
do, you may vote your shares in person even though you have returned a
proxy.
/S/ ALLAN J. SWEET
ALLAN J. SWEET
President
AMLI RESIDENTIAL PROPERTIES TRUST
125 South Wacker Drive, Suite 3100
Chicago, Illinois 60606
___________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 26, 2004
___________
The 2004 annual meeting of shareholders of AMLI Residential
Properties Trust will be held at 111 West Monroe Street (37th floor),
Chicago, Illinois on Monday, April 26, 2004, at eleven o'clock a.m.,
Chicago time, for the following purposes:
1. To elect three Trustees to serve for a three year term and
until their successors are elected and qualify; and
2. To ratify the appointment of KPMG LLP as the Company's
independent auditors for the fiscal year ending December 31,
2004.
To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Trustees has fixed the close of business on March 5,
2004 as the record date for determining the shareholders entitled to
receive notice of and to vote at the annual meeting.
By Order of the Board of Trustees
GREGORY T. MUTZ
Chairman of the Board and
Chief Executive Officer
Chicago, Illinois
March 24, 2004
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON.
SHAREHOLDERS WHO DO NOT INTEND TO BE PRESENT AT THE MEETING IN PERSON ARE
REQUESTED TO SIGN AND DATE THE ENCLOSED PROXY AND TO RETURN IT IN THE
ACCOMPANYING ENVELOPE IN ORDER THAT THE NECESSARY QUORUM MAY BE ASSURED.
ANY PROXY MAY BE REVOKED IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY
STATEMENT AT ANY TIME BEFORE IT HAS BEEN VOTED AT THE MEETING.
PROXY PROXY
AMLI RESIDENTIAL PROPERTIES TRUST
This Proxy is Solicited by and on Behalf of the Board of Trustees
Annual Meeting of Shareholders
To Be Held April 26, 2004
The undersigned hereby appoints each of John E. Allen, Gregory T.
Mutz, Allan J. Sweet, and Philip N. Tague with full power of substitution,
to represent the undersigned at the annual meeting of shareholders of AMLI
Residential Properties Trust to be held on April 26, 2004, and at any
adjournments or postponements thereof, and to cast at such meeting the
votes that the undersigned would be entitled to cast if present at such
meeting, in accordance with the following instructions. If no instructions
are indicated, the shares represented by this Proxy will be voted FOR
Items 1 and 2 on the reverse hereof.
The undersigned acknowledges receipt of the Notice of Annual Meeting
and the Proxy Statement together with this Proxy.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on the reverse side.)
PROXY CARD
AMLI RESIDENTIAL PROPERTIES TRUST
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER
USING DARK INK ONLY. [ X ]
1. ELECTION OF TRUSTEES:
Nominees: John E. Allen, Adam S. Metz, Philip N. Tague,
For All (Except
Nominee(s) whose
_________________________ FOR WITHHOLD name(s) appear
All All below)
[ ] [ ] [ ]
2. To ratify the appointment of KPMG LLP as the Company's independent
auditors for the fiscal year ending December 31, 2004.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Such other business that may properly come before the meeting or any
adjournment thereof.
Trustees recommend: a FOR Vote on Proposals 1 and 2
Dated: ______________________________, 2004
Signature: ________________________________________
Signature, if jointly held_______________________________
NOTE: Please sign exactly as your name(s) appears. For joint
accounts, each owner should sign. When signing as executor,
administrator, attorney, trustee or guardian, etc., please give
your full title.
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
CONTENTS
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Page
----
. Introduction . . . . . . . . . . . . . . . . . . . . 1
. Annual Report. . . . . . . . . . . . . . . . . . . . 1
. Voting of Proxies. . . . . . . . . . . . . . . . . . 1
. Proposal 1 - Election of Trustees. . . . . . . . . . 2
. Management . . . . . . . . . . . . . . . . . . . . . 3
. Board Committees and Meetings. . . . . . . . . . . . 8
. Report of the Audit Committee. . . . . . . . . . . . 9
. Summary Compensation Table . . . . . . . . . . . . . 10
. Option Grants. . . . . . . . . . . . . . . . . . . . 13
. Aggregated Option Exercises in 2003 and
Year-End Option Values . . . . . . . . . . . . . . . 13
. Long-term Incentive Plan Awards and Payouts. . . . . 14
. Equity Compensation Table. . . . . . . . . . . . . . 14
. Option Plan. . . . . . . . . . . . . . . . . . . . . 14
. Restricted Share Plan. . . . . . . . . . . . . . . . 15
. Performance Incentive Plan . . . . . . . . . . . . . 16
. Executive Share Purchase Plan. . . . . . . . . . . . 16
. Senior Officer Loan Share Purchase Program . . . . . 17
. Incentive Compensation . . . . . . . . . . . . . . . 18
. Retirement Savings Plan. . . . . . . . . . . . . . . 18
. Compensation of Trustees . . . . . . . . . . . . . . 18
. Non-Competition Agreements, Employment
Agreements, and Termination of Employment. . . . . . 19
. Compensation Committee Interlocks and
Insider Participation. . . . . . . . . . . . . . . . 19
. Executive Compensation Committee
Report on Executive Compensation . . . . . . . . . . 19
. Nominating and Governance Committee. . . . . . . . . 21
. Communicating with the Board . . . . . . . . . . . . 23
. Attendance by Members of the Board of Trustees
at the Annual Meeting of Shareholders. . . . . . . . 24
. Performance Graph. . . . . . . . . . . . . . . . . . 24
. Certain Relationships and
Related Transactions . . . . . . . . . . . . . . . . 25
i
Page
----
. Relationships with Independent Accountants . . . . . 26
. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . . . 27
. Section 16(a) Beneficial Ownership
Reporting Compliance . . . . . . . . . . . . . . . . 29
. Proposal 2 - Ratification of Appointment
of Independent Auditors. . . . . . . . . . . . . . . 30
. Shareholder Proposals. . . . . . . . . . . . . . . . 30
. Proxy Solicitation Expense . . . . . . . . . . . . . 30
ii
AMLI RESIDENTIAL PROPERTIES TRUST
125 South Wacker Drive, Suite 3100
Chicago, Illinois 60606
___________
PROXY STATEMENT
___________
Annual Meeting of Shareholders
To Be Held Monday, April 26, 2004
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by and on behalf of the Board of Trustees (the "Board") of AMLI
Residential Properties Trust, a Maryland real estate investment trust
("AMLI"), for use at the annual meeting of AMLI's shareholders to be held
on Monday, April 26, 2004, at 111 West Monroe Street (37th floor), Chicago,
Illinois, at eleven o'clock a.m., Chicago time, and any adjournments or
postponements thereof (the "Annual Meeting"), for the purposes set forth in
the accompanying Notice of Annual Meeting.
This Proxy Statement and the enclosed form of proxy are first being
mailed or given to shareholders on or about March 24, 2004.
ANNUAL REPORT
AMLI's Annual Report for the year ended December 31, 2003, including
a copy of AMLI's Annual Report on Form 10-K for the year ended December 31,
2003, as filed with the Securities and Exchange Commission, is being mailed
together with this Proxy Statement to each of AMLI's shareholders of record
at the close of business on March 5, 2004 (the "Record Date").
Alternatively, AMLI's Annual Report on Form 10-K may be accessed on-line
through AMLI's website www.amli.com.
VOTING OF PROXIES
Only shareholders of record of AMLI's common shares of beneficial
interest, $.01 par value per share (the "Common Shares"), at the close of
business on the Record Date are entitled to notice of and to vote at the
Annual Meeting. Each Common Share is entitled to one vote on all matters
voted upon by shareholders. There were 21,694,273 Common Shares
outstanding on the Record Date. A majority of the outstanding Common
Shares represented in person or by proxy will constitute a quorum at the
meeting.
Each valid proxy returned to AMLI will be voted at the Annual Meeting
as indicated on the proxy or, if no indication is made with respect to a
proposal, in favor of such proposal in accordance with the recommendations
of the Board set forth in this Proxy Statement. AMLI knows of no matters
to be presented at the Annual Meeting other than the proposals referred to
on the proxy card and described in this Proxy Statement. However, if any
other matters are properly presented at the Annual Meeting, the persons
named on the enclosed proxy intend to vote the Common Shares represented by
them pursuant to the discretionary authority granted them in the proxy.
Any person submitting a proxy may revoke it at any time before it is
exercised by so notifying AMLI in writing or by delivering a duly executed
proxy bearing a later date to the Secretary of AMLI. In addition, persons
submitting proxies may elect to vote their shares in person at the Annual
Meeting, although mere attendance at the Annual Meeting will not serve to
revoke a proxy.
1
PROPOSAL 1
ELECTION OF TRUSTEES
Three Trustees, constituting all Class I Trustees, are to be elected
at the Annual Meeting. The Class I Trustees will serve for a three-year
term until AMLI's annual meeting of shareholders in 2007 and until their
respective successors are elected and qualify, or until earlier death,
resignation or removal. Assuming the presence of a quorum, Trustees will
be elected by a plurality of the votes cast at the Annual Meeting. There
is no cumulative voting for Trustees. For purposes of the election of
Trustees, abstentions will not be counted as votes cast and will have no
effect on the result of the vote, although they will count toward the
presence of a quorum.
The Board of Trustees has nominated three members of the class of
Trustees whose terms are expiring in 2004 to serve for new terms. Each
valid proxy returned to the Company will be voted at the Annual Meeting for
the three nominees listed below, unless the proxy specifies otherwise.
Each of the nominees listed below is a member of the present Board.
Biographical information for each of the nominees is set forth under the
caption "Management."
NOMINEES
John E. Allen
Adam S. Metz
Philip N. Tague
If any nominee should unexpectedly become unavailable for service,
proxies will be voted for another person selected by the Board, unless the
proxy specifies otherwise.
2
MANAGEMENT
TRUSTEES AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to
AMLI's Trustees and executive officers. AMLI has a nine-member Board of
Trustees. The Board of Trustees has determined that a majority (presently
five Trustees) are not affiliated with AMLI Realty Co. and its affiliates
and successors and are independent as determined by the New York Stock
Exchange (each an "Independent Trustee"). The basis for determination of
the independence of each Independent Trustee has been specific inquiry and
Board consideration of the responses thereto. Except for the existence of
an unrelated business relationship between two of the Independent Trustees,
which the Board believes is not relevant to the determination, there is no
circumstance or fact known by the Board which causes it to believe that the
Independent Trustees are not, in fact, independent. Messrs. Mutz, Allen
and Sweet have been Trustees since the organization of the Company.
