SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] 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 Section 240.14a-11(c) or Section 240.14a-12
CAMDEN PROPERTY TRUST
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(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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(3) Per unit price or other underlying value of transaction computed
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
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was paid previously. Identify the previous filing by registration statement
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CAMDEN PROPERTY TRUST
3200 SOUTHWEST FREEWAY, SUITE 1500
HOUSTON, TEXAS 77027
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 5, 1997
--------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of Camden Property Trust (the "Company") will be held at 10:00 A.M.,
local time, on Thursday, June 5, 1997, at The Ritz Carlton Hotel, 1919 Briar
Oaks Lane, Houston, Texas for the following purposes:
1. To elect seven members of the Company's Board of Trust
Managers.
2. To approve an amendment to the Company's 1993 Share Incentive
Plan to increase the number of shares authorized for issuance
under the plan.
3. To ratify the appointment of Deloitte & Touche LLP as
independent auditors of the Company for the year ending
December 31, 1997.
4. To consider and transact such other business as may properly
be brought before the Meeting or any adjournment thereof.
Only shareholders of record at the close of business on April 17, 1997 will
be entitled to notice of and to vote at the Meeting and any adjournments or
postponements thereof. The share transfer books will not be closed.
By Order of the Board of Trust Managers
G. Steven Dawson
Senior Vice President - Finance,
Chief Financial Officer and Treasurer
Houston, Texas
April 21, 1997
YOUR VOTE IS IMPORTANT
To ensure that your interests will be represented at the Meeting,
whether or not you plan to attend the Meeting, please complete, date, sign and
mail the enclosed proxy promptly. Shareholders who attend the Meeting in person
may revoke their proxies and vote in person if they so desire.
CAMDEN PROPERTY TRUST
3200 SOUTHWEST FREEWAY, SUITE 1500
HOUSTON, TEXAS 77027
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PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 5, 1997
------------------------------
This Proxy Statement and the enclosed proxy are furnished to shareholders of
Camden Property Trust, a Texas real estate investment trust (the "Company"), in
connection with the solicitation of proxies by the Board of Trust Managers of
the Company from holders of outstanding common shares of beneficial interest,
$.01 par value (the "Common Shares"), for use at the Annual Meeting of
Shareholders (the "Meeting") to be held at 10:00 A.M., local time, on Thursday,
June 5, 1997, at The Ritz Carlton Hotel, 1919 Briar Oaks Lane, Houston, Texas,
and at any adjournment or postponement thereof. The approximate date on which
this Proxy Statement and the related form of proxy are first being sent to
shareholders is April 30, 1997.
If the enclosed proxy is properly executed and returned, and if a
shareholder specifies a choice on the proxy, the Common Shares represented by
the proxy will be voted (or withheld from voting) in accordance with such
shareholder's choice. If the proxy is signed and returned but no specification
is made, the proxy will be voted FOR the election of each of the nominees for
Trust Manager listed herein, FOR the amendment of the Company's 1993 Share
Incentive Plan (the "Plan") and FOR the proposal to ratify the appointment of
the independent auditors.
Any proxy executed and returned by a shareholder may be revoked by the
shareholder giving it, at any time prior to its being voted, by filing with the
Secretary of the Company at its address set forth above a written notice of
revocation or a duly executed proxy bearing a later date. Any proxy also may be
revoked by the shareholder attending the Meeting and voting in person. A notice
of revocation need not be on any specific form.
As of the date of this Proxy Statement, the Board of Trust Managers of the
Company knows of no business that will be presented for consideration at the
Meeting other than the matters described in this Proxy Statement. If any other
matters are properly brought before the Meeting, the persons named in the
accompanying form of proxy will vote the proxies in accordance with their
judgment.
RECORD DATE AND VOTING AT THE MEETING
The Board of Trust Managers has fixed the close of business on April 17,1997
as the record date for the determination of the shareholders of the Company
entitled to notice of, and to vote at, the Meeting. At that date, there were
outstanding 26,320,125 Common Shares, the holders of which will be entitled to
one vote per Common Share on each matter submitted to the Meeting. No other
voting securities of the Company were outstanding on April 17,1997. Shareholders
are not entitled to cumulate their votes.
The holders of a majority of the Common Shares entitled to vote (13,160,063
Common Shares), present in person or represented by proxy, shall constitute a
quorum for the transaction of business at the Meeting. If such quorum shall not
be present or represented at the Meeting, the shareholders present or
represented at the Meeting may adjourn the Meeting from time to time without
notice other than announcement at the Meeting until a quorum shall be present or
represented. If a quorum is present or represented at the Meeting, the
shareholders present or represented at the Meeting may continue to transact
business until adjournment notwithstanding the withdrawal of enough shareholders
to leave less than a quorum present, provided that there remain at the Meeting
the holders of at least one-third of the Common Shares entitled to vote.
The Texas Real Estate Investment Trust Act does not specifically address the
treatment of abstentions and broker non-votes. Pursuant to the Company's Bylaws,
abstentions and broker non-votes (where a nominee holding shares for a
beneficial owner has not received voting instructions from the beneficial owner
with respect to a particular matter and such nominee does not possess or choose
to exercise discretionary authority with respect thereto) will be included in
the determination of the number of Common Shares present at the Meeting for
quorum purposes. Also pursuant to the Company's Bylaws, abstentions and broker
non-votes will not be deemed to be outstanding and, therefore, will not be
counted in the tabulations of votes cast on proposals presented to shareholders.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Shares as of April 17, 1997 for (i) each person or entity
known by the Company to be the beneficial owner of more than five percent of the
Company's Common Shares,(ii) the Company's Chief Executive Officer and each of
the Company's other four most highly compensated officers (collectively, the
"Named Executive Officers"), (iii) each Trust Manager, and (iv) all Trust
Managers and executive officers of the Company as a group. Each person or entity
named in the table has sole voting and investment power with respect to all
Common Shares shown as beneficially owned, except as otherwise set forth in the
notes to the table. The number of shares reported as beneficially owned by a
person or entity represents the number of Common Shares the person or entity
holds plus the number of Common Shares into which vested options held by the
person are exercisable within 60 days and the number of Common Shares into which
units held by the person or entity are redeemable. The Company may elect to
issue Common Shares rather than pay cash upon redemption of such units or
convert the units at the rate of one Common Share for each unit. These units
represent the limited partnership ownership interest in Camden Operating, L.P.
("Operating Partnership"). See "Certain Relationships and Transactions" for more
information on the Operating Partnership. The extent to which a person or entity
holds shares of Common Shares, options or units is set forth in the footnotes.
Shares Beneficially Owned
-------------------------
Name and Address of Beneficial Owners (1) Amount Percent of Class (2)
- -------------------------------------------- ------------------------- -------------------------
Cohen & Steers Capital Management, Inc. 2,328,500 (3) 8.8%
William R. Cooper 1,982,461 (4) 7.1%
PGI Associates, L.P. 1,407,495 (5) 5.1%
Richard J. Campo 413,179 (6) 1.6%
D. Keith Oden 410,522 (7) 1.6%
Lewis A. Levey 312,933 (8) 1.2%
H. Malcolm Stewart 88,202 (9) *
Michael W. Biggs 72,460 (10) *
G. Steven Dawson 59,002 (11) *
Steven A. Webster 12,667 (12) *
F. Gardner Parker 11,067 (12)(13) *
George A. Hrdlicka 10,667 (12) *
All Trust Managers and
executive officers as a group (13 persons) 3,196,143 (14) 11.2%
____________________________
* Less than 1%.
(1) The address for Cohen & Steers Capital Management, Inc. is 757 Third
Avenue, New York, NY 10017. The address for PGI Associates, L.P. ("PGI") is
7557 Rambler Road, Suite 700, Dallas, Texas 75231. The address for Messrs.
Cooper, Campo, Oden, Levey, Stewart, Biggs, Dawson, Webster, Parker and
Hrdlicka is c/o Camden Property Trust, 3200 Southwest Freeway, Suite 1500,
Houston, Texas 77027.
(2) For purposes of this calculation, the number of Common Shares deemed
outstanding includes 26,320,125 Common Shares currently outstanding and the
number of Common Shares issuable to the named person
3
or entity upon redemption of units held by such person or entity or upon
the exercise of options held by such person that are exercisable within 60
days.
(3) Pursuant to information contained in a Schedule 13G filed with the
Securities and Exchange Commission in January 1997, the Company was
informed that as of December 31, 1996, Cohen & Steers Capital Management,
Inc. possessed sole dispositive and voting power for 2,328,500 and
1,989,900 Common Shares, respectively, as a result of acting as investment
advisor to several qualified employee benefit plans, registered investment
companies and endowments.
