SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant
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))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Section 240.14a-11(C) or
Section 240.14a-12
Home Properties of New York, Inc.
(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):
No fee required
$125 per Exchange Act Rules O-11c(1)(ii), 14a-6(I)(1), 14a-6(I)(2)or
Item 22(a)(2) of Schedule 14A Fee computed on table below per Exchange
Ace Rules 14a-6(I) (4) and O-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------
2) Aggregate Number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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Fee paid previously by written preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act
Rule O-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: ----------------------------------------------------
HOME PROPERTIES OF NEW YORK, INC.
Suite 850
Clinton Square
Rochester, New York 14604
March 20, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Home Properties of New York, Inc. The Annual Meeting will
be held on Tuesday, May 5, 1998 at 2:00 p.m. at The Strong Museum, One
Manhattan Square, Rochester, New York 14607.
A Notice of Annual Meeting and a Proxy Statement are enclosed.
They describe the matters to be acted upon at the Annual Meeting. Your vote
on these matters is very important. Please sign, date and return the
enclosed proxy card in the envelope provided. This will insure that your
shares are represented at the meeting, whether or not you plan to attend in
person.
We look forward to seeing you at the meeting.
Norman P. Leenhouts
Chairman and Co-Chief Executive Officer
Nelson B. Leenhouts
President and Co-Chief Executive Officer
HOME PROPERTIES OF NEW YORK, INC.
Suite 850
Clinton Square
Rochester, New York 14604
---------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 1998
---------------------------------------
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders
of Home Properties of New York, Inc. (the "Company") will be held on Tuesday,
May 5, 1998 at 2:00 p.m. at The Strong Museum, One Manhattan Square, Rochester,
New York 14607 for the following purposes:
1. To elect eleven directors of the Company to serve until
the 1999 Annual Meeting of Stockholders and until their respective
successors are elected;
2. To ratify the Board of Director's appointment of Coopers &
Lybrand as the Company's independent auditors for 1998;
3. To consider the approval of an amendment to the Company's
Articles of Incorporation to increase the number of authorized shares
of Common Stock, par value $.01 per share, to an aggregate of
50,000,000 shares;
4. To consider the approval of issuance of up to 25,000
shares of the Company's Common Stock to directors in payment of a
portion of annual directors' fees;
5. To consider the approval of the issuance of up to 500,000
shares of the Company's Common Stock to directors, officers and key
employees pursuant to the Company's Director, Officer and Employee
Stock Purchase and Loan Plan; and
6. To consider and act upon any other matters that are
properly brought before the Annual Meeting and at any adjournments or
postponements thereof.
The Board of Directors set the close of business on March 17, 1998 as
the record date. Only stockholders whose names appear on the stock register of
the Company at the close of business on the record date will be entitled to
notice of and to vote at the Annual Meeting and at any adjournments or
postponements. (If you hold your stock in the name of a brokerage firm, bank or
other nominee, only that entity can vote your shares. Please give instructions
for your shares to be voted to the person responsible for your account.)
Please complete and sign the enclosed proxy card. The proxy
represented by this card is solicited by the Board of Directors of the Company.
Please mail the card promptly in the enclosed postage-prepaid envelope. You may
change the votes on any proxy by sending a written notice to Ann M. McCormick,
Secretary of the Company at 850 Clinton Square, Rochester, New York 14604 before
the Annual Meeting, by sending a different proxy card with a later date before
the Annual Meeting or by voting in person by ballot at the Annual Meeting.
Stockholders of record who attend the Annual Meeting may vote in person, even if
they have previously delivered a signed proxy.
Rochester, New York By Order of the Board of Directors
March 20, 1998
Ann M. McCormick
Secretary
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY
RETURN THE ENCLOSED PROXY CARD. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE
IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
HOME PROPERTIES OF NEW YORK, INC.
Suite 850
Clinton Square
Rochester, New York 14604
---------------------------------------
PROXY STATEMENT
---------------------------------------
FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 5, 1998
March 20, 1998
This Proxy Statement is delivered to you in connection with the
solicitation of proxies by the Board of Directors of Home Properties of New
York, Inc. (the "Company") for use at the 1998 Annual Meeting of Stockholders of
the Company, (the "Annual Meeting"). The Annual Meeting will be held on Tuesday,
May 5, 1998 at 2:00 p.m. at The Strong Museum, One Manhattan Square, Rochester,
New York 14607.
This Proxy Statement is first being sent to stockholders on or about
March 20, 1998. The Board of Directors set the close of business on March 17,
1998 as the record date (the "Record Date") for determining which stockholders
are entitled to notice of and to vote at the Annual Meeting (including any
adjournments or postponements). Only holders of the Company's Common Stock
("Common Stock") whose names appear on the stock registers of the Company at the
close of business on the Record Date will be entitled to notice of and to vote
at the Annual Meeting. As of the Record Date, there were
[----------------------] shares of Common Stock outstanding and entitled to vote
at the Annual Meeting. Stockholders are entitled to one vote for each share of
Common Stock they hold.