Messrs. Heilweil, McConahey and Schreiber have been Trustees since
February 28, 1994. Mr. Tague and Ms. Gates have been Trustees since
March 14, 1995. Mr. Metz was appointed Trustee effective January 1, 2003
and elected for a one-year term on April 28, 2003. Each of the other
individuals named below as an executive officer of the Company accepted his
or her position upon formation of the Company, except Messrs. Tague and
Kraft, who accepted their positions in September 1994; Mr. Chapman, who
accepted his positions in December 1997; Mr. Small, who accepted his
position in January 2002; and Mr. Hallsey who accepted his position in July
2003. As of March 1, 2004 Mr. Allen is the only AMLI officer holding any
position with AMLI Realty Co. and its affiliates. Mr. Allen plans to
retain his position as President of AMLI Realty Co. and its affiliates
through 2004.
Mr. Sweet and Mr. Tague shared the responsibilities of the Chief
Executive Officer from January 1, 1999 until February 2, 2004, on which
date Mr. Mutz re-assumed the responsibility he had as Chief Executive
Officer from AMLI's inception through 1998. Mr. Sweet and Mr. Tague
continue in their prior roles as President and Executive Vice President,
respectively. Mr. Allen no longer devotes a majority of his business time
to AMLI activities. Mr. Tague has been a full-time employee of the Company
since 1997.
NAME AGE POSITION
- ---- --- --------
Gregory T. Mutz 58 Chairman of the Board
and, as of February 2, 2004, CEO
(term will expire in 2005)
John E. Allen 67 Vice-Chairman of the Board
(term would expire in 2004)
Allan J. Sweet 56 President (Co-CEO until February 2, 2004)
and Trustee
(term will expire in 2006)
Philip N. Tague 55 Executive Vice President
(Co-CEO until February 2, 2004)
and Trustee
(term would expire in 2004)
Laura D. Gates* 53 Trustee (term will expire in 2005)
Marc S. Heilweil* 58 Trustee (term will expire in 2005)
Stephen G. McConahey* 60 Trustee (term will expire in 2006)
Adam S. Metz* 42 Trustee (term would expire in 2004)
John G. Schreiber* 57 Trustee (term will expire in 2006)
Robert J. Chapman 56 Executive Vice President/Chief Financial
Officer
Steven F. Hallsey 50 Executive Vice President - Property
Management
Stephen C. Ross 46 Executive Vice President - Development
Steven L. Small 48 Executive Vice President/Chief Information
Officer
Charles C. Kraft 56 Senior Vice President and Treasurer/
Principal Accounting Officer
3
____________________
* Independent Trustee.
The following is a biographical summary of the experience of AMLI's
Trustees and executive officers and certain other significant employees:
Gregory T. Mutz. Mr. Mutz is Chairman of the Board (and, effective
February 2, 2004, Chief Executive Officer) of AMLI, a successor company to
AMLI Realty Co., which he co-founded in 1980. Mr. Mutz is a Director of
the ABN-AMRO Alleghany Family of Mutual Funds. Mr. Mutz had been CEO of
AMLI until November 1998 and thereafter co-CEO of AMLI until January 1,
2002. From November 1998 until June 30, 2003 Mr. Mutz was President and
CEO of UICI, a diversified Dallas-based insurance and financial services
company which is the parent company of AMLI Realty Co., and was Vice
Chairman of the Board of UICI during the six months ended December 31,
2003. Prior to founding AMLI, Mr. Mutz was an officer with White, Weld &
Co., Incorporated, a New York investment-banking firm (1976-1978) and was
associated with the Chicago law firm of Mayer, Brown, Rowe & Maw LLP (1973-
1976). He received a B.A. from DePauw University in 1967 and a J.D. from
the University of Michigan Law School in 1973. Mr. Mutz served as an
infantry lieutenant in Vietnam from 1968 to 1969.
John E. Allen. Mr. Allen is Vice-Chairman of AMLI's Board and
President and a Director of AMLI Realty Co., which he co-founded in 1980.
Prior to co-founding AMLI Realty Co., he was a partner at the Chicago law
firm of Mayer, Brown, Rowe & Maw LLP, with which he had been associated
since 1964. Mr. Allen received a B.S. in Business from Indiana University
in 1961 and a J.D. from the Indiana University School of Law in 1964.
Allan J. Sweet. Mr. Sweet is AMLI's President and, with Mr. Tague,
had been AMLI's Co-CEO from January 1, 1999 until February 2, 2004. He has
been associated with AMLI since its inception and, prior to that time, with
AMLI Realty Co. since 1985. Prior to joining AMLI Realty Co., Mr. Sweet
was a Partner in the Chicago law firm of Schiff Hardin & Waite, with which
he had been associated since 1978. He received a B.B.A. from the
University of Michigan in 1968 and a J.D. from the University of Michigan
Law School in 1973. From 1980 to 1983, Mr. Sweet was a trustee of American
Equity Investment Trust, an over-the-counter equity REIT. He is a Director
of the National Multifamily Housing Council, serves on the Board of
Directors of the Association of Foreign Investors in Real Estate, and is a
member of the Pension Real Estate Association and NAREIT.
Philip N. Tague. Mr. Tague is AMLI's Executive Vice President and,
with Mr. Sweet, had been AMLI's Co-CEO from January 1, 1999 through
February 2, 2004. He has been associated with the Company since its
inception and with AMLI Realty Co. since 1981. Prior to joining AMLI
Realty Co., Mr. Tague was associated with the Chicago law firm of Mayer,
Brown, Rowe & Maw LLP (1977-1981). He received a B.A. from Northwestern
University in 1971 and a J.D. from Ohio State University College of Law in
1977. He is an officer and/or member of a number of industry groups
including the Atlanta Apartment Association, the Georgia Apartment
Association, ULI, NAIOP, REIAC, CORE NET and the National Multifamily
Housing Council.
Laura D. Gates. Ms. Gates is an Independent Consultant since 2000.
From 1994 to 2000 she was Vice President for Museum Affairs and later Vice
President, International at the Field Museum of Natural History in Chicago.
Prior thereto she was a principal of McKinsey & Company, Inc. from 1986 to
1993 and an Associate in that firm from 1980 to 1985. Ms. Gates received a
B.A. from Wellesley College in 1972 and an M.B.A. from the Harvard
University Graduate School of Business Administration in 1976.
4
Marc S. Heilweil. Mr. Heilweil has been President of Spectrum
Advisory Services, Inc., an investment counseling company based in Atlanta,
Georgia since 1991. He is also the portfolio manager of Marathon Value
Portfolio, an equity mutual fund registered under the Investment Company
Act of 1940. Previously, he was President of Heilweil Hollander
Jacobs, Inc. from 1986 to 1991 and worked as an investment counselor from
1977 to 1986. Mr. Heilweil practiced law from 1974 to 1977. Mr. Heilweil
received a B.A. from Yale University in 1967 and a J.D. from Yale
University Law School in 1974.
Stephen G. McConahey. Mr. McConahey is currently Chairman of SGM
Family Properties, LLC, a private investment company. Until October 1999,
Mr. McConahey held the position of President and Chief Operating Officer of
EVEREN Securities, Inc. and EVEREN Capital Corporation, where he was
responsible for the day to day operations of the firm, chaired the
operating committee and served as a member of the board of directors.
EVEREN was purchased by First Union Corporation in October 1999. Prior to
EVEREN, Mr. McConahey was Senior Vice President of corporate and
international development at Kemper Corporation and Executive Vice
President at Kemper Financial Services. Prior to Kemper, Mr. McConahey was
Chairman and Chief Executive Officer of Boettcher and Company, a regional
securities brokerage firm headquartered in Denver, Colorado. Mr. McConahey
received his bachelor's degree from the University of Wisconsin and MBA
from the Harvard University Graduate School of Business Administration.
Earlier in his career, Mr. McConahey received a White House Fellowship and
subsequently served as Special Assistant to President Gerald Ford. Prior
to his fellowship, Mr. McConahey was with the consulting firm of McKinsey
and Company.
Adam S. Metz. Mr. Metz is a founding partner of Polaris Capital,
LLC, a real estate consulting and investment firm. Prior to founding
Polaris, Mr. Metz was Executive Vice President and Chief Investment Officer
of Rodamco, North America from 2000-2002, and was Executive Vice President
and Chief Financial Officer and then President of Urban Shopping Centers
(1993-2000), a NYSE listed real estate investment trust purchased by
Rodamco in 2000. Mr. Metz was a Vice President in the Capital Markets
Group of JMB Realty Corp. from 1987 to 1993, and was a Corporate Lending
Officer in the Commercial Real Estate Lending Group of The First National
Bank of Chicago from 1983 to 1987. Mr. Metz holds an undergraduate degree
from Cornell University and a Masters of Management Degree from
Northwestern University.
John G. Schreiber. Mr. Schreiber is President of Centaur Capital
Partners, Inc., a family investment firm. He is also Co-Founder and
Partner of Blackstone Real Estate Advisors, L.P., which manages large real
estate private equity funds. Mr. Schreiber is a Director of The Rouse
Company, as well as a number of mutual funds advised by T. Rowe Price
Associates, Inc. Mr. Schreiber is also a Director of The Brickman Group,
Ltd., and JMB Realty Corporation and a number of its affiliates. Prior to
his retirement as an officer of JMB Realty Corporation in 1990, Mr.
Schreiber was Chairman of JMB/Urban Development Co. and an Executive Vice
President of JMB Realty Corporation. Mr. Schreiber received a B.B.A. from
Loyola University in Chicago in 1968 and an M.B.A. from Harvard University
Graduate School of Business in 1970.
5
Robert J. Chapman. Mr. Chapman is AMLI's Executive Vice President
and Chief Financial Officer. Mr. Chapman joined AMLI in December of 1997.
Previously, Mr. Chapman was Managing Director of Heitman Capital Management
Corporation (1994-97), Managing Director and Chief Financial Officer of JMB
Institutional Realty Corporation (1994) and Managing Director and Chief
Financial Officer of JMB Realty Corporation (1976-94). He was also
associated with KPMG LLP (1972-76). Mr. Chapman received a B.B.A. in 1970
and an M.B.A. in 1971 from the University of Cincinnati and is a CPA. Mr.