(4) In addition to 312,047 Common Shares and units owned by Mr. Cooper
directly, Mr. Cooper's Common Shares and units owned include 1,407,495
units which are held by PGI, the general partner of which is a company
controlled by Mr. Cooper, and 240,941 units held by Gateway Mall Associates
I, L.P., a partnership in which Mr. Cooper serves as a general partner of
the general partner, and 21,978 units held by WRC Holdings, Inc. Mr. Cooper
became a Trust Manager following the merger of Paragon Group, Inc.
("Paragon") into the Company.
(5) PGI is a Texas limited partnership, the general partner of which is a
company controlled by Mr. Cooper and the limited partners of which consist
of Messrs. Cooper and Levey, entities wholly owned by them and eight former
officers of Paragon or its affiliates. PGI owns 1,407,495 units.
(6) Includes 150,000 Common Shares which may be purchased upon exercising
vested options and 15,059 vested restricted Common Shares held in the Rabbi
Trust. (See "Compensation Committee Report on Executive Officer
Compensation -- Share Option and Restricted Share Program" for the
definition of the Rabbi Trust.) Does not include (i) 150,000 Common Shares
underlying options that have not vested, (ii) 9,348 Common Shares of the
18,696 Common Shares owned by Centeq Realty, Inc. ("Centeq Realty"), the
surviving entity of the Centeq group of Companies ("Centeq"). Mr. Campo
owns 50% of the common shares of Centeq Realty. See Richard J. Campo's
business experience paragraph under "Proposal One: Election of Trust
Managers" for more information on Centeq. See Note (7) below, or (iii)
47,957 restricted Common Shares held in the Rabbi Trust that have not
vested.
(7) Includes 150,000 Common Shares which may be purchased upon exercising
vested options and 14,450 vested restricted Common Shares held in the Rabbi
Trust. Does not include (i) 150,000 Common Shares underlying options that
have not vested, (ii) 9,348 Common Shares of the 18,696 Common Shares owned
by Centeq Realty. Mr. Oden owns 50% of the common shares of Centeq Realty.
See Note (6) above, or (iii) 47,956 restricted Common Shares held in the
Rabbi Trust that have not vested.
(8) In addition to 71,992 Common Shares and units owned by Mr. Levey directly,
Mr. Levey's Common Shares and units owned include 240,941 units held by
Gateway Mall Associates I, L.P., a partnership in which Mr. Levey serves as
a general partner of the general partner. Mr. Levey became a Trust Manager
following the merger of Paragon into the Company.
(9) Includes 52,000 Common Shares which may be purchased upon exercising vested
options and 6,837 vested restricted Common Shares held in the Rabbi Trust.
(10) Includes 52,000 Common Shares which may be purchased upon exercising vested
options and 5,237 vested restricted Common Shares held in the Rabbi Trust.
Does not include 2,660 restricted Common Shares held in the Rabbi Trust
that have not vested.
(11) Includes 47,000 Common Shares which may be purchased upon exercising vested
options and 6,340 vested restricted Common Shares held in the Rabbi Trust.
Does not include 20,084 restricted Common Shares held in the Rabbi Trust
that have not vested.
(12) Includes 6,667 Common Shares which may be purchased upon exercising vested
options. Does not include 1,333 Common Shares underlying options that have
not vested.
(13) Includes 200 Common Shares that are owned by Mr. Parker's wife and 100
Common Shares that are owned by trusts for the benefit of each of Mr.
Parker's two minor children, for whom his wife is acting as trustee.
4
(14) Includes 929,894 Common Shares, 1,701,517 units, 513,000 Common Shares
subject to options exercisable within 60 days and 51,732 restricted Common
Shares held in the Rabbi Trust, all of which are deemed outstanding
pursuant to Rule 13d-3(d)(1). Shares and/or units beneficially owned by
more than one individual have been counted only once for this purpose. Does
not include 314,000 Common Shares underlying options that have not vested.
See Notes (6), (7) and (12) above. Does not include 118,657 restricted
Common Shares held in the Rabbi Trust that have not vested. See Notes (6),
(7), (10) and (11) above.
PROPOSAL ONE:
ELECTION OF TRUST MANAGERS
The holders of Common Shares are being asked to elect seven members to the
Company's Board of Trust Managers. The Bylaws of the Company require the
affirmative vote of two-thirds of the outstanding Common Shares to elect each
Trust Manager nominee that has not previously been elected as a Trust Manager by
the shareholders. The election of Messrs. Cooper and Levey will require a two-
thirds vote. The remaining Trust Managers must be re-elected by the affirmative
vote of the holders of a majority of the shares of the Company present in person
or represented by proxy at the Meeting; provided, however, if the requisite vote
is not obtained with respect to the election of Trust Managers, then the
existing Trust Managers (other than Messrs. Cooper and Levey) will continue in
their capacity as such.
If for any reason any nominee for Trust Manager should become unavailable
for election, the proxies may be voted for the election of a substitute
designated by the Board of Trust Managers, unless a contrary instruction is
given on the proxy. The Board of Trust Managers has no reason to believe that
any of the nominees will be unable or unwilling to serve if elected, and all
nominees have expressed an intention to serve the entire term for which election
is sought.
The following table contains certain information concerning the nominees:
Name Age Trust Manager Since
- ---- --- -------------------
Richard J. Campo (1) 42 May 1993
William R. Cooper (1) 60 April 1997
George A. Hrdlicka (2)(3) 65 October 1993
Lewis A. Levey (3) 55 April 1997
D. Keith Oden 40 May 1993
F. Gardner Parker (1)(2) 55 July 1993
Steven A. Webster (1) 45 July 1993
- -------------------------
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
Richard J. Campo has been the Chairman of the Board of Trust Managers
and Chief Executive Officer of the Company since May 1993. From June 1993
through December 1993, Mr. Campo also was the President of the Company. Mr.
Campo co-founded Centeq and its predecessor entities in 1982 and has been
continuously involved as a principal executive officer and director of Centeq
and its predecessors since 1982. Centeq's operations consisted primarily of
asset management and construction activities. Centeq was previously owned 80% by
an entity related to the sellers of 11 of the original 17 properties sold to the
Company in connection with its initial public offering ("IPO"). The remaining
20% was owned by Messrs. Campo and Oden.
5
William R. Cooper is currently a private investor who prior to April
1997 had served for 30 years in a variety of capacities with Paragon or its
predecessor. Most recently Mr. Cooper served as Chairman of the Board of
Directors and Chief Executive Officer of Paragon and Paragon Group Holdings. Mr.
Cooper is a member of the Board of Directors for the Advisory Board of the
Society of Industrial and Office Realtors, the Presbyterian Healthcare System
and the National Realty Committee.
George A. Hrdlicka is a founding partner of the law firm of
Chamberlain Hrdlicka White Williams & Martin and has been primarily involved in
the practice of tax law since 1965. He is a regular lecturer on tax subjects at
institutes and seminars around the country and is Board Certified as a tax
lawyer by the Texas Board of Legal Specialization. He currently serves as a
member of the Texas Board of Legal Specialization staff.
Lewis A. Levey is currently a private investor who prior to April 1997
had served for 26 years in a variety of capacities with Paragon or its
predecessor. Most recently, Mr. Levey served as Vice Chairman of the Board of
Directors and as a director of Paragon and Paragon G.P. Holdings. Mr. Levey is
currently a member of the Board of Directors of the National Multi-Housing
Council, and a Council member of the Urban Land Institute.
D. Keith Oden has been the President and Chief Operating Officer of
the Company since December 1993. From July 1993 through December 1993, Mr. Oden
was a consultant to the Company. Mr. Oden co-founded Centeq and its predecessor
entities in 1982 and has been continuously involved as a principal executive
officer and director of Centeq and its predecessors since 1982.
F. Gardner Parker is a private investor and has been involved in
structuring private and venture capital investments for the past twelve years.
Mr. Parker was with Ernst & Young from 1970 to 1984 and was a partner with the
firm from 1977 to 1984. Mr. Parker is Chairman of the Board of three privately
held companies and is a director of three additional privately held companies.
Steven A. Webster currently serves as Chairman and Chief Executive
Officer of Falcon Drilling Company, Inc., a publicly-held oil and gas drilling
contractor. Mr. Webster also serves as managing general partner of a group of
affiliated venture capital investment partnerships. Mr. Webster is a director of
Crown Resources Corporation, a precious metals mining concern, and DI
Industries, Inc., an onshore drilling contractor, both of which are publicly
held.