Please complete, sign, date and promptly return the accompanying Proxy
Card. An envelope with prepaid postage is enclosed. The persons named on the
Proxy Card will vote the shares of Common Stock as directed on properly executed
cards if they are received before the vote at the Annual Meeting and not
revoked. If a proxy is submitted without any instructions, the proxy will be
voted FOR Proposal 1 for the election of the eleven nominees for directors of
the Company named in this Proxy Statement; FOR Proposal 2 to ratify the
appointment of Coopers & Lybrand as independent auditors; FOR Proposal 3
regarding the amendment to the Articles of Incorporation; FOR Proposal 4
regarding the authorization of an additional 25,000 shares of Common Stock to
pay additional fees to the directors; and FOR Proposal 5 regarding the approval
of the Director, Officer and Employee Stock Purchase and Loan Plan. The Company
does not expect any matters which are not described in this Proxy Statement to
be presented at the Annual Meeting. If other matters are presented, proxies will
be voted in accordance with the discretion of the proxy holders.
For the Company to be able to act on the listed matters at the Annual
Meeting, at least a majority of the total number of outstanding shares of Common
Stock entitled to vote must be present, either in person or by proxy. Under
Maryland law, if a stockholder abstains on a vote, the abstention does not
constitute a vote "for" or "against" a matter. Thus, abstentions are disregarded
in determining the "votes cast" for purposes of electing directors. With respect
to certain matters, brokers and certain other nominees are entitled to vote in
their discretion if the beneficial owner or person entitled to vote does not
give the broker or nominee instructions on how to vote. If, however, the brokers
or nominees do not receive instructions from the beneficial owner or other
person entitled to vote such shares on Proposal 3 regarding the amendment to the
Articles of Incorporation, on Proposal 4 regarding the issuance of up to 25,000
shares of Common Stock to directors and on Proposal 5 regarding the approval of
the issuance of up to
500,000 shares of Common Stock pursuant to the Director,
Officer and Employee Stock Purchase and Loan Plan, they may not vote on those
proposals and their "non-votes" will be treated like abstentions. Under the
rules of the New York Stock Exchange, Proposals 3, 4 and 5 must be approved by a
majority of the votes cast so long as the total of votes cast on the proposal is
more than 50% of the total number of shares entitled to vote.
A stockholder of record who submits a proxy may revoke it at any time
before the vote at the Annual Meeting: (i) by giving a written revocation to Ann
M. McCormick, the Secretary of the Company, at 850 Clinton Square, Rochester,
New York 14604; (ii) by filing another properly executed proxy with a later
date; or (iii) by attending the Annual Meeting in person and voting by ballot.
Any stockholder of record as of the Record Date who attends the Annual Meeting
may vote in person even if they have previously sent in a proxy card. If a
stockholder attends the Annual Meeting but does not complete a ballot their
shares of Common Stock will be voted in accordance with his previously given
proxy.
The Company is mailing its 1997 Annual Report to Stockholders,
including its financial statements for the fiscal year ended December 31, 1997,
at the same time this Proxy Statement is being mailed to stockholders. Portions
of the Annual Report are incorporated in this Proxy Statement by reference. A
stockholder may also obtain a copy of the Company's Form 10-K Annual Report
filed with the Securities and Exchange Commission by writing Home Properties of
New York, Inc., Stockholder Services, 850 Clinton Square, Rochester, New York
14604.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, eleven individuals will be elected to serve as
directors until the 1999 Annual Meeting and until their successors are elected.
The Board of Directors has nominated Norman P. Leenhouts, Nelson B. Leenhouts,
Richard J. Crossed, Amy L. Tait, Burton S. August, Sr., William Balderston, III,
Alan L. Gosule, Leonard F. Helbig, III, Roger W. Kober, Clifford W. Smith, Jr.,
and Paul L. Smith to serve as directors (the "Nominees"). Each of the Nominees
is currently serving as a director of the Company. The Board of Directors
anticipates that each of the Nominees will serve as a director if elected. If
any person nominated by the Board of Directors is unable to accept election, the
proxies will be voted for the election of another person recommended by the
Board of Directors.
The favorable vote of the holders of a majority of the shares of Common
Stock cast at the Annual Meeting is required for the election of the nominees as
directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.
Information Regarding Nominees for Director
Brief biographical descriptions of the Nominees follow. The information
was furnished to the Company by the Nominees. The information is up to date
through March 17, 1998.
Page 2
Norman P. Leenhouts, 62, has served as Chairman of the Board of
Directors, Co-Chief Executive Officer and a director of the Company since its
inception in 1993. He has also served as Chairman of the Board of Home
Properties Management, Inc. ("HP Management") and as a director of Conifer
Realty Corporation ("Conifer Realty") since their formation. Norman Leenhouts is
a co-owner, together with Nelson Leenhouts, of Home Leasing Corporation, the
Company's predecessor ("Home Leasing"), and served as Chairman of Home Leasing
since 1971. He is a director of Hauser Corporation and Rochester Downtown
Development Corporation. He also serves on the Board of Trustees of Roberts
Wesleyan College. His is a graduate of the University of Rochester and is a
certified public accountant. He is the twin brother of Nelson Leenhouts.
Nelson B. Leenhouts, 62, has served as President, Co-Chief Executive
Officer