Chapman is or has been a member of the Association of Foreign Investors in
Real Estate, the Mortgage Bankers Association, the National Association of
Real Estate Investment Trusts, the National Multi Housing Council, the Real
Estate Investment Advisory Council, the Pension Real Estate Association,
the Urban Land Institute, the International Council of Shopping Centers,
The American Institute of Certified Public Accountants and the Illinois CPA
Society. In addition to having been a National Association of Securities
Dealers registered representative, he served as a Board Member of the
National Association of Real Estate Companies and the Real Estate Advisory
Council of the University of Cincinnati.
Steven F. Hallsey. Mr. Hallsey is Executive Vice President of AMLI
and Chairman of the Board and Chief Executive Officer of AMLI Management
Company, a subsidiary of AMLI Residential which provides property
management, leasing and corporate homes services to the AMLI portfolio.
Mr. Hallsey also serves as Executive Vice President of AMLI Residential.
Prior to joining AMLI, Mr. Hallsey was associated with Charles E. Smith
Residential, a division of Archstone-Smith Trust, as Executive Vice
President (2001-2003). His responsibilities included managing a 25,000-
unit apartment portfolio in five major markets. Prior to that, Mr. Hallsey
was Senior Vice President of Asset Management at Glenborough Realty Trust
(1998-2001); President and COO of Western National Group (1995-1998);
President of Harbor Group International (1994-1995); Senior Vice President
at Balcor-American Express (1990-1994) and Senior Executive Vice President
at Clark Financial Corporation (1983-1990).
Stephen C. Ross. Mr. Ross is Executive Vice President - Development
of AMLI and has been with AMLI since its inception; prior thereto he was
with AMLI Realty Co. since 1989. Mr. Ross is responsible for development
activities in Chicago and other regions and for coordinating efforts
nationally to minimize real estate tax assessments. Prior to joining AMLI
Realty Co., he was associated with JMB Realty Corporation in Chicago and
New York City where he had certain portfolio management and acquisition
responsibilities. Mr. Ross received a B.S. from the University of
Rochester in 1978 and an M.B.A. from the University of Chicago in 1981. He
is a member of the Urban Land Institute and was a founding Director of the
Central Region of REIAC.
Steven L. Small. Mr. Small is AMLI's Executive Vice President and
Chief Information Officer. Mr. Small joined AMLI in September 2000 and is
responsible for AMLI's technology infrastructure including its wide area
network, ERP financial and reporting systems, and technical support
operations. Prior to joining AMLI, he owned a company that designed and
installed voter registration databases for large municipalities such as
Chicago and Phoenix. Mr. Small graduated from the University of Illinois
in 1977 with a Bachelor of Science Degree in Computer Engineering.
Mark T. Alfieri. Mr. Alfieri is AMLI's Senior Vice President of
Acquisitions. Prior to joining AMLI in 1999, he was a Vice President with
FultsOncor Investment Services (1997-1999) who specialized in the sale of
office, industrial and multifamily properties to real estate investors. He
was President and Founder of Revest Group, Inc. (1992-1997), an asset
management company, and Vice President with Performance Properties
Corporation (1987-1991). Mr. Alfieri holds a B.B.A. in Marketing from
Texas A&M University. He is a licensed real estate broker in Texas.
6
Peggy D. Butterworth. Ms. Butterworth is Executive Vice President of
AMLI Management Company. Prior to joining AMLI in 1994, she had been
associated with AMLI Realty Co. since 1988. Prior to joining AMLI Realty
Co., she was Divisional Vice President for the Trammell Crow Company (1979-
1988). Ms. Butterworth attended the Virginia Polytechnic Institute and
State University.
Mark T. Evans. Mr. Evans is President of AMLI Residential
Construction LLC. He has overall responsibility for the allocation of
personnel, resources and systems relating to the Company's multifamily land
development and construction activities and is actively involved in the
planning, development and product selection for the Company's communities.
Joining the Company in 1994, Mr. Evans was previously associated with
Peachtree Residential Properties as Director of Purchasing (1992-1994);
Roberts Properties (1990-1992); Grove Construction (1986-1990); and AMLI
Realty Co. (1983-1986). Mr. Evans graduated from the University of Florida
in 1982.
Charles C. Kraft. Mr. Kraft is AMLI's Senior Vice President,
Treasurer, and Principal Accounting Officer and had been associated with
AMLI Realty Co. from 1983 through 1996. Mr. Kraft is responsible for
financial reporting, tax planning, treasury and cash management operations.
Prior to joining AMLI Realty Co., he was associated with the Chicago office
of KPMG LLP (1968-1982) in that firm's national real estate practice. Mr.
Kraft received an A.B. from Wabash College in 1968. He is a past Director
of the Chicago Board of Realtors and is a CPA. Mr. Kraft is a member of
The American Institute of Certified Public Accountants and the Illinois CPA
Society.
Rosita A. Lina. Ms. Lina is AMLI's Senior Vice President and
Controller. Prior to joining AMLI in 1994, she had been associated with
AMLI Realty Co. since 1985. Ms. Lina is responsible for the Company's
accounting operations. Prior to joining AMLI Realty Co., she was
Accounting Manager for four years with Urban Investment and Development Co.
in Chicago, Illinois. Ms. Lina received a B.B.A. from the University of
the East in Manila, Philippines in 1965 and is a CPA. She is a member of
The American Institute of Certified Public Accountants and the Illinois CPA
Society.
Porter Lummus. Mr. Lummus joined AMLI in 2003 as Vice President of
Acquisitions. Prior to joining AMLI, he was Vice President and National
Director of Acquisitions for Pritzker Residential since August 1998. Mr.
Lummus received his MBA from Georgia State University and a BBA from the
University of Georgia. He served as a member of the Board of Directors of
the National Multi-Housing Council from 2000 to 2003. Additionally, he
holds the CCIM designation from the National Association of Realtors and is
a licensed broker in the state of Georgia.
Gregory A. O'Berry. Mr. O'Berry is President of AMLI Management
Company and has been with the Company since April 1995. He is responsible
for asset management of the Company's multifamily investments, as well as
for the operations of AMLI Corporate Homes. He was previously associated
with Lincoln Property Company (1985-1995), most recently as Vice President
- - Finance and Administration (Midwest) in Chicago, Illinois. Mr. O'Berry
received a B.S. in Accounting from the University of Illinois in 1982 and
is a CPA. He is past President and is currently a member of the Board of
Directors and the Executive Committee of the Chicagoland Apartment
Association.
Fred N. Shapiro. Mr. Shapiro is Senior Vice President of
Acquisitions for AMLI. Prior to joining the Company in 1994, he had been
associated with AMLI Realty Co. since 1984. He is responsible for
acquisition efforts in the Midwest. Mr. Shapiro received a B.A. from New
York University in 1971 and a J.D. from John Marshall Law School in 1978.
7
BOARD COMMITTEES AND MEETINGS
AMLI has standing Audit, Executive Compensation, and Nominating &
Governance Committees of the Board. Each such Committee has a written
charter which is available on AMLI's website at www.amli.com.
Messrs. Metz (Chairman), Heilweil and McConahey constitute the Audit
Committee. The Board has determined that Mr. Metz is the Audit Committee
"Financial Expert" within the meaning of that term as described in Item 401
of Regulation S-K. Each member of the Audit Committee is an independent
Trustee. The Audit Committee is responsible for the engagement of
independent public accountants. The Audit Committee reviews with the
independent public accountants the plans and results of the audit
engagement, approves professional services provided by the independent
public accountants, reviews the independence of the independent public
accountants, considers the range of and pre-approves audit and non-audit
services, including fees, reviews AMLI's internal audit function, and
reviews the adequacy of AMLI's internal accounting controls. The Audit
Committee met eight times during the year 2003 and met once each in
February and March 2004 to carry out its responsibilities as detailed in
its charter which was adopted on May 1, 2000, and which was amended in 2003
to reflect expanded responsibilities undertaken by the Audit Committee in
2003.
Messrs. Schreiber (Chairman) and McConahey, and Ms. Gates constitute
the Executive Compensation Committee. Each member of the Executive
Compensation Committee is a "disinterested person" within the meaning of
former Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and all members of the Executive Compensation
Committee are Independent Trustees. The Executive Compensation Committee
determines the compensation of AMLI's four officers who are also Trustees
and the Chief Financial Officer, and administers AMLI's option plan,
performance incentive plan, executive share purchase plan, restricted share
plan, forgivable loan plan and certain other employee benefit plans. See
"Option Plan," "Performance Incentive Plan," "Executive Share Purchase
Plan," "Restricted Share Plan," "Incentive Compensation," "Retirement
Savings Plan," "Non-Competition Agreements, Employment Agreements, and
Termination of Employment," and "Executive Compensation Committee Report on
Executive Compensation" below. The Executive Compensation Committee met
six times in 2003, and three times in January and February 2004 regarding
compensation matters for 2003.
Ms. Gates (Chairman) and Messrs. Heilweil and Schreiber constitute
the Nominating & Governance Committee. Each member of the Nominating &
Governance Committee is an Independent Trustee. This committee was formed
late in 2002 to identify individuals qualified to become Board members, and
to recommend that the Board select the trustee nominees to be voted on at
the annual meetings of shareholders; to develop and recommend to the Board
the Corporate Governance Guidelines applicable to the Company; and to
review any plan of succession for the position of Chief Executive Officer.
The Nominating & Governance Committee met once in October 2003, and again
in January 2004.
Five meetings of the full Board were held in 2003. Each Trustee who
held such position in 2003 attended at least 75% in the aggregate of all
meetings of the Board and any committee on which such Trustee served.
8
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has reviewed and discussed with management and
with AMLI's independent auditors AMLI's audited financial statements for
the year ended December 31, 2003. These discussions included matters
required to be discussed by the Statements on Auditing Standards No. 61,
which include, among other things, (1) methods used to account for
significant or unusual transactions; (2) the effect of significant
accounting policies in emerging areas for which there is a lack of
authoritative guidance; (3) the process used by management in formulating
sensitive accounting estimates and the basis for the auditor's conclusions
regarding the reasonableness of those estimates; and (4) any disagreements
with management over the application of accounting principles, the basis
for management's accounting estimates, and the disclosures in the financial
statements.
The Audit Committee has received the written disclosures and the
letter from our independent auditors, KPMG LLP, as required by Independence
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," and has discussed with the independent auditors the issue of
their independence from the Company. The Audit Committee has considered
whether the provision of non-audit services by KPMG LLP to the Company for
the fiscal year ended December 31, 2003, as described in this Proxy
Statement under "Relationship with Independent Accountants," is compatible
with maintaining KPMG LLP's independence.