The Company's Declaration of Trust and Bylaws expressly permit the
Company's Trust Managers and officers to engage in other activities including
those relating to the ownership and operation of multifamily properties. No
policy of the Company restricts Trust Managers from conducting, for their own
accounts or on behalf of others, other business activities including those
relating to the ownership and operation of multifamily properties. For a
description of certain restrictions on the ability of the Named Executive
Officers to compete with the Company in the multifamily property business, see
"Executive Compensation--Employment Agreements."
COMMITTEES OF THE BOARD OF TRUST MANAGERS
The Board of Trust Managers of the Company has three standing
committees: an Audit Committee, an Executive Committee and a Compensation
Committee. The Audit Committee makes recommendations concerning the engagement
of independent auditors, reviews with the independent auditors the plans and
results of the audit engagement, approves professional services provided by the
independent auditors, reviews the independence of the independent auditors,
considers the range of audit and non-audit fees and reviews the adequacy of the
Company's internal accounting controls. The Executive Committee has the
authority to acquire, dispose of and finance investments for the Company and
execute contracts and agreements, including those related to the borrowing of
money by the Company, and generally exercises all other powers of the Trust
Managers except for those which require action by all Trust Managers or the
independent Trust Managers under the Declaration of Trust or Bylaws or under
applicable law. The Compensation Committee has the authority to determine
compensation for the Company's executive officers and to administer the Plan.
The Company does not have a nominating committee.
COMPENSATION OF TRUST MANAGERS
The Company pays its non-employee Trust Managers an annual fee of
$12,000, a fee of $1,000 for attending each meeting plus a fee of $250 for each
telephone conference. Such telephone conference fees totaled $500 for each Trust
Manager in 1996. In addition, Trust Managers receive a fee of $500 for attending
each committee meeting unless such meeting is on the same day as another
meeting. Trust Managers who are employees of the Company are not paid Trust
Manager fees. In addition, the Company may reimburse the Trust Managers
6
for travel expenses incurred in connection with their activities on behalf of
the Company. Prior to May 1995, non-employee Trust Managers each received
annually options to purchase 4,000 Common Shares under the Plan. Total options
granted to the Trust Managers were 24,000 of which 20,001 had vested at December
31, 1996. Such options totally vest in 1997 and expire ten years from the grant
date. In May 1995, the shareholders of the Company approved an amendment to the
Plan granting each non-employee Trust Manager 2,000 restricted Common Shares
under the Plan effective upon their election as a Trust Manager and on each
anniversary of the date such Trust Manager joined the Board. Total restricted
Common Shares granted to the Trust Managers were 12,000 of which 1,200 had
vested at December 31, 1996. Following the merger of Paragon into the Company
which occurred on April 15, 1997, Messrs. Cooper and Levey became Trust Managers
and each received 2,000 restricted Common Shares under the Plan. Restricted
Common Shares issued to Trust Managers vest over five years from date of grant.
MEETINGS OF THE BOARD AND COMMITTEES
During the year ended December 31, 1996, there were six meetings of
the Board of Trust Managers, no meetings of the Executive Committee or Audit
Committee, and one meeting of the Compensation Committee. Each Trust Manager
attended at least 75% of the meetings of the Board of Trust Managers and the
committees on which such Trust Manager served during such period. In addition,
the Board and such Committees took action on numerous occasions by unanimous
written consent.
EXECUTIVE OFFICERS
The executive officers of the Company and their ages are as follows:
Name Age Position
- ---- --- --------
Richard J. Campo 42 Chairman of the Board of Trust Managers and
Chief Executive Officer
D. Keith Oden 40 President, Chief Operating Officer and Trust
Manager
Michael W. Biggs 46 Senior Vice President-Asset Management
G. Steven Dawson 39 Senior Vice President-Finance, Chief Financial
Officer, Treasurer and Assistant Secretary
Alison L. Dimick 34 Senior Vice President-Acquisitions and
Dispositions
James M. Hinton 40 Senior Vice President-Development
Elizabeth Pringle Johnson 39 Senior Vice President-General Counsel,
Secretary and Assistant Treasurer
H. Malcolm Stewart 45 Senior Vice President-Construction
Information concerning the business experience of Messrs. Campo and
Oden is provided in "Proposal One: Election of Trust Managers."
Michael W. Biggs has been the Senior Vice President--Asset Management
of the Company since May 1993. Prior to the formation of the Company, from 1992
to 1993, Mr. Biggs was President of Centeq's property management division and
responsible for managing properties owned by Centeq. Prior thereto, Mr. Biggs
was Vice President of The Dickson Group (a real estate property management
company) from 1989 to 1992.
G. Steven Dawson has been the Senior Vice President--Finance, Chief
Financial Officer and Treasurer of the Company since May 1993 and Assistant
Secretary of the Company since December 1993. Prior to the formation of the
Company, from 1990 to 1993, Mr. Dawson was Senior Vice President--Finance and
Chief Financial Officer of Centeq.
7
Alison L. Dimick joined the Company in April 1997 as Senior Vice
President-Acquisitions and Dispositions. Prior to joining the Company, Ms.
Dimick was Vice President of Acquisitions for MIG Realty Advisors, a pension
fund advisor specializing in multifamily properties. From 1986 to 1991, she
served in a variety of capacities with Grubb & Ellis Realty Advisors most
recently as Vice President of Portfolio Management.
James M. Hinton has been the Senior Vice President--Development of the
Company since June 1996. Mr. Hinton was Vice President of Development for Camden
Development, Inc. from December 1993 to May 1996. Prior thereto, Mr. Hinton was
the National Multifamily Asset Manager for J. E. Robert Company from February
1991 to November 1993.
Elizabeth Pringle Johnson has been the Senior Vice President--General
Counsel and Secretary of the Company since May 1993 and Assistant Treasurer
since December 1993. Prior to the formation of the Company, Ms. Johnson was
General Counsel to Centeq from 1992 to 1993. Prior thereto, Ms. Johnson was a
shareholder in the law firm of Winstead Sechrest & Minick P.C. from 1991 to
1992.
H. Malcolm Stewart has been the Senior Vice President--Construction
since December 1993. Mr. Stewart was the President of Centeq's construction
division from 1989 to December 1993.
No family relationship exists among any of the Trust Managers or
executive officers of the Company. No arrangement or understanding exists
between any Trust Manager or executive officer or any other person pursuant to
which any Trust Manager or executive officer was selected as a Trust Manager or
executive officer of the Company. All executive officers are elected annually
by, and serve at the discretion of, the Board of Trust Managers.
Based solely upon a review of Form 4's furnished to the Company with
respect to the year ended December 31, 1996, no person failed to disclose on a
timely basis, as disclosed in such forms, reports required by Section 16(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE OFFICER COMPENSATION
The Compensation Committee, which consists entirely of non-employee
Trust Managers, reviews and approves all remuneration arrangements for the
Company's executive officers, Trust Managers and other employees and all
compensation plans, including the Plan. The Compensation Committee held one
meeting during 1996 and a meeting on February 5, 1997 to vote on 1996
compensation issues.
OBJECTIVES AND COMPENSATION PHILOSOPHY
The Company's objectives are to produce consistent earnings growth and
selectively invest in favorable markets. In order to meet its objectives, the
Company must attract, reward, motivate and retain key executives who are capable
of achieving the Company's objectives in a competitive industry. The Company's
philosophy for compensating executive officers is that an incentive-based
compensation system tied to the Company's financial performance and portfolio
growth will best align the interests of its executives with the objectives of
the Company. In accordance with this philosophy, the Company has adopted a
compensation system designed to meet the Company's objectives by making a
significant portion of an executive's compensation dependent on the Company's
and such executive's performance.
The Company's executive compensation system consists of the following
elements: base salary determined by the Compensation Committee based on its
assessment of individual performance, contributions to the Company and peer
group comparisons; an annual bonus that is directly related to the performance
of the executive's department and the Company as a whole; and grants of
restricted shares and options designed to motivate individuals to enhance the
long-term value of the Common Shares. The Compensation Committee does not
allocate a fixed percentage of compensation to each of these three elements, nor
does the Compensation Committee use specific qualitative or quantitative
measures or factors in assessing individual performance, except with respect to
the award of bonuses, as described below.
8
BASE SALARY
In 1996, base salary levels and annual increases for executive
officers were determined by the Compensation Committee based on an evaluation of
the responsibilities of the position held and the experience of the particular
individuals both compared to companies of similar size, complexity and, where
comparable, in the same industry. In addition to comparing base salary
compensation of other companies, consideration is given to the overall corporate
performance. Actual salaries are based on the executive's skill and ability to
influence the Company's financial performance and growth in both the short-term
and the long-term.
BONUS COMPENSATION
The Company's executive officers participate in a bonus incentive
program whereby the individual executives are eligible for bonuses based on a
percentage of base salary. The bonus percentage is based on competitive analysis
and on the executive's ability to influence the Company's success in achieving
its objectives. Earned bonuses are determined annually in part on the basis of
performance against pre-established goals and in part based on the discretion of
the Compensation Committee. The eligible bonus percentage is allocated in part
to the achievement of Company goals, in part to the achievement of individual
goals, and in part to discretionary evaluation by the Compensation Committee.
Specific individual goals for each officer are established at the beginning of
the year and are tied to the functional responsibilities of each executive.
Individual goals include both objective financial measures as well as subjective
factors, such as efficiency in managing capital resources and successful
acquisitions or development. The Company's goals are based on operating
performance, as measured by the Company's funds from operations. The
Compensation Committee requires executives to receive at least 25% and up to 50%
of their annual bonus in the form of restricted shares.
SHARE OPTION AND RESTRICTED SHARE PROGRAM
The Compensation Committee believes that by providing the executives
who have substantial responsibility for the management and growth of the Company
with an opportunity to increase their ownership of Common Shares, the best
interest of shareholders and executives will be closely aligned. Therefore,
executives are eligible to receive options from time to time, giving them the
right to purchase Common Shares or restricted shares. During 1996, the
Compensation Committee did not adhere to any firmly established formulas or
schedules for the issuance of options or restricted shares. The Compensation
Committee granted options and restricted shares based on the recommendations of
an independent compensation consultant and an assessment of the performance of
the executive's department and the Company as a whole.
In order to tie executive compensation to the long-term performance of
the Company, the Compensation Committee requires executives to receive at least
25% and up to 50% of their annual bonus in the form of restricted shares. For
the portion of the bonus paid in the form of restricted shares, the executive
receives shares valued at 150% of the cash value of such portion of the bonus.
The number of shares to be issued is determined based on the market share price
at the date of grant. Such restricted shares vest 25% on the grant date, with
the remaining shares vesting 25% on each anniversary of the date of grant for
the next three years.
The Compensation Committee has established a rabbi trust (the "Rabbi
Trust"), in which restricted shares may be awarded for certain officers. Vested
restricted shares and the related accumulated dividends held by the Rabbi Trust
may be purchased by the officer at any time within 20 years from the date of
grant of such shares for a price equal to (i) 10% of the fair value of the
shares on the date the shares were awarded to the Rabbi Trust; and (ii) 5% of
the amount of dividends declared and paid with respect to such shares.
CEO PERFORMANCE EVALUATION
For 1996, the Compensation Committee evaluated the CEO's performance
based on the Company's objectives to maximize long-term profitability for its
shareholders. The Company believes such objectives are achieved by providing
quality housing for its residents through sophisticated property management and
innovative operating strategies and selectively investing in favorable markets
while maintaining a conservative capital structure. The Company achieved its
objectives in 1996 by increasing its profitability resulting primarily through
higher operating margins, disciplined management of the Company's assets and
skillful day-to-day operations. The commitment to generate consistent earnings
growth requires the Company to consider selective disposition of properties and
redeployment of capital if management determines a property cannot meet long-
term earnings growth expectations. During 1996, the Company disposed of five
properties with 1,219 units. Based on the Company
9
achieving its corporate goals and objectives, Mr. Campo received a 3.5% increase
in his base salary and received restricted share awards, options and a bonus
amount which were based upon the relative achievement of the various stated
goals and objectives.
The report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended (the "Securities Act"), or under the Exchange Act except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such acts.
The foregoing report is given by the following members of the
Compensation Committee:
F. Gardner Parker
George A. Hrdlicka
10
EXECUTIVE COMPENSATION
The following table summarizes the compensation for the years ended
December 31, 1996, 1995 and 1994 of the Company's Chief Executive Officer and
each of the Named Executive Officers:
Annual Compensation Long-Term Compensation
-------------------------------------- --------------------------
Other
Annual Restricted Securities
Compen- Share Underlying
Name and Principal Position Year Salary Bonus(1) sation (2) Awards (1)(3) Options (4)
- --------------------------- ---- -------- --------- ---------- -------------- -----------
Richard J. Campo 1996 $241,055 $123,750 $2,375 $765,313 150,000
Chairman of the Board of Trust 1995 232,875 82,500 2,138 310,008 --
Managers and Chief Executive Officer 1994 225,000 103,125 2,044 378,118 50,000
D. Keith Oden 1996 241,055 123,750 2,375 765,313 150,000
President, Chief Operating Officer and 1995 232,875 82,500 2,138 310,008 --
Trust Manager 1994 225,000 103,125 2,044 378,118 50,000
H. Malcolm Stewart 1996 152,125 61,875 2,375 321,750 --
Senior Vice President-- Construction 1995 146,970 41,250 2,138 130,754 --
1994 142,000 63,281 2,044 138,598 --
G. Steven Dawson 1996 139,275 56,375 2,375 280,103 --
Senior Vice President--Finance, 1995 134,550 41,250 2,138 130,754 --
Chief Financial Officer, Treasurer and 1994 130,000 48,125 2,044 156,884 --
Assistant Secretary
Michael W. Biggs 1996 139,275 53,625 1,535 264,382 --
Senior Vice President--Asset 1995 134,550 50,625 1,575 113,877 --
Management 1994 130,000 63,282 1,322 138,591 --
- -----------------------
(1) The Compensation Committee requires executives to receive at least 25%, and
up to 50%, of their annual bonus in the form of restricted shares. For the
portion of the bonus paid in the form of restricted shares, the executive
received shares valued at 150% of the cash value of such portion of the
bonus. The number of shares issued was determined based on the market share
price at the date of grant. Such restricted shares vest 25% on the grant
date (the "25% Vested Shares"), with the remaining shares vesting 25% on
each anniversary of the date of grant for the next three years. The Common
Shares related to the 25% Vested Shares are included in the above table
under Bonus and the unvested portion of the restricted shares are included
in the above table under Restricted Share Awards.
(2) Consists of matching contributions under the Company's 401(k) savings plan.
(3) At December 31, 1996, the aggregate value of the 126,819 restricted shares
not yet vested based on the closing share price of $28.63 at December 31,
1996 was $3,630,828. In February 1997, the Company awarded 52,209 restricted
shares with three- to five-year vesting periods from the date of grant. The
February 1997 grants pertained to 1996 compensation. The aggregate value of
restricted shares not yet vested including the February 1997 grants based on
the closing share price of $28.63 at December 31, 1996 was $5,125,572.
Distributions on restricted shares that have not yet vested were paid at the
same rate as paid to all shareholders.
(4) The table includes a total of 300,000 options granted to Messrs. Campo and
Oden in February 1997 as these option grants related to the performance of
the Company in 1996. All options have a three-year vesting period.
11
EMPLOYMENT AGREEMENTS
The Company has employment agreements with each of the Named Executive
Officers, the terms of which expire at various times through August 20, 1999.
Such agreements provide for minimum salary levels as well as various incentive
compensation arrangements, which are payable based on the attainment of specific
goals. The agreements also provide for severance payments in the event certain
situations occur such as termination without cause or a change of control. The
severance payments vary based on the Named Executive Officer's position and
amount to one times the current salary base for Messrs. Biggs, Dawson and
Stewart and 2.99 times the average annual compensation over the previous three
fiscal years for Messrs. Campo and Oden. The agreements restrict each of the
Named Executive Officers from competing with the Company anywhere within a 30-
mile radius of any of the Company's properties during the terms thereof and,
except in certain circumstances, for a period of one year after termination
thereof.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No person who served as a member of the Company's Compensation
Committee during 1996 (i) was an officer or employee of the Company during such
year, (ii) was formerly an officer of the Company, or (iii) was a party to any
material transaction set forth under "Certain Relationships and Transactions."
No executive officer of the Company served as a member of the
compensation or similar committee or board of directors of any other entity, one
of whose executive officers served on the Compensation Committee or Board of
Trust Managers of the Company.
SHARE OPTIONS
The following table contains information concerning the grant of share
options to the Named Executive Officers. Although no Named Executive Officers
were granted any options during 1996, the table includes a total of 300,000
unexercisable options granted to Messrs. Campo and Oden in February 1997 as
these option grants related to the performance of the Company in 1996.