Based on its review of the audited financial statements and
discussions related thereto, the Audit Committee has recommended to the
Board of Trustees that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2003.
Adam S. Metz, Chairman
Marc S. Heilweil
Stephen G. McConahey
9
<table>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding the compensation of Messrs. Sweet and Tague,
the Co-CEOs of the Company, and the Company's four other most highly compensated executive officers during 2003,
2002 and 2001. The table includes compensation from all sources for services rendered to the Company and its
subsidiaries during these years.
<caption>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------- ----------------------------------
AWARDS PAYOUTS
----------------------- -------
OTHER RESTRICTED SECURITIES
ANNUAL SHARE UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (1) ($)(2) (NUMBER) ($) (3) ($) (4)
- ------------------ ---- ------- --------- ------------ ---------- ---------- ------- ------------
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Allan J. Sweet
President,
Co-CEO, and
Trustee (5). . . . 2003 $300,000 $199,500 $147,105 107,200 -- -- $12,738
2002 $285,000 $169,500 $ 29,945 -- 60,000 $ 72,965 $ 9,823
2001 $285,000 -- $ 9,958 -- 60,000 $ 51,080 $20,413
Philip N. Tague
Executive Vice
President,
Co-CEO, and
Trustee (5). . . . 2003 $300,000 $199,500 $144,841 107,200 -- -- $12,738
2002 $285,000 $169,500 $ 12,535 -- 60,000 $ 72,965 $ 9,810
2001 $285,000 -- $ 14,998 -- 60,000 $ 51,080 $20,384
Robert J. Chapman
Executive Vice
President -
Chief Financial
Officer. . . . . . 2003 $262,500 $ 99,750 $ 45,474 88,440 -- -- $ 9,993
2002 $250,000 $ 84,750 $ 26,255 -- 40,000 -- $ 7,583
2001 $250,000 -- $ 8,300 -- 40,000 -- $10,196
Stephen Hallsey
Executive Vice
President -
Property
Management (5) . . 2003 $112,500 $ 40,000 $ 4,320 120,600 -- -- $20,000
10
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------- ----------------------------------
AWARDS PAYOUTS
----------------------- -------
OTHER RESTRICTED SECURITIES
ANNUAL SHARE UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (1) ($)(2) (NUMBER) ($) (3) ($) (4)
- ------------------ ---- ------- --------- ------------ ---------- ---------- ------- ------------
Stephen C. Ross
Executive Vice
President -
Development. . . . 2003 $235,000 $15,000 $22,957 69,680 -- -- $ 8,733
2002 $232,500 $10,000 $ 7,103 -- 20,000 $ 51,075 $ 7,051
2001 $228,000 $ 6,800 -- -- 20,000 $ 39,906 $13,879
Brian K. Cranor
Executive Vice
President -
Capital Markets
(5). . . . . . . . 2003 $226,500 $15,000 $22,953 69,680 -- -- $ 9,475
2002 $220,000 $10,000 $ 7,103 -- 20,000 -- $ 7,583
2001 $213,000 $10,000 -- -- 20,000 -- $ 9,904
<fn>
(1) During 2003 AMLI paid $90,000 in compensation to each of Mr. Sweet and Mr. Tague in full satisfaction of
AMLI's obligations regarding its pre-existing split dollar life insurance policies covering the lives of
Mr. Sweet and Mr. Tague. The Company pays the cost of personal income tax preparation services for
Mr. Sweet ($2,264, $2,413 and $1,672 in 2003, 2002 and 2001, respectively) and for Mr. Chapman ($3,000,
$2,900 and $2,500 in 2003, 2002 and 2001, respectively). Compensation based on the 15% discount under the
Executive Share Purchase Plan was as follows:
2003 2002 2001
------- ------- -------
Mr. Sweet $14,999 14,997 8,286
Mr. Tague 14,999 -- 14,998
Mr. Chapman 15,000 14,998 5,800
During 2003 and 2002, compensation resulting from scheduled forgiveness of loans was as follows:
2003 2002
------- -------
Mr. Sweet $34,082 12,535
Mr. Tague 34,082 12,535
Mr. Chapman 22,722 8,357
Mr. Ross 19,213 7,103
Mr. Cranor 19,209 7,103
11
During 2003 cash compensation resulting from distribution equivalents paid on restricted shares was as
follows:
Mr. Sweet $ 5,760
Mr. Tague 5,760
Mr. Chapman 4,752
Mr. Hallsey 4,320
Mr. Ross 3,744
Mr. Cranor 3,744
(2) The restricted shares awarded during 2003 were the initial award and represent the total number of
restricted shares held at December 31, 2003. The values in the table are based on AMLI's closing share
value on December 31, 2003 ($26.80). Restricted shares vest one-third at the beginning of each of the
third, fourth and fifth years following the date of each award.
On February 2, 2004 the Board of Trustees approved an additional award of restricted shares as follows:
8,000 restricted shares each to Mr. Sweet and Mr. Tague, 6,000 restricted shares to Mr. Chapman, 2,500
restricted shares to Mr. Hallsey, and 4,000 restricted shares each to Mr. Ross and Mr. Cranor.
(3) LTIP Payouts include amounts earned as distribution equivalents and reported as "all other compensation"
in previous periods. In January 2004 AMLI paid $107,632 and $118,228 to Mr. Ross and Mr. Cranor,
respectively, to terminate their participation in AMLI's Performance Incentive Plan ("PIP").
(4) The employer contributions by the Company under the Retirement Savings Plan for Messrs. Sweet, Tague,
Chapman, Ross and Cranor were $1,000 each in 2003, 2002 and 2001. See "Retirement Savings Plan" below.
The Company paid an annual premium each year ($199 in 2003) to provide long-term disability and $50,000 of
group term life and Accidental Death insurance for each of the named executive officers. During 2003, 2002
and 2001, Messrs. Sweet and Tague were each credited with $11,539, $8,512 and $18,936, respectively; Mr.
Chapman was credited with $8,794, $6,384 and $9,100, respectively; Mr. Ross was credited with $7,534,
$5,852 and $12,783, respectively; and Mr. Cranor was credited with $8,276, $6,384 and $8,808,
respectively, in Performance Units (as defined under "Performance Incentive Plan" below) as distribution
equivalents corresponding to the amount of distributions made on the number of units of limited
partnership interest ("Units") in AMLI Residential Properties, L.P. (the "Operating Partnership")
underlying the Performance Units respectively held by each of them. See "Long-Term Incentive Plan Awards"
and "Performance Incentive Plan" below. During 2002 and 2001, Mr. Sweet received $112 and $381,
respectively, and Mr. Tague received $99 and $352, respectively, in taxable income relating to split
dollar life insurance policies maintained jointly by the Company and these officers. Mr. Hallsey was paid
a $20,000 moving allowance following commencement of his employment in July 2003.
(5) On February 2, 2004 Gregory T. Mutz succeeded Messrs. Sweet and Tague as CEO.
Mr. Hallsey commenced employment on July 1, 2003; the amount reported as 2003 salary for Mr. Hallsey is
based on an annual rate of $225,000 for 2003.
Mr. Cranor ceased employment and resigned all positions with AMLI effective March 1, 2004.
</table>
12
<table>
OPTION GRANTS
During 2003 no Options were granted to any named executive officers or any key employees and officers of the
Company and its subsidiaries.
AGGREGATED OPTION EXERCISES IN 2003 AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning exercises of options during 2003 by each of
the executive officers named in the summary compensation table above and the year-end value of unexercised options
owned by such executive officers.
<caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SECURITIES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT YEAR-END YEAR-END (3) ($)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (NUMBER)(1) ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<s> <c> <c> <c> <c> <c> <c>
Allan J. Sweet 45,861 $466,301 94,666 202,334 $476,973 $903,139
Philip N. Tague 14,432 $397,988 134,666 202,334 $622,099 $903,139
Robert J. Chapman 1,633 $ 42,891 73,167 145,333 $368,558 $646,396
Steve Hallsey 0 $ 0 0 0 $ 0 $ 0
Stephen C. Ross 17,748 $103,149 73,167 68,667 $313,920 $303,155
Brian K. Cranor 31,761 $190,962 0 68,667 $ 0 $303,155
<fn>
___________
(1) Shown net of shares deemed tendered upon "seasoned share" exercises.
(2) Computed as the number of options exercised multiplied by the difference between fair value per share
at date of exercise and the exercise price per share.
(3) Calculated based on the year-end share value of $26.80 per share.
</table>
13
LONG-TERM INCENTIVE PLAN AWARDS AND PAYOUTS
From 1995 to 2001, 116,200 Performance Units (as defined under
"Performance Incentive Plan" below), of which 16,000 original Performance
Units remain outstanding as of March 1, 2004, were awarded to key employees
and officers of the Operating Partnership and the Service Companies
pursuant to the Company's performance incentive plan. In February 2002,
Messrs. Sweet and Tague each received cash compensation payments of $72,965
and Mr. Ross received a cash compensation payment of $51,075, in full
satisfaction of the Performance Units these officers had been awarded in
1997.
EQUITY COMPENSATION TABLE
The following summarizes as of December 31, 2003 AMLI's equity
compensation plans, all of which have been approved by shareholders:
(c)
Number of
securities
remaining
(a) available
Number of for future
securities to (b) issuance under
be issued upon Weighted-average equity com-
exercise of exercise price pensation plans
outstanding of outstanding (excluding secur-
options, warrants options, warrants ities reflected
and rights and rights in column (a))
----------------- ----------------- -----------------
Option Plan 1,888,576 $22.10 1,145,999
Restricted
Share Plan 46,900 -- 213,100
Trustee Share
Acquisition Plan 0 -- 23,571
Executive Share
Purchase Plan 0 -- 371,954
Option exercises in 2004 have reduced the number of securities to be
issued under the Option Plan to 1,546,130. The February 2, 2004 award of
76,050 restricted shares has increased the number of shares to be issued
under the Restricted Plan from 46,900 to 122,950.
Each of AMLI's equity compensation plans is described in detail in
the paragraphs which follow.
OPTION PLAN
In 1994 AMLI adopted the Option Plan to provide incentives to attract
and retain Trustees, officers and key employees and service providers.
AMLI awarded only 18,000 Options since January 1, 2003, and AMLI does not
anticipate awarding additional options in the near future. The summary of
the Option Plan set forth below is qualified in its entirety by the text of
the Option Plan.