Percent of
Number of Total Potential Realizable Value
Common Options at Assumed Annual Rates
Shares Granted to of Share Price Appreciation
Underlying Employees Exercise For Option Term
Options For Fiscal Price Per Expiration --------------------------
Name Granted (1) Year 1996 Share Date 5% 10%
- ---- ----------- ---------- ---------- ---------- ------------ ------------
Richard J. Campo 150,000 50% $27.00 February 1, $2,547,023 $6,454,657
2007
D. Keith Oden 150,000 50% $27.00 February 1, $2,547,023 $6,454,657
2007
(1) All such options vest in equal installments over three years and expire ten
years after the date of grant.
12
The following table sets forth information with respect to the Named
Executive Officers concerning the unexercised options held at December 31, 1996.
No Named Executive Officer exercised any options during 1996. The table includes
a total of 300,000 unexercisable options granted to Messrs. Campo and Oden in
February 1997 as these option grants related to the performance of the Company
in 1996.
Number of Common Shares
Underlying Unexercised Value of Unexercised
Name Options Held at in-the-Money Options at
- ---- December 31, 1996 December 31, 1996
-------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Richard J. Campo 133,333 166,667 $817,333 $321,667
D. Keith Oden 133,333 166,667 817,333 321,667
Michael W. Biggs 52,000 -- 317,760 --
H. Malcolm Stewart 52,000 -- 227,760 --
G. Steven Dawson 47,000 -- 295,860 --
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for the
Company, the Standard & Poor's 500 Composite Stock Index and the National
Association of Real Estate Investment Trusts All Equity Index. The graph assumes
the investment of $100 on July 31, 1993 (the month in which the IPO was
consummated and the Common Shares were registered under Section 12 of the
Exchange Act) in the Company's Common Shares and in each index and that all
dividends were reinvested.
[PERFORMANCE GRAPH APPEARS HERE]
1993 1994 1995 1996
------------ ------------ ------------ --------------
JUL DEC JUN DEC JUN DEC JUN DEC
----- ----- ----- ----- ----- ----- ----- ------
The Company 100.0 111.6 112.0 118.3 108.4 122.9 127.7 159.7
The NAREIT All Equity Index 100.0 99.5 104.8 102.7 108.6 118.4 126.5 160.1
S&P 500 Index 100.0 105.4 101.8 106.8 128.3 146.8 161.6 180.5
13
CERTAIN RELATIONSHIPS AND TRANSACTIONS
RELATED PARTY TRANSACTIONS
Camden Connection, Inc. ("CCI") (formerly Apartment Connection, Inc.) is a
nonqualified-REIT subsidiary. The Company owns 100% of the non-voting stock of
CCI and 1% of the voting stock. The remainder of the voting stock of CCI is
owned by Messrs. Campo and Dawson. The Company has made an unsecured working
capital revolving line of credit available to CCI which has been renewed
annually. The loan has a maximum commitment of $1.2 million, earns interest at a
fixed rate of 7.5% per annum and is payable in full during July 1997. The loan's
outstanding balance was $1.2 million at December 31, 1996.
In conjunction with the equity offering in April 1994, Messrs. Campo and
Oden (collectively, the "Executives") each purchased $1 million of Common Shares
at the market price of such shares. The Compensation Committee determined that
it was in the best interest of the Company that the Executives have greater
ownership interests in the Company. Accordingly, the Compensation Committee
determined that the Company should loan to each Executive 90% of the purchase
price of such Common Shares or $900,000. These loans have five-year terms and
bear interest at the fixed rate of 7.0%. The loans are non-recourse, but are
secured by a pledge of such Common Shares, and do not require any prepayments of
principal until maturity. During July 1995, the Executive's loans were
transferred to CCI. CCI obtained a $1.8 million unsecured loan from the Company
with the same interest rate and maturity as the underlying Executive loans.
During 1995, the Company formed TeleServe, Inc. (formerly Camden
Communications One, Inc.), doing business as CamTel ("CamTel"). CamTel is a
nonqualified-REIT subsidiary that was established to provide fiber optic,
central office switched telecommunications service to residents in the Company's
properties and third parties. The Company owns 100% of the non-voting stock of
CamTel and 1% of the voting stock. The remainder of the voting stock of CamTel
is owned by Messrs. Campo, Dawson, Hrdlicka, Oden, Parker and Webster. The
Company has made an unsecured revolving line of credit available to CamTel with
a maximum commitment of $5.9 million which had an outstanding balance of
$585,000 at December 31, 1996. The loan earns interest at 7.0%, payable in full
in June 1999 and is used to fund asset additions or other operating costs.
During 1996 the Company had management agreements with investment
partnerships in which the Executives had a combined 1% interest, with respect to
two multifamily properties owned by such partnerships. The management agreements
provided for the exclusive right to lease, operate and manage these two
properties. Management fees earned on the two properties amounted to $184,000 in
1996. In November 1996 the Company received a $244,000 fee upon the sale of the
two properties. All such management agreements have terminated.
On April 15, 1997, the Company through its merger with Paragon began
performing residential property services for owners of three third-party and
twelve affiliated properties. Messrs. Cooper and Levey collectively own
interests of 1% to 50% in the twelve affiliated properties. These residential
property services are conducted by one of the Company's affiliates, Paragon
Residential Services, Inc. ("PRSI"). The Company through the Operating
Partnership which was acquired as part of the merger owns a 95% economic
interest in PRSI. The remaining 5% economic interest is owned by CCI. The
Operating Partnership owns 100% of the non-voting stock and 1% of the voting
stock of PRSI. Management fees earned in 1996 by PRSI, or PRSI's predecessor,
PGPSI on the fifteen properties amounted to $1.6 million.
Mr. Cooper holds, either directly or indirectly, a 1% interest in various
partnerships which own eight apartment properties in which the Company,
indirectly owns a 70% to 75% interest. The remaining interests are held by
outside investors.
14
PROPOSAL TWO:
APPROVAL OF AMENDMENT TO THE 1993 SHARE INCENTIVE PLAN
GENERAL
The Company adopted the Plan in connection with its initial public offering
to retain and attract and provide incentives to Trust Managers, officers and
other key employees of the Company. Upon receipt of approval of the shareholders
of the Company in May 1994, the Plan was amended and restated. In connection
with the amendment of the Plan, the number of Common Shares authorized for
issuance under the Plan was increased to 1,450,000 (5.5% of the outstanding
Common Shares on April 17, 1997). At April 17, 1997, only 79,752 Common Shares
remained available for issuance under the Plan.
The Board of Trust Managers believes that providing an increased
availability of Common Shares for issuance under the Plan is important in order
for the Company to provide long-term incentives to retain key employees and
officers.
On April 21, 1997, the Board of Trust Managers unanimously voted to amend
the Plan, subject to the approval of the shareholders, to increase the maximum
number of Common Shares available for issuance under the Plan to 10% of the
total number of Common Shares outstanding at any time. Based upon the number of
Common Shares outstanding on April 17, 1997, the Plan would have a total of
2,632,013 Common Shares authorized for issuance under the Plan, an increase of
82% Common Shares over the number of currently authorized Common Shares.
ADMINISTRATION
The Plan is currently administered by the Compensation Committee (the
"Committee") which generally has the authority, within the limitations set forth
in the Plan, to establish rules and regulations concerning the Plan, to
determine the persons to whom awards may be made, the number of Common Shares to
be covered by each award, and the terms and provisions of the award to be
granted. Pursuant to the Plan, the Committee has the right to award Options,
Rights (as defined below), Limited Rights (as defined below), Restricted Share
Awards (as defined below), Performance Units (as defined below) and Performance
Share Awards (as defined below) (collectively, "Incentive Awards").
SHARES AVAILABLE FOR INCENTIVE AWARDS
A total of 1,450,000 Common Shares have been reserved for issuance under the
Plan. If any Incentive Award shall expire, be canceled or terminate, any Common
Shares subject thereto which are not issued or are forfeited may again be
subject to Incentive Awards under the Plan, provided that Rights that are
exercisable as an alternative to an Option (as described below) are not subject
to the foregoing limitation. Notwithstanding the foregoing, under certain
circumstances Common Shares may not again be the subject of grants under the
Plan. The maximum number of Common Shares which may be the subject of Options
and Rights granted to any individual in any calendar year shall not exceed
200,000 Common Shares. If Options and Rights are granted to a "covered person"
(as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code")) are canceled, such canceled Options and Rights shall continue to
be counted against the maximum limitation. Each Incentive Award contains usual
anti-dilution provisions which are applicable in the event of a stock dividend,
split-up, conversion, exchange, reclassification or substitution. In the event
of any other change in the corporate structure or outstanding Common Shares, the
Committee may make such equitable adjustments to the number of Common Shares and
the class of shares available under the Plan or to any outstanding Incentive
Awards as it shall deem appropriate to prevent dilution or enlargement of
rights.