The Option Plan provides for the grant of options to purchase a
specified number of Common Shares or Units ("Options"). Under the Option
Plan, the maximum number of Common Shares available for grant and available
to be issued upon exchange of Units issued under the Option Plan is equal
to 3,450,000 (increased from 1,000,000 in 1998 and from 2,000,000 in 2000
and from 2,850,000 in 2002 pursuant to amendment to the Plan).
14
Participants in the Option Plan, who may be AMLI Trustees, officers
or employees, or AMLI service providers to, AMLI, its subsidiaries or
designated affiliates, will be selected by the Executive Compensation
Committee. Approximately 50 Trustees, officers and employees are currently
eligible to participate in the Option Plan. The Executive Compensation
Committee will also determine the terms of Options granted under the Option
Plan including, among other things, the exercise price of Options, whether
Incentive Share Options ("ISOs") or non-qualified Options shall be granted,
the number of Common Shares or Units subject to each Option and the vesting
schedule applicable to each such Option. AMLI Trustees are also eligible
to participate but, in the case of Trustees who are not also employees of
AMLI, only pursuant to automatic grants set forth in the Option Plan and
described under "Compensation of Trustees" below.
The Executive Compensation Committee may amend any award previously
granted, prospectively or retroactively. However, options granted may not
be subsequently amended to provide for any change in exercise price. No
such amendment may impair the rights of any participant under any award
without the consent of such participant (except for any amendment made to
cause the Option Plan to qualify for an exemption provided by Rule 16b-3
under the Exchange Act). The Option Plan authorizes the Executive
Compensation Committee to grant Options at an exercise price determined by
the Executive Compensation Committee. Such price cannot be less than 100%
of the fair market value of the Common Shares or Units on the trading date
immediately preceding the date on which the Option in respect thereof is
granted. Subject to certain limitations regarding real estate investment
trust ("REIT") qualification and taxes, with respect to any individual, the
aggregate fair market value (determined at the time the Option is granted)
of Common Shares with respect to which ISOs may be granted under the Option
Plan, which Options are exercisable for the first time during any calendar
year, may not exceed $100,000. No Option may be granted or exercised if
the grant or exercise of such Option could cause the Company to fail to
qualify as a REIT for Federal income tax purposes or to incur additional
taxes under Section 857 of the Internal Revenue Code of 1986, as amended
(the "Code"). The exercise price is payable in cash or, pursuant to a 2003
amendment to the Option Plan, a deemed tender of shares held at least one
year. The vesting provisions of the Options will be determined by the
Executive Compensation Committee, except with regard to Options received by
Independent Trustees as described under "Compensation of Trustees" below.
The right of any participant to exercise an Option may not be
transferred in any way other than by will or the laws of descent and
distribution.
AMLI's Co-CEOs during 2003 and the four most highly compensated
executive officers have received Options under the Option Plan as follows:
Mr. Sweet, 437,000; Mr. Tague, 419,500; Mr. Chapman, 231,000; Mr. Hallsey,
none; Mr. Ross, 184,000; and Mr. Cranor, 121,000. No Options were granted
to such executive officers in 2003. AMLI's Independent Trustees have
received Options as described under "Compensation of Trustees" below.
RESTRICTED SHARE PLAN
In 2003 AMLI adopted Amendment No. 1 to its Senior Officer Share
Acquisition Plan, which it has subsequently renamed the Restricted Share
Plan. Awards under this plan have replaced awards pursuant to the Senior
Officer Loan Share Purchase Program and, generally in 2003, pursuant to the
Option Plan. Subject only to continued employment during the vesting
period, employees receiving restricted share awards vest one-third each at
the end of the third, fourth and fifth years following each annual award.
Participants receive cash compensation equal to dividends that they would
have received had the shares not been restricted. Participants are not
entitled to vote restricted shares until vesting occurs.
15
PERFORMANCE INCENTIVE PLAN
On January 30, 1995, the Board adopted a performance incentive plan
(the "Performance Incentive Plan") pursuant to which performance units
("Performance Units") may be awarded to employees of the Operating
Partnership and the Service Companies. The Performance Incentive Plan is a
form of phantom equity plan, with each Performance Unit awarded under the
plan intended to be equal in value to a Unit, the value of which
corresponds to the value of a Common Share. The Executive Compensation
Committee selects the employees eligible to participate in the Performance
Incentive Plan, determines the number of Performance Units, if any, to
award to a participant and the terms and conditions of the award, and
administers the Performance Incentive Plan. The number of Performance
Units held by an employee will be increased proportionally to reflect
distributions made with respect to Units, which distributions correspond to
dividends paid with respect to Common Shares. Performance Units will
become payable to the employee upon determination by the Executive
Compensation Committee that the particular performance objectives specified
by the Executive Compensation Committee have been met or upon a "change in
control" (as defined in the Performance Incentive Plan). Payment on
Performance Units will be made in a number of Units equal to the number of
eligible Performance Units held by an employee on the payment date, except
that Performance Units held by an employee who is subject to Section 16 of
the Exchange Act with respect to AMLI will be payable in an amount of cash
equal to the fair market value of the Units which would otherwise be paid
to such employee. Under the Performance Incentive Plan, the total number
of Performance Units available for grant and the total number of Common
Shares available to be issued upon exchange of Units issued under the
Performance Incentive Plan will be equal to 250,000.
No Performance Units were awarded to employees and officers of the
Operating Partnership and the Service Companies in 2003 or 2002, and AMLI
does not anticipate making any future awards of units pursuant to this
Plan.
In December 2003 AMLI agreed to pay cash to all but the five most
senior participants in the PIP, in exchange for termination of any future
rights and benefits that these thirty participants had pursuant to the PIP.
On January 15, 2004 AMLI paid these thirty plan participants $1,197,000 in
full satisfaction of any and all future liabilities of AMLI under the PIP,
except those with respect to Mr. Mutz, Mr. Allen, Mr. Sweet, Mr. Tague and
Mr. Chapman. AMLI has recorded expense totalling $700,000 over the years
1998 through 2003 for the potential liability under the PIP to these five
individuals.
EXECUTIVE SHARE PURCHASE PLAN
The "Executive Share Purchase Plan" was adopted by the Board
effective May 1, 1996 and was approved at the 1996 annual meeting of
shareholders. All Trustees who are not employees of AMLI were eligible to
participate in the Executive Share Purchase Plan through 1999. Other
eligible participants will be officers and employees of AMLI, the Operating
Partnership and the Service Companies, designated by AMLI's Executive
Compensation Committee.
Eligible participants who are AMLI officers or employees may elect to
purchase Common Shares, and eligible participants who are employees of the
Operating Partnership or Service Companies may elect to purchase Units
(which the participant is required to exchange immediately for an equal
number of Common Shares), during quarterly window periods. A "window
period" is the ten business day period commencing on the third business day
following AMLI's quarterly public release of earnings. Participants may
only purchase Common Shares or Units during one window period in any
calendar year. The maximum value of Common Shares or Units which may be
purchased is the lesser of $100,000 or 50% of the participant's base
salary. The purchase price per Common Share or Unit is 85% of the fair
market value of a Common Share or Unit on the trading day immediately
preceding the date of purchase.
16
Prior to July 2002, participants electing to make purchases under the
Executive Share Purchase Plan could elect to receive a loan for up to 80%
of the purchase price, provided that, in no event could a participant have
more than $200,000 principal amount of loans outstanding under this Plan at
any time. These loans bear interest at a fixed rate of 150 basis points
over the then current ten-year Treasury bond rate. The Plan has now been
amended to preclude the Company from providing or arranging any financings
of shares issued pursuant to the Plan subsequent to July 2002.
The Common Shares may not be sold, assigned, transferred or pledged
(except to secure a loan) during the period ending on the earlier of
(i) the fifth anniversary of the purchase date, (ii) the date of a Change
in Control of AMLI, or (iii) the date that the participant terminates
employment or service on the Board, as applicable. In addition, the Common
Shares may not be transferred while they are serving as collateral for a
loan under the Executive Share Purchase Plan. Generally, a Change in
Control will be deemed to occur upon acquisition of more than 20% of AMLI's
voting stock by any party (other than by certain related parties), a
merger, sale of substantially all of AMLI's assets, the liquidation of the
Company, or the election of Trustees constituting a majority of the Board
who were not recommended by the incumbent Trustees.
During 2003, seven officers acquired a total of 20,486 Common Shares
pursuant to this Plan. Total expense recorded in 2003 for the 15%
discount, including the Service Companies' shares, was $62,316. At
December 31, 2003, the aggregate outstanding balance of recourse loans made
pursuant to this Plan was $26,358. See "Security Ownership of Certain
Beneficial Owners and Management" below.
SENIOR OFFICER LOAN SHARE PURCHASE PROGRAM
The Senior Officer Loan Share Purchase Program was replaced in 2002
by the Restricted Share Plan.
Since 1997, the Executive Compensation Committee of the Board has
approved a total of $9,830,795 in recourse loans to the four officers who
are also Trustees and fifteen other officers to enable them to acquire on
the open market a total of 442,794 of the Company's Common Shares. All
442,794 shares had been acquired by February 28, 2002. These loans bear
interest at rates ranging from 3.91% to 6.23% and generally have terms of
nine years. The aggregate remaining balances of these loans totalled
$2,306,565 at December 31, 2003 and the remaining unpaid amounts of each
officer's loans are included in the amounts set forth in the footnotes to
the security ownership table. No additional loans will be made by AMLI
pursuant to this program.
Since 1999, the Company has made $3,098,000 of additional loans to 22
Senior Officers of the Company which they used to acquire Company shares on
the open market (62,100 shares for $1,297,000 in 1999, 39,876 shares for
$881,000 in 2000, and 36,805 shares for $920,000 in 2001). These loans are
subject to forgiveness over the five year period commencing December 1999,
2000 or 2001 (based solely on each employee's continued employment with
AMLI), as follows: 10% following the end of the second year, an additional
20% following the end of the third year, an additional 35% following the
end of the fourth year, and the final 35% at the end of the fifth year.
See "Security Ownership of Certain Beneficial Owners and Management" below.
The aggregate remaining balances of these loans totalled $2,279,723 at
December 31, 2003. No additional loans will be made by AMLI pursuant to
this program.