TYPES OF INCENTIVE AWARDS
Options. Options granted under the Plan may be incentive stock options
("ISOs") under Section 422 of the Code or non-qualified Options, at the
discretion of the Committee. No ISO will be granted to an individual who is not
an employee of the Company or a subsidiary at the time the Option is granted.
The Plan provides that the exercise price of an Option will be fixed by the
Committee on the date of grant and shall not be less than the fair market value
of the underlying Common Share on the date of grant; however, the exercise price
of an ISO granted to an participant who owns Common Shares possessing more than
10% of the total combined voting power of all outstanding shares of the Company
must be at least equal to 110% of the fair market value of a Common Share
15
on the date of grant. Any ISOs granted to such participants also must expire
within five years from the date of grant. Additionally, Options granted under
the Plan will not be ISOs to the extent that the aggregate fair market value of
the Common Shares with respect to which ISOs under the Plan (or under any other
plan maintained by the Company or a subsidiary) first become exercisable in any
year exceeds $100,000. Options are exercisable for a duration determined by the
Committee, but in no event after ten years from the date of grant.
Payment of the purchase price for Common Shares acquired upon the exercise
of Options may be made by one or more of the following methods: in cash, by
check, by delivery to the Company of Common Shares already owned by the Option
holder, or by such other methods as the Committee may permit from time to time;
provided, however, that a holder may not use previously owned Common Shares that
were acquired pursuant to the Plan, or any other share plan that may be
maintained by the Company or its subsidiaries, to pay the purchase price under
an Option, unless the holder has beneficially owned such Common Shares for at
least six months.
Reload Options. An Option may, in the discretion of the Committee, include a
"Reload Option" which shall entitle the holder, upon (i) the exercise of the
original Option prior to the holder's termination of employment and (ii) payment
of the exercise price in Common Shares that the holder has owned for at least
six months prior to the date of exercise, to receive a new Option to purchase,
at the fair market value of a Common Share on the date of exercise of the
original Option, the number of Common Shares having a value equal to the
exercise price of the original Option. A Reload Option may also allow that upon
exercise of the Option, the holder may receive a new Option to purchase at the
fair market value of a Common Share on the date of exercise of the original
Option, the number of Common Shares equal to the number of Common Shares issued
upon exercise of the original Option. Such Reload Options shall be subject to
the same terms and conditions, including the exercise date, and shall be
exercisable at the same time or times as the original Option to which it
relates. In no event shall any Reload Option be exercisable within six months of
its date of grant.
Rights and Limited Rights. A Right may be granted either independently or in
connection with an Option. A Right granted in connection with an Option shall be
exercisable (a) only to the extent that the related Option is exercisable and
(b) either in conjunction with, or as an alternative to, the exercise of the
related Option. A "Right" is the right to receive an amount equal to the excess
(or a portion of the excess, as determined by the Committee at the time of
grant) of the fair market value of a Common Share on the date of exercise over
(i) the fair market value of a Common Share on the date of grant, in the case of
a Right granted independently of any Option, or (ii) the exercise price of the
related Option, in the case of a Right granted in connection with an Option
(which excess is referred to as the "Spread"). However, with respect to Rights
exercised by officers and Trust Managers who are subject to Section 16(b) of the
Exchange Act during quarterly ten-day periods beginning on the third day after
the release of the Company's quarterly statements of sales and earnings, the
amount payable to all such holders who exercise their Rights during any such
period may be uniformly determined by reference to a single fair market value of
a Common Share on any day during such relevant quarterly period, as may be
designated by the Committee, rather than the fair market value of a Common Share
on the actual date of exercise by each respective holder.
The holder of a conjunctive Right granted in connection with an Option is
deemed to have exercised the Right at the same time, and to the same extent
that, the related Option is exercised. The holder of an alternative Right
granted in connection with an Option is entitled to exercise such Right only by
surrendering the related Option with respect to the same number of Common Shares
as to which such Right is exercised, and to receive payment therefor. The number
of Common Shares with respect to which an alternative Option is surrendered
shall not be available for future grants of Incentive Awards. A Right granted
independently of any related Option is exercisable for a duration determined by
the Committee, but in no event after ten years from the date of grant. In
addition, the Committee otherwise may limit the amount payable upon the exercise
of any Rights.
The Committee may fix such waiting periods, exercise dates or other
limitations as it shall deem appropriate with respect to Rights granted under
the Plan including, without limitation, the achievement of specific goals;
provided, however, that each Right granted under the Plan shall be exercisable
only upon the consent of the Committee; and provided, further, that a Right that
relates to a specific Option shall be exercisable only when and to the extent
that the Option to which it relates is exercisable and, if such Option is an
ISO, only at such times as there is a positive Spread.
At the election of the holder, but subject to disapproval of such election
by the Committee, distribution of the amount payable upon the exercise of a
Right may be made in Common Shares, valued at their fair market value on the
date of exercise of the Right, or in cash, or in a combination of cash and
Common Shares.
16
The Committee shall also have the power to grant Limited Rights as part of
an award of Options or Rights. A "Limited Right" shall provide for an automatic
cash payment to the holder equal to the Spread (or such other amount as
determined by the Committee) upon the occurrence of a Change in Control (as
defined in the Plan) on a date fixed by the Committee.
Options and Rights generally will be exercisable by the holder thereof
subject to terms fixed by the Committee, except as otherwise provided for in the
Plan. In no event shall an Option or Right become exercisable during the six
month period following the date of grant or subsequent to the expiration of the
term of the Option or Right.
Options and Rights terminate six months following the holder's, (i)
termination of employment with or service for, the Company or a subsidiary, (ii)
retirement or permanent disability or, (iii) death. In the case of the death of
the holder, the Option and/or Right is exercisable by the holder's estate,
personal representative or beneficiary. If a Participant violates the terms and
conditions his or her employment or relationship with the Company or its
subsidiaries, such Participant's unexercised Options shall immediately terminate
upon termination of employment or the relationship, as applicable.
Restricted Share Awards. The Committee may grant Restricted Share Awards to
eligible individuals. The Committee also will grant a Restricted Share Award to
any individual who is entitled to a bonus under the Bonus Plan, for a number of
Common Shares having a value on the date of grant equal to a percentage of the
bonus specified by the Committee. "Restricted Share Awards" are the right to
purchase Common Shares at a price determined by the Committee (but in no event
less than par value). Such Common Shares, when and if issued, shall be subject
to transfer restrictions determined by the Committee in its sole discretion, and
subject to substantial risk of forfeiture unless and until specific conditions
established by the Committee at the time of grant are met. Such conditions may
be based on continuing employment or achievement of pre-established performance
objectives or both, as determined by the Committee. Unless the holder of a
Restricted Share Award ceases to be an employee or Director of the Company or a
subsidiary (for reasons other than permanent disability or death), the
restricted Common Shares will vest in accordance with a schedule or other
conditions as are determined by the Committee; provided, however, no Restricted
Shares awarded under the Plan may be subject to vesting requirements over a
period of less than three years.
Payment of the purchase price for Common Shares purchased pursuant to
Restricted Share Awards shall be paid at the time and in the manner specified by
the Committee at the time of the grant of the Restricted Share Award. If the
employment or relationship with the Company and its affiliates of a holder of a
Restricted Share Award is terminated for any reason before satisfaction of the
terms and conditions for the vesting of all Common Shares subject to the
Restricted Share Award, the number of restricted Common Shares not theretofore
vested shall be reacquired by the Company and forfeited, and the purchase price
paid for such Common Shares by the holder shall be returned to the holder.
Certificates for the Common Shares purchased pursuant to Restricted Share
Awards shall be issued in the name of the holder thereof, but the certificates
may be retained in escrow until such time as the transfer restriction shall have
lapsed. The holder of a Restricted Share Award shall, as of the date of grant,
have all rights of a shareholder with respect to the Common Shares registered in
his or her name (unless otherwise provided in a Restricted Share Award),
including the voting and dividend rights.
Under the Plan, each non-employee Trust Manager automatically receives upon
his or her election to the Board of Trust Managers, and on each anniversary of
his or her election, a Restricted Share Award of 2,000 Common Shares. Each non-
employee Trust Manager Restricted Share Award vests in five equal installments
on each of the first five anniversaries of the date of grant. Non-employee Trust
Managers are not eligible to receive any other Awards under the Plan.