17
INCENTIVE COMPENSATION
A bonus incentive compensation plan (the "Bonus Plan") is in place
for executive and key officers. This program awards bonuses to executive
officers and certain other key officers covered under the plan based on the
achievement of specified targets and goals for AMLI and the individual
officer. The primary targets are based upon annual increases in Funds from
Operations (defined as income (loss) before minority interest of Unit
holders in the Operating Partnership and extraordinary items plus certain
non-cash items, primarily depreciation) per share, Common Share price
performance compared to performance of the share price of selected
competitors and benchmarking against the economic performance of selected
competitors. The amount of bonus is based on a formula determined for each
officer based on a range of up to 100% of base compensation. The Executive
Compensation Committee may also grant discretionary bonuses to certain
officers based upon an assessment of such an officer's performance.
Bonuses for 2003, 2002 and 2001 for AMLI's most highly compensated
executive officers are set forth in the summary compensation table. See
"Summary Compensation Table" above.
RETIREMENT SAVINGS PLAN
AMLI and its affiliates have adopted a joint retirement savings plan
(the "Retirement Savings Plan") for their full-time employees. The
Retirement Savings Plan is a qualified plan pursuant to Sections 401(a) and
401(k) of the Internal Revenue Code. Employees of AMLI, the Operating
Partnership and the Service Companies are generally eligible to participate
in the Retirement Savings Plan after one full year of service. Eligible
employees may contribute each year up to 15% of their compensation to the
Retirement Savings Plan. AMLI or such entity matches each participating
employee's annual contributions, to a maximum of $1,000 per employee
(increasing to $2,000 per employee effective January 1, 2004). Employees
are not vested in AMLI's or such entity's contributions until the third
anniversary of their employment.
As of January 1, 1995 the Retirement Savings Plan was amended to
provide for an additional contribution by the Company, the Operating
Partnership or one of the Service Companies, as applicable, equal to a
percentage determined by management of each eligible employee's
compensation. No such contributions were made for any of the three years
ended December 31, 2003.
The employer contributions by AMLI under the Retirement Savings Plan
during 2003, 2002 and 2001 for the most highly compensated executive
officers of the Company are set forth in footnote (4) to the summary
compensation table. See "Summary Compensation Table" above.
COMPENSATION OF TRUSTEES
In 2003 the Company paid its Independent Trustees at the annual rate
of $16,000 (of which $12,000 was represented by newly-issued Common Shares
following each dividend record date pursuant to the terms of the Company's
Trustee Share Compensation Plan) plus $1,000 for each Board meeting or
committee meeting attended. Through 2003 each independent Trustee also
received 2,000 Options annually. Commencing in 2000, Mr. Mutz, the
Chairman of the Board, and Mr. Allen, the Vice-Chairman of the Board, are
paid compensation of $40,000 ($16,000 in cash and $24,000 represented by
newly-issued Common Shares) and $30,000 ($12,000 in cash and $18,000
represented by newly-issued Common Shares), in their capacities as Chairman
of the Board and Vice-Chairman of the Board. In addition, the Company
reimburses all Trustees for expenses incurred in attending meetings.
Messrs. Sweet and Tague are not paid any Trustees' fees.
18
Pursuant to the Option Plan (described above), Messrs. Heilweil,
McConahey, Metz and Schreiber and Ms. Gates were each granted, effective as
of the time they became Trustees, and each future Independent Trustee will
also be granted, effective as of the Trustee's initial election or
appointment, a ten-year Option to acquire 2,000 Common Shares at fair
market value on the trading day immediately preceding the date of the grant
(in the case of Messrs. Heilweil, McConahey and Schreiber, the initial
public offering price of $20.50 per share; in the case of Ms. Gates, $18.00
per share, and in the case of Mr. Metz, $21.025 per share). A Trustee's
initial Options are not exercisable until after the first anniversary of
the date of grant. The exercise price is payable in cash or, pursuant to a
2003 amendment to the Option Plan, a deemed tender of shares held for at
least one year.
NON-COMPETITION AGREEMENTS, EMPLOYMENT AGREEMENTS AND TERMINATION
OF EMPLOYMENT
The four officers who are also Trustees and 13 other AMLI officers
have each entered into an employment agreement which includes a non-
competition provision. The non-competition provision of each employment
agreement prohibits each officer from engaging directly or indirectly in
the multifamily residential property business (as defined) other than on
behalf of AMLI during the period the officer is an employee of AMLI and for
a period of either 12 months, 18 months, or 24 months from termination of
employment. Upon both a change in control of AMLI and a change in
circumstance of the employee (as such terms are defined in the agreements),
the employment agreements provide for immediate vesting of all previously
unvested Options and Performance Units, cash payment equal to one, two or
three times average compensation (as defined) and additional cash
compensation to each employee who might be subject to excise taxes under
Section 4999 of the Internal Revenue Code so that the Employee receives
that amount before the application of income taxes that he would receive if
he were not subject to such excise taxes.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no Executive Compensation Committee interlocks or insider
participation on the Executive Compensation Committee.
EXECUTIVE COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Executive Compensation Committee of the Board consists of three
Trustees who are not employees of the Company, the Operating Partnership or
a Service Company, and who are Independent Trustees. The Executive
Compensation Committee reviews and approves all remuneration arrangements
for the Chairman and Vice Chairman of the Board, the Co-CEOs, and the other
officers of the Company (the "Senior Executives"), and administers the
Option Plan, the Performance Incentive Plan, the Executive Share Purchase
Plan, the Restricted Share Plan, and the Bonus Plan. The Executive
Compensation Committee also reviews and adopts or recommends to
shareholders the adoption of new employee benefit plans or modifications to
existing plans. The Executive Compensation Committee met six times in 2003
and three times in January and February 2004 regarding 2003 compensation
matters.
AMLI's executive compensation program is intended to attract,
incentivize, reward and retain experienced and motivated executives who
contribute to AMLI's growth. The goal of the Executive Compensation
Committee in setting Senior Executive compensation is to align the
interests of the executives with those of AMLI's shareholders, focusing on
long-term growth of Funds From Operations ("FFO") and increases in
shareholder value. The Executive Compensation Committee, in administering
19
AMLI's executive compensation program, considers recommendations from
management and extensive available data concerning executive compensation
at other equity real estate investment trusts and companies in other
businesses. The Executive Compensation Committee periodically discusses
with senior management the cost and desirability of engaging an independent
compensation consultant, and elected to do so in 2003 to obtain information
relative to administering executive compensation for 2003. The Executive
Compensation Committee expects to continue to review this decision
annually.
For 2004, the Committee has discretion to authorize subjective cash
bonuses and intends to establish incentives for objective cash bonuses that
may be contingent upon, among other things, the Company's achieving certain
FFO targets.
AMLI's executive compensation currently consists of an executive's
base salary, cash bonus, discounted purchases under the Executive Share
Purchase Plan, and restricted Common Shares under the Amended Senior
Officer Share Acquisition Plan.
BASE SALARY. Executive salary levels are designed to reward Company
employees for performing their normal duties. Salary levels are
established on the basis of a number of factors including management
recommendations, prior salary history with the Company, industry
comparables, individual performance and overall Company results. The
salaries of the President and the Executive Vice President - Development
are being maintained at $300,000 in 2004, the same salaries they were paid
in 2003 when they were also co-CEO's. On February 2, 2004 Mr. Mutz was
elected CEO at an annual salary rate of $325,000.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. For 2004 the Executive
Compensation Committee determined the compensation of Mr. Mutz utilizing
the same philosophy and procedures as are applied to other AMLI Senior
Executives.
BONUSES. AMLI's executive officers participate in the Bonus Plan. A
portion of the bonus each year is based on pre-established goals concerning
growth in FFO and benchmarking Company FFO and stock price performance
against those of a group of other multifamily real estate investment
trusts. A discretionary portion is also based on achievement of individual
job goals and for extraordinary contributions to the Company's results for
the past year. Cash bonuses of $199,500 each were paid to the
President/Co-CEO and the Executive Vice President/Co-CEO for 2003. Cash
bonuses paid to other Senior Executives in 2004 for 2003 performance
averaged 18.7% of 2003 base salary.
OPTIONS. Awards of Options under the Option Plan had been designed
to utilize the award of interests in AMLI and the Operating Partnership in
order to tie Senior Executive compensation to the creation of shareholder
value and allow the Senior Executives to share in AMLI's success. See
"Long-Term Incentive Plan Awards" above for a description of the vesting
provisions of Performance Units awarded in prior years. No options were
awarded during 2003 except for 2,000 Options awarded to each of AMLI's five
independent Trustees.
RESTRICTED SHARES. In 2003 the Committee approved the award of
46,900 restricted Common Shares, and on February 2, 2004 approved the award
of 76,050 additional restricted Common Shares under the Amended and
Restated Senior Officer Share Acquisition Plan ("Restricted Share Plan") in
recognition of the continuing desirability of aligning the interests of
management and shareholders.
20
It is the Executive Compensation Committee's intention that, so long
as it is consistent with the Company's overall compensation objectives, all
executive compensation be deductible for Federal income tax purposes.
Section 162(m) of the Internal Revenue Code limits the tax deduction for
compensation paid to the Company's Chief Executive Officers and the four
most highly compensated officers who are employed at fiscal year end to
$1 million per year, unless certain requirements are met. The Company's
ability to meet the REIT distribution requirements, and the portion of the
Company's distributions which constitute taxable dividend income, rather
than return of capital, may be impacted by Section 162(m).
The Executive Compensation Committee does not believe that any
compensation paid by the Company in 2003 would meet the tests under
Section 162(m) for a disallowance of compensation deductions; nor does it
presently intend that any such deductions be disallowed in the future.
However, the Executive Compensation Committee, in setting future Senior
Executive compensation, will continue to consider the long-run interests of
the Company, balancing any non-deductibility under Section 162(m) against
the need for the Company to adequately compensate its executive officers
for services rendered.
EXECUTIVE COMPENSATION COMMITTEE
John G. Schreiber, Chairman
Laura D. Gates
Stephen G. McConahey
NOMINATING AND GOVERNANCE COMMITTEE
The Nominating & Governance Committee has a written charter which is
available on AMLI's website at www.amli.com.
NOMINATION OF TRUSTEES
- ----------------------
Trustees may be nominated by the Board of Trustees or by shareholders
in accordance with the Bylaws of AMLI. As a matter of course, the
Nominating & Governance Committee reviews the qualifications of various
persons to determine whether they might make good candidates for
consideration for membership on the Board of Trustees. The Nominating &
Governance Committee will review all proposed nominees for the Board of
Trustees, including those proposed by shareholders, in accordance with its
mandate contained in its charter. This will include a review of the
person's judgment, experience, independence, understanding of AMLI's
business or other related industries and such other factors as the
Nominating & Governance Committee determines are relevant in light of the
needs of the Board of Trustees and the company. The Nominating &
Governance Committee will select qualified candidates and review its
recommendations with the Board of Trustees, which will decide whether to
invite the candidate to be a nominee for election to the Board of Trustees.