Performance Units and Performance Share Awards. The Committee may grant
Performance Units or Performance Share Awards to eligible individuals.
"Performance Units" are units valued by reference to designated criteria
established by the Committee, other than Common Shares. "Performance Share
Awards" are valued by reference to the value of Common Shares. Payments pursuant
to Performance Units and Performance Share Awards may, in the sole discretion of
the Committee, be made in the form of cash, Common Shares or a combination
thereof. The Committee shall designate a method of converting Performance Units
to Common Shares including, but not limited to, a method based on the fair
market value over consecutive trading days. Prior to settlement of Performance
Units or Performance Share Awards in Common Shares, the holder of such award
shall pay the Company an amount of cash equal to, at a minimum, the par value
per Common Share multiplied by the number
17
of Common Shares to be issued. The holders of Performance Units and Performance
Share Awards are not entitled to any voting rights or dividends with respect to
Performance Units or Performance Share Awards.
EXERCISABILITY OF INCENTIVE AWARDS
Incentive Awards become immediately exercisable in full, (i) in the case of
Options and Rights only, upon the holder's retirement from the Company; (ii)
upon the permanent disability or death of the holder while in the employ or
service of the Company; (iii) upon the occurrence of such special circumstances
as in the opinion of the Committee merit special consideration; or (iv) upon a
Change in Control. However, no Options or Rights may be exercised earlier than
six months following the date of grant.
To the extent that the acceleration of exercisability or vesting of an
Incentive Award following a Change in Control, when aggregated with other
payments or benefits to the participant, whether or not payable pursuant to the
Plan, would, as determined by the Company's tax counsel, result in "excess
parachute payments" (as defined in Section 280G of the Code), such parachute
payment or benefits shall be reduced to the extent necessary so that no portion
thereof shall be subject to the excise tax imposed by Section 4999 of the Code,
but only if, by reason of such reduction, the participant's net after tax
benefit shall exceed the net after tax benefit if such reduction were not made.
AMENDMENT
The Plan may be terminated and may be modified or amended by the Board of
Trust Managers at any time; however, any modification or amendment (i)
increasing the aggregate number of Common Shares which may be issued under
Incentive Awards; (ii) changing the class of persons who are eligible to receive
Incentive Awards; or (iii) requiring shareholder approval pursuant to Rule 16b-3
of the Exchange Act or Section 162(m) of the Code will be subject to shareholder
approval within one year of the adoption of such amendments.
CERTAIN FEDERAL INCOME TAX MATTERS
The Federal income tax consequences to an employee who receives an ISO
generally will, under current law, be as follows:
An employee will not realize any income upon the grant or exercise of an
ISO. If the employee disposes of the Common Shares acquired upon the exercise of
an ISO at least two years after the date the Option is granted and at least one
year after the Common Shares are transferred to him or her, the employee will
realize long-term capital gain in an amount equal to the excess, if any, of his
or her selling price for the Common Shares over the Option exercise price. In
such case, the Company will not be entitled to any tax deduction resulting from
the issuance or sale of the Common Shares. If the employee disposes of the
Common Shares acquired upon the exercise of an ISO prior to the expiration of
two years from the date the Option is granted, or one year from the date the
Common Shares are transferred to him or her, any gain realized will be taxable
at such time as follows (a) as ordinary income to the extent of the difference
between the Option exercise price and the lesser of the fair market value of the
Common Shares on the date the Option was exercised or the amount realized from
such disposition, and (b) as capital gain to the extent of any excess, which
gain shall be treated as short-term or long-term capital gain depending upon the
holding period of the Common Shares. In such case, the Company may claim an
income tax deduction (as compensation) for the amount taxable to an individual
as ordinary income.
In general, the difference between the fair market value of the Common
Shares at the time the ISO is exercised and the Option exercise price will
constitute an item of adjustment, for purposes of determining alternative
minimum taxable income, and under certain circumstances may be subject, in the
year in which the Option is exercised, to the alternative minimum tax.
If an employee uses Common Shares which he or she owns to pay, in whole or
in part, the exercise price for Common Shares acquired pursuant to an ISO, (a)
the holding period for the newly issued Common Shares equal in value to the old
Common Shares which were surrendered upon the exercise shall include the period
during which the old Common Shares were held, (b) the individual's basis in such
newly issued Common Shares will be the same as his or her basis in the old
Common Shares surrendered and (c) no gain or loss will be recognized by the
individual on the old Common Shares surrendered. However, if an employee uses
Common Shares previously acquired pursuant to the exercise of an ISO to pay all
or part of the exercise price under an ISO, such tender will constitute a
disposition of such previously acquired Common Shares for purposes of the one-
year (or two-year) holding period requirement applicable to such ISO and such
tender may be treated as a taxable exchange.
18
The Federal income tax consequences to an individual who receives non-
qualified Options generally will, under current law, be as follows:
An individual will not realize any income at the time the Option is granted.
Generally, an individual will realize ordinary income, at the time the Option is
exercised, in a total amount equal to the excess of the then fair market value
of the Common Shares acquired over the exercise price. However, Section 83 of
the Code provides that, if a Trust Manager, officer or principal shareholder
(i.e., an owner of more than 10% of the outstanding Common Shares) receives
Common Shares pursuant to the exercise of a non-qualified stock option, he or
she is not required to recognize any income until the date on which such shares
can be sold at a profit without liability under Section 16(b) of the Exchange
Act. At such time, the Trust Manager, officer or principal shareholder will
realize income equal to the amount by which the then fair market value of the
Common Shares acquired pursuant to the exercise of such Option exceeds the price
paid for such Common Shares. Alternatively, a Trust Manager, officer or
principal shareholder who would not otherwise be taxed at the time the Common
Shares are transferred may file a written election, within 30 days of such
transfer, with the Internal Revenue Service, to be taxed as of the date of
transfer, on the difference between the then fair market value of the Common
Shares and the price paid for such Common Shares.
All income realized upon the exercise of a non-qualified Option will be
taxed as ordinary income. The Company will be entitled to a tax deduction (as
compensation) for the amount taxable to an individual (including a Trust
Manager, officer and principal shareholder) upon the exercise of a non-qualified
Option, as described above, in the same year as those amounts are taxable to the
individual.
Common Shares issued pursuant to the exercise of a non-qualified Option
generally will constitute a capital asset in the hands of an individual
(including a Trust Manager, officer or principal shareholder) and will be
eligible for capital gain or loss treatment upon any subsequent disposition. The
holding period of such individual will commence upon the date he or she
exercises the non-qualified Option. The individual's basis in the Common Shares
will be equal to the greater of their fair market value as of that date or the
amount paid for such Common Shares. If, however, an individual uses Common
Shares which he or she owns to pay, in whole or in part, the exercise price for
Common Shares acquired pursuant to the exercise of a non-qualified Option, (a)
the holding period for the newly issued Common Shares equal in value to the old
Common Shares which were surrendered upon the exercise shall include the period
during which the old Common Shares were held, (b) the individual's basis in such
newly issued Common Shares will be the same as his or her basis in the
surrendered Common Shares, (c) no gain or loss will be realized by the
individual on the old Common Shares surrendered, and (d) the individual will
realize ordinary income in an amount equal to the fair market value of the
additional number of Common Shares received over and above the number of old
Common Shares surrendered.
The Federal income tax consequences to an individual who receives Restricted
Share Awards generally will, under current law, be as follows:
An individual will not realize any income when the right to acquire Common
Shares subject to a Restricted Share Award is granted, or when the Common Shares
issued pursuant to a Restricted Share Award are registered in the individual's
name. The individual will realize ordinary income as and when the Common Shares
are no longer subject to a substantial risk of forfeiture (which risk of
forfeiture includes the restrictions imposed by Section 16(b) of the Exchange
Act), in an amount equal to the difference between the fair market value of the
Common Shares as of such date and the price he or she paid for such Common
Shares. Alternatively, the individual can file a written election with the
Internal Revenue Service, no more than 30 days after the Common Shares are
transferred to him or her pursuant to a Restricted Share Award to be taxed as of
the date of transfer on the difference between the then fair market value of the
Common Shares and the price he or she paid for such Common Shares. Once the
individual has realized ordinary income with respect to the Common Shares, any
subsequent increase in the value of the Common Shares generally will be taxed
when the Common Shares are sold as long-term or short-term capital gain,
depending on how long the Common Shares are held. The individual's holding
period with respect to the Common Shares will begin on the date he or she
realizes ordinary income with respect to the Common Shares and the basis in the
Common Shares will be equal to their then fair market value. The Company will be
entitled to a tax deduction when, and to the extent, ordinary income is realized
by the individual with respect to such Common Shares. Any dividends or other
distributions paid on the Common Shares generally will be taxable when
distributed to the individual.