AMLI does not pay a fee to any third party to identify or assist in
identifying or evaluating potential nominees.
Each nominee for election as a Trustee is either an AMLI executive
officer or is standing for reelection. If the Nominating & Governance
Committee receives a nominee recommendation from a shareholder or group of
shareholders that has beneficially owned more than 5% of the company's
voting common shares for at least 1 year as of the date of the
recommendation, the name of the candidate, the name(s) of the
shareholder(s) who recommended the candidate and whether the Nominating &
Governance Committee chose to nominate the candidate must be provided, if
the consent of both the shareholder and the candidate has been received.
21
For a shareholder to submit a candidate for consideration by the
Nominating & Governance Committee, a shareholder must notify AMLI's
Secretary. In addition, our Bylaws permit shareholders to nominate
directors at a shareholder meeting. To make a director nomination at the
2005 Annual Meeting, a shareholder must notify the Company's Secretary not
less than 60 days nor more than 90 days prior to the first anniversary of
the preceding year's annual meeting, unless the date of the annual meeting
is advanced by more than 30 days or delayed by more than 60 days from the
anniversary date, in which event notice must be delivered not less than 60
days nor more than 90 days prior to the 2005 Annual Meeting date or the
tenth day following the day on which public announcement of the Annual
Meeting date is first made. Notices should be sent to: Secretary, AMLI
Residential, 125 S. Wacker Drive, Suite 3100, Chicago, Illinois 60606. In
either case, the notice must meet all of the requirements contained in our
Bylaws.
The notice must set forth:
. the name, age, business address and residence address of the
proposed nominee;
. the principal occupation or employment of the proposed nominee;
. any other information relating to the proposed nominee that
would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations of
proxies for election of Trustees pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder;
. any other information the shareholder believes is relevant
concerning the proposed nominee;
. a written consent of the proposed nominee(s) to being named as
a nominee and to serve as a Trustee if elected;
. whether the proposed nominee is going to be nominated at the
annual meeting of shareholders or is only being provided for
consideration by the Nominating & Governance Committee;
. the name and record address of the shareholder who is
submitting the notice;
. the class or series and number of AMLI voting shares which
are owned of record or beneficially by the shareholder who is
submitting the notice;
. a description of all arrangements or understandings between the
shareholder who is submitting the notice and any other person
(naming such person) pursuant to which the nomination is being
made by the shareholder who is submitting the notice;
. if the shareholder who is submitting the notice intends to
nominate the proposed nominee at the annual meeting of
shareholders, a representation that the shareholder intends to
appear in person or by proxy at the Annual Meeting to nominate
the proposed nominee named in the notice; and
. any other information relating to the shareholder that would be
required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies
for election of Trustees pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
22
COMMUNICATING WITH THE BOARD
Shareholders may communicate directly with the Board of Trustees and
may also direct such communications solely to non-management Trustees. All
communications should be directed to AMLI's Secretary at: Secretary, AMLI
Residential, 125 S. Wacker Drive, Suite 3100, Chicago, Illinois 60606 and
should prominently indicate on the outside of the envelope that it is
intended for the Board of Trustees, or for non-management trustees. Each
communication intended for the Board of Trustees and received by the
Secretary which is related to AMLI's operations and is not otherwise
commercial in nature will be promptly forwarded to the specified party
following its clearance through normal security procedures. The
communication will not be opened, but rather will be forwarded unopened to
the intended recipient.
ATTENDANCE BY MEMBERS OF THE BOARD OF TRUSTEES
AT THE ANNUAL MEETING OF SHAREHOLDERS
AMLI encourages each member of the Board of Trustees to attend each
annual meeting of shareholders. All trustees attended the annual meeting
of shareholders held on April 28, 2003.
23
PERFORMANCE GRAPH
The following line graph compares the change in the Company's
cumulative shareholder return on its Common Shares to the cumulative total
return of the Standard & Poor's 500 Stock Index ("S&P 500 Index") and the
NAREIT Equity REIT Total Return Index ("NAREIT Index") from December 31,
1998 to December 31, 2003. The graph assumes the investment of $100 in the
Company and each of the indices on December 31, 1998 and the reinvestment
of all dividends. The return shown on the graph is not necessarily
indicative of future performance.
[PERFORMANCE GRAPH]
December 31,
-------------------------------------------------
1998 1999 2000 2001 2002 2003
------- ------- ------- ------- ------- -------
AMLI
Residential
Properties
Trust. . . . . . . . $100.00 $ 98.78 $130.85 $144.85 $132.67 $181.46
NAREIT Index. . . . . $100.00 $ 95.38 $120.53 $137.32 $142.57 $195.51
S&P 500 Index . . . . $100.00 $121.04 $110.02 $ 96.94 $ 75.52 $ 97.18
A $100.00 investment in the Company on December 31, 1998, decreased
to $98.78 at December 31, 1999, increased to $130.85 at December 31, 2000,
increased again to $144.85 at December 2001, decreased to $132.34 at
December 2002, and increased to $178.61 at December 31, 2003.
The NAREIT Index, adjusted to $100.00 at December 31, 1998, decreased
to $95.38 at December 31, 1999, increased to $120.53 at December 31, 2000,
increased again to $137.32 at December 31, 2001, increased again to $142.57
at December 31, 2002, and increased again to $195.51 at December 31, 2003.
The S&P 500 Index, adjusted to $100.00 at December 31, 1998,
increased to $121.04 at December 31, 1999, decreased to $110.02 at December
31, 1999, decreased again to $96.94 at December 31, 2001, decreased again
to $75.52 at December 31, 2002 and increased to $97.18 at December 31,
2003.
24
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
THE SERVICE COMPANIES
Ninety-five percent of the voting common stock of each of the Service
Companies (AIA and AMLI Management Company, including AMLI Residential
Construction LLC) was owned by AMLI Realty Co. until December 31, 2002, as
of which date AMLI Residential Properties, L.P. paid to AMLI Realty Co.
$700,000 in cash for all of AMLI Realty Co.'s ownership interests in the
Service Companies and for the "AMLI" service mark. Following this
transaction, AMLI Residential Properties, L.P. owns in excess of 99% of the
Service Companies and has voting control of the Service Companies.
During 2003 AMLI and AMLI Management Company received $112,140 and
$117,811, respectively, in reimbursements from AMLI Realty Co. for the cost
of providing certain management and administrative services.
CORPORATE SERVICES AGREEMENT
Pursuant to a corporate services agreement among the Management
Company, AIA, Amrescon, the Operating Partnership and the Company, the
Operating Partnership and the Management Company provide various
managerial, administrative, accounting, investor relations, and other
services related to the operations and administration of the Management
Company, AIA, Amrescon, the Operating Partnership and the Company. The
corporate services agreement provides for the parties to reimburse the
Operating Partnership and the Management Company quarterly for costs
incurred with respect to this agreement. The Company, the Management
Company, AIA and Amrescon paid $0, $485,733, $160,020 and $357,656,
respectively, to the Operating Partnership pursuant to the corporate
services agreement in 2003. The Company, the Operating Partnership, AIA
and Amrescon paid $0, $1,432,110, $77,540 and $674,568, respectively, to
the Management Company pursuant to the corporate services agreement in
2003.
Unless the Management Company acts in bad faith, is grossly
negligent, recklessly disregards its duty, or engages in willful
misconduct, the Management Company will have no liability to the Company or
the Operating Partnership resulting from the performance of its duties
under the corporate services agreement. The Management Company is required
to indemnify AIA, Amrescon, the Company and the Operating Partnership for
any damages arising out of the Management Company's default under the
corporate services agreement or as a result of the Management Company's
gross negligence. Similarly, AIA, Amrescon, the Company and the Operating
Partnership are obligated to indemnify the Management Company for any
damages arising out of their respective defaults under the corporate
services agreement or as a result of their gross negligence.
25
RELATIONSHIPS WITH INDEPENDENT ACCOUNTANTS
KPMG LLP has been the independent accounting firm that audits the
financial statements of AMLI and its subsidiaries since AMLI's inception in
1994.
The Audit Committee has adopted policies and procedures for pre-
approving all audit and non-audit work performed by KPMG LLP.
The following table presents fees for professional audit services
rendered by KPMG LLP for the audit of AMLI's annual financial statements
for 2003 and 2002, and fees billed for other services rendered by KPMG LLP.
2003 2002
---------- ----------
Audit Fees . . . . . . . . . . . . . . $ 769,600 686,200
Audit-Related Fees . . . . . . . . . . 7,500 7,000
Tax Fees . . . . . . . . . . . . . . . 285,400 292,100
All Other Fees . . . . . . . . . . . . -- --
---------- ----------
Total Fees . . . . . . . . . . . . $1,062,500 985,300
========== ==========
In the above table, "audit fees" is comprised of amounts billed by KPMG LLP
for professional services for the audit of AMLI's consolidated financial
statements included in Form 10-K and review of financial statements
included in Form 10-Q's, including all services required to comply with
Generally Accepted Auditing Standards, comfort letters, audits of co-
investment partnerships and review of documents filed with the SEC; "audit-
related fees" are fees billed by KPMG LLP for audit and related services
that are traditionally performed by KPMG LLP including our employee benefit
plan audit, audit services that are not required by statute or regulation
and other items reasonably related to the performance of the audit or
review of our financial statements; "tax fees" are fees for tax compliance,
tax advice and tax planning including services provided to co-investment
partnerships.
26
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Shares as of March 1, 2004 for (1) each person who is known to the Company
to have been the beneficial owner of more than five percent of the Common
Shares outstanding on March 1, 2004, (2) each Trustee of the Company and
each executive officer of the Company named in the summary compensation
table and (3) the Company's Trustees and executive officers as a group. The
number of Common Shares beneficially owned by a person includes the number
of Common Shares into which Units or Series B Preferred Shares beneficially
owned by the person are exchangeable and convertible and the number of
Common Shares for which a person holds an option, exercisable within sixty
days of March 1, 2004, to acquire.