An individual will be subject to tax, at ordinary income rates, on the
amount of cash and the fair market value of any property received upon the
exercise of any Rights or Limited Rights, or pursuant to Performance Units
19
or Performance Share Awards. The Company will be entitled to a tax deduction
equal to the amount includible in the individual's income.
In addition to the Federal income tax consequences discussed above, Section
280G of the Code provides that if an officer, shareholder or highly compensated
individual receives a payment which is in the nature of compensation and which
is contingent upon a change in control of the employer, and such payment equals
or exceeds three times his or her "base salary" (as described below), then any
amount received in excess of such base salary shall be considered an "excess
parachute payment." An individual's "base salary" is equal to his or her average
annual compensation over the five-year period (or period of employment, if
shorter) ending with the close of the individual's taxable year immediately
preceding the taxable year in which the change in control occurs. If the
taxpayer establishes, by clear and convincing evidence, that an amount received
is reasonable compensation for past or future services, all or a portion of such
amount may be deemed not to be an excess parachute payment. If any payments made
under the Plan in connection with a change in control of the Company constitute
excess parachute payments with respect to any individual (and such payments are
not reduced or eliminated pursuant to the terms of the Plan), then in addition
to any income tax which would otherwise be owed on such payment, the individual
will be subject to an excise tax equal to 20% of such excess parachute payment
and the Company will not be entitled to any tax deduction to which it otherwise
would have been entitled with respect to such excess parachute payment.
Section 280G provides that payments pursuant to a contract entered into or
amended within one year of a change in control are presumed to be parachute
payments unless the individual establishes, by clear and convincing evidence,
that such contract was not entered into or amended in contemplation of a change
in control. In addition, the grant of an Incentive Award within one year of a
change in control or the acceleration of an Incentive Award because of a change
in control may be considered a parachute payment. Pursuant to proposed
regulations issued by the Treasury Department under Section 280G, the
acceleration of a non-qualified stock option because of a change in control is
considered a parachute payment in an amount equal to the value of the
accelerated portion of the Option. Even if the grant of an Incentive Award
within one year of a change in control or the acceleration of an Incentive Award
is not a parachute payment for purposes of Section 280G, the exercise of an
Option or Right granted within one year of the change in control or the exercise
of the accelerated portion of an Option or Right may result in a parachute
payment, in an amount equal to the excess of the fair market value of the Common
Shares received upon exercise of the Option over the exercise price (or the cash
or fair market value of Common Shares received upon the exercise of Rights).
Payments received for the cancellation of an Incentive Award because of a change
in control may also result in parachute payments.
Under Section 162(m) of the Code, publicly held companies may not deduct
compensation for certain employees to the extent that such compensation exceeds
$1 million for the taxable year. The $1 million limitation applies to the
Company's Chief Executive Officer and the four most highly compensated officers
other than the Chief Executive Officer. Compensation which is performance based
(as defined in the Code and rules and regulations thereunder), however, is not
counted as subject to the deductibility limitation of Section 162(m). Income
pursuant to Options and Rights under the Plan is intended to permit full
deduction by the Company, by qualifying such income as performance-based
compensation and, therefore, exempt from the limitations of Section 162(m).
Income pursuant to Limited Rights, Restricted Share Awards, Performance Units
and Performance Share Awards would be subject to the deductibility limitations
of Section 162(m).
The foregoing summary with respect to Federal income taxation does not
purport to be complete and reference is made to the applicable provisions of the
Code.
PROPOSAL THREE:
RATIFICATION OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Trust Managers
of the Company has appointed the firm of Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 1997. The affirmative vote
of a majority of the Common Shares present, or represented, and entitled to vote
at the meeting, is required to ratify the appointment of Deloitte & Touche LLP.
A representative of Deloitte & Touche LLP is expected to be present at the
Meeting. The representative will be afforded the opportunity to make a statement
and to respond to appropriate questions of shareholders. If the resolution
ratifying the appointment of Deloitte & Touche LLP as independent auditors is
approved by the
20
shareholders, the Board of Trust Managers nevertheless retains the discretion to
select different auditors in the future, should the Board then deem it in the
Company's best interest. Any such selection need not be submitted to a vote of
shareholders.
SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals on matters appropriate for
shareholder action consistent with regulations of the Securities and Exchange
Commission (the "Commission"). Should a shareholder intend to present a proposal
at the Company's Annual Meeting of Shareholders to be held in 1998, it must be
received by the Secretary of the Company, 3200 Southwest Freeway, Suite 1500,
Houston, Texas 77027, not later than December 31, 1997, in order to be included
in the Company's proxy statement and form of proxy relating to that meeting.
SOLICITATION PROCEDURES
Officers and regular employees of the Company, without extra compensation,
may solicit the return of proxies by mail, telephone, telegram or personal
interview. Certain holders of record, such as brokers, custodians and nominees,
are being requested to distribute proxy materials to beneficial owners and to
obtain such beneficial owners' instructions concerning the voting of proxies.
The cost of solicitation of proxies (including the cost of reimbursing
banks, brokerage houses, and other custodians, nominees and fiduciaries for
their reasonable expenses incurred in forwarding proxy soliciting material to
beneficial owners) will be paid by the Company.
MISCELLANEOUS
A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 1996 was mailed on or about March 31, 1997 to shareholders of
record on March 27, 1997.
The information set forth in this Proxy Statement under the caption
"Executive Compensation--Report of the Compensation Committee of the Board of
Trust Managers" and "--Performance Graph" shall not be deemed to be (i)
incorporated by reference into any filing by the Company under the Securities
Act or the Exchange Act, except to the extent that in any such filing the
Company expressly so incorporates such information by reference, and (ii)
"soliciting material" or to be "filed" with the Commission.
Where information contained in this Proxy Statement rests particularly
within the knowledge of a person other than the Company, the Company has relied
upon information furnished by such person or contained in filings made by such
person with the Commission.
21
CAMDEN PROPERTY TRUST
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, JUNE 5, 1997
The undersigned, revoking any proxy heretofore given, hereby appoints Richard
J. Campo, D. Keith Oden and G. Steven Dawson, or any of them, proxies of the
undersigned, with full power of substitution, to vote all of the common shares
of beneficial interest of CAMDEN PROPERTY TRUST (the "Company") which the
undersigned is entitled to vote at the Company's Annual Meeting to be held at
10:00 A.M., local time, on Thursday, June 5, 1997, at the Ritz Carlton Hotel,
1919 Briar Oaks Lane, Houston, Texas and at any adjournment thereof, hereby
ratifying all that said proxies or their substitutes may do by virtue hereof,
and the undersigned authorizes and instructs said proxies to vote as set forth
on the Reverse Side hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUST MANAGERS.
THE BOARD OF TRUST MANAGERS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED IN
PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4.
Please Fill in, Date, Sign and Mail this Proxy in the enclosed postage-paid
return envelope.
By signing and returning this Proxy, the undersigned acknowledges receipt of
the Notice of Annual Meeting and Proxy Statement and of the Annual Report and
financial statements of the Company preceding or accompanying the same.
(PLEASE DATE AND SIGN ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
CAMDEN PROPERTY TRUST
JUNE 5, 1997
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
PLEASE MARK YOUR
A [X] VOTES AS IN THIS
EXAMPLE.
1. Election of Trust Managers.
WITHHOLD
FOR AUTHORITY
[_] [_]
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the line below.
- --------------------------------------
NOMINEES: RICHARD J. CAMPO
WILLIAM R. COOPER
GEORGE A. HROLICKA
LEWIS A. LEVEY
D. KEITH ODEN
F. GARDNER PARKER
STEVEN A. WEBSTER
2. Approval of an amendment to the 1993 Share Incentive Plan to increase the
number of shares authorized for issuance under the plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Approval of the appointment of Deloitte & Touche LLP as independent auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments thereof.
FOR AGAINST ABSTAIN
[_] [_] [_]
Signature Date:
____________________________________ ---------------------------
Date:
- --------------------------------------------- ___________________________
SIGNATURE IF HELD JOINTLY
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. IF SHARES ARE REGISTERED IN
THE NAMES OF TWO OR MORE PERSONS, EACH SHOULD SIGN. EXECUTORS, ADMINISTRATORS,
TRUSTEES OR GUARDIANS, ATTORNEYS AND CORPORATE OFFICERS SHOULD ADD THEIR TITLE.