COMMON SHARES PERCENT OF ALL
NAME AND ADDRESS BENEFICIALLY COMMON SHARES
OF BENEFICIAL OWNER (1) OWNED (2) (2)
- ---------------------- ------------- --------------
Security Capital Preferred Growth
Inc. (3). . . . . . . . . . . . . . . . . 4,324,100 17.4%
Security Capital Research and
Management, Incorporated (3). . . . . . . 1,718,200 7.9%
Deutsche Bank AG (4). . . . . . . . . . . . 3,149,870 14.5%
Cohen and Steers Capital
Management, Inc. (5). . . . . . . . . . . 2,030,400 9.4%
Morgan Stanley (6). . . . . . . . . . . . . 1,513,043 7.0%
Gregory T. Mutz (7) . . . . . . . . . . . . 364,430 1.7%
John E. Allen (8) . . . . . . . . . . . . . 122,654 0.8%
Allan J. Sweet (9). . . . . . . . . . . . . 206,926 1.0%
Philip N. Tague (10). . . . . . . . . . . . 231,163 1.1%
Laura D. Gates (11) . . . . . . . . . . . . 28,032 0.1%
Marc S. Heilweil (12) . . . . . . . . . . . 21,256 0.1%
Stephen G. McConahey (13) . . . . . . . . . 16,565 0.0%
Adam S. Metz (14) . . . . . . . . . . . . . 2,633 0.1%
John G. Schreiber (15). . . . . . . . . . . 31,642 0.0%
Robert J. Chapman (16). . . . . . . . . . . 134,802 0.6%
Steve F. Hallsey (17) . . . . . . . . . . . 150 0.0%
Stephen C. Ross (18). . . . . . . . . . . . 85,028 0.4%
All Trustees and executive officers
as a group (14 persons) . . . . . . . . . 1,404,994 6.3%
- ----------
(1) Unless otherwise noted, the address for each of the persons or
entities is 125 South Wacker Drive, Suite 3100, Chicago, Illinois
60606.
(2) Assumes that all Units and Series B Preferred Shares held by the
person are exchanged and converted for Common Shares and that none of
the Units or Series B Preferred Shares held by other persons are so
exchanged or converted and that all options exercisable within sixty
days of March 1, 2004 to acquire Common Shares held by the person are
exercised and no options to acquire Common Shares held by other
persons are exercised.
27
(3) Information with regard to Security Capital Preferred Growth,
Incorporated, 11 South LaSalle Street, Chicago, IL 60603 is based on
Amendment No. 1 to Schedule 13G, dated February 13, 2004, as updated
for that company's filing on Form 4 dated February 27, 2004. Total
shares include AMLI's entire issue of 3,125,000 Series B Cumulative
Convertible Redeemable Preferred Shares of Beneficial Interest. The
Series B Preferred Shares were issued at a price of $24 per share,
are convertible to Common Shares on a one-for-one basis, are non-
callable until 2007, and carry an annual dividend equal to the
greater of $1.80 per share or the current annual dividend rate on
Common Shares, which is currently $1.92 per share.
Information with regard to Security Capital Research and Management
Incorporated, (a registered investment adviser), 11 South LaSalle
Street, Chicago, IL 60603, is based solely on Amendment No. 2 to
Schedule 13G, dated February 13, 2004, as updated for the filing on
Form 4 dated February 27, 2004.
(4) Information with regard to Deutsche Bank AG, Taunusanlage 12,
D-60325, Frankfurt au Main, Federal Republic of Germany, is based
solely on Schedule 13G filed on February 6, 2004 and includes the
following:
Deutsche Bank AG . . . . . . . . . . . . . 1,574,935
RREEF America, LLC . . . . . . . . . . . . 1,513,800
Deutsche Bank Trust Company
Americas . . . . . . . . . . . . . . . . 31,035
Deutsche Investment Management
Americas . . . . . . . . . . . . . . . . 30,100
---------
3,149,870
=========
(5) Information with regard to Cohen & Steers Capital Management, Inc.
(an Investment Adviser registered under Section 203 of the Investment
Advisers Act of 1940), 757 Third Avenue, New York, New York 10017, is
based solely on Schedule 13G filed on January 5, 2004.
(6) Information with regard to Morgan Stanley, 1585 Broadway, New York,
New York 10036, is based solely on Amendment No. 3 to Schedule 13G
dated February 15, 2004. The total of 1,513,043 Common Shares
includes 1,407,400 Common Shares held by Morgan Stanley Investment
Management, Inc., an Investment Adviser registered under Section 203
of the Investment Advisers Act of 1940.
(7) Mr. Mutz, directly and through various trusts and other affiliates,
beneficially owned 285,127 Common Shares and 29,087 Units and held
50,216 currently exercisable Options to acquire Common Shares.
Starting in November 1996, Mr. Mutz has financed the acquisition of
116,935 Common Shares with recourse loans from the Company. The
maximum aggregate loan balances between January 1, 2003 and March 1,
2003 were $944,727; such loan balances totalled $43,874 at March 1,
2004 and bear interest at 6.06%.
(8) Mr. Allen, directly and through affiliates, beneficially owned
117,220 Common Shares and 1,434 Units and held 64,000 currently
exercisable Options to acquire Common Shares. Starting in November
1996, Mr. Allen has financed the acquisition of 77,306 Common Shares
with recourse loans from the Company. The maximum aggregate loan
balances between January 1, 2003 and February 28, 2004 were $233,148;
such loan balances totalled $0 at March 1, 2004.
28
(9) Mr. Sweet, directly and through various trusts and other affiliates,
beneficially owned 160,427 Common Shares and 1,833 Units and held
44,666 currently exercisable Options to acquire Common Shares.
Starting in November 1996, Mr. Sweet has financed the acquisition of
110,685 Common Shares with recourse loans from the Company. The
maximum aggregate loan balances between January 1, 2003 and March 1,
2004 were $770,942; such loan balances totalled $605,971 at March 1,
2004 and bear interest at fixed rates ranging from 3.91% to 6.40%.
(10) Mr. Tague beneficially owned 136,497 Common Shares and held 94,666
currently exercisable Options to acquire Common Shares. Starting in
November 1996, Mr. Tague has financed the acquisition of 106,274
Common Shares with recourse loans from the Company. The maximum
aggregate loan balances between January 1, 2003 and March 1, 2004
were $707,981; such loan balances totalled $605,971 at March 1, 2004,
and bear interest at fixed rates ranging from 3.91% to 6.06%.
(11) Ms. Gates beneficially owned 18,187 Common Shares and held 9,845
currently exercisable Options to acquire Common Shares.
(12) Mr. Heilweil beneficially owned 11,411 Common Shares and held 9,845
currently exercisable Options to acquire Common Shares.
(13) Mr. McConahey beneficially owned 16,565 Common Shares and held no
currently exercisable Options to acquire Common Shares.
(14) Mr. Metz beneficially owned 633 Common Shares and held 2,000
currently exercisable Options to acquire Common Shares.
(15) Mr. Schreiber beneficially owned 21,257 Shares and held 10,385
currently exercisable Options to acquire Common Shares.
(16) Mr. Chapman beneficially owned 79,135 Common Shares and held 55,667
currently exercisable options to acquire Common Shares. Starting in
December 1997, Mr. Chapman has financed the acquisition of 73,465
Common Shares with recourse loans from the Company. The maximum
aggregate loan balances between January 1, 2003 and March 1, 2004
were $767,066; such loan balances totalled $622,978 at March 31, 2004
and bear interest at fixed rates ranging from 3.91% to 6.40%.
(17) Mr. Hallsey beneficially owned 150 Common Shares.
(18) Mr. Ross beneficially owned, directly and through an affiliate,
35,195 Common Shares and held 49,833 currently exercisable Options to
acquire Common Shares. Starting in February 1997, Mr. Ross has
financed the acquisition of 19,466 Common Shares with recourse loans
from the Company. The maximum aggregate loan balances between
January 1, 2003 and March 1, 2004 were $356,211; such loan balances
totalled $299,303 at March 1, 2004 and bear interest at fixed rates
ranging from 3.91% to 7.01%.
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Trustees,
certain of the Company's officers, and beneficial owners of more than 10
percent of the Company's outstanding Common Shares, to file reports of
ownership and changes in ownership of the Company's Common Shares with the
Securities and Exchange Commission and to send copies of such reports to
the Company. Based solely upon a review of such reports and amendments
thereto furnished to the Company and upon written representations of
certain of such persons that they were not required to file certain of such
reports, the Company believes that no such person failed to file any such
report on a timely basis during 2003, except that Forms 4 for each of three
June 2003 transactions by Mr. Ross were filed late.
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PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has selected the firm of KPMG LLP as the
Company's independent auditors for 2004. A proposal to ratify this
appointment will be presented at the Annual Meeting. The affirmative vote
of a majority of the votes cast at the Annual Meeting will be necessary to
adopt this proposal. For purposes of the vote on this matter, abstentions
will not be counted as votes cast and will have no effect on the result of
the vote, although they will be counted toward the presence of a quorum.
Each valid proxy returned to the Company will be voted for the
ratification of the appointment of KPMG LLP as the Company's independent
auditors for 2004 unless the proxy specifies otherwise. The Board
recommends that shareholders vote FOR the ratification of such appointment.
The Company expects that representatives of KPMG LLP will be present
at the Annual Meeting and will be available to respond to appropriate
questions. Such representatives will have the opportunity to make a
statement at the Annual Meeting if they desire to do so.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the Annual Meeting
of shareholders to be held in the year 2005 must be received by AMLI at its
principal executive offices on or before November 24, 2004 for inclusion in
the Company's proxy statement and form of proxy relating to that meeting.
Shareholder proposals intended to be presented at the annual meeting
of shareholders to be held in the year 2005, but not included in its Annual
Meeting proxy statement, must be received by the Company's Secretary at its
principal executive offices not less than 60 days nor more than 90 days
prior to the first anniversary of the 2004 Annual Meeting of Shareholders,
unless the date of the Annual Meeting is advanced by more than 30 days or
delayed by more than 60 days from the anniversary date, in which event
notice must be delivered not less than 60 days nor more than 90 days prior
to the 2005 Annual Meeting date or the tenth day following the day on which
public announcement of the Annual Meeting date is first made.
PROXY SOLICITATION EXPENSE
The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited personally, or
by telephone, facsimile transmission or other electronic means, by officers
or employees of the Company. The Company will also request persons, firms
and corporations holding shares beneficially owned by others to send proxy
material to, and obtain proxies from, the beneficial owners of such shares
and will, upon request, pay the holders' reasonable expenses for doing so.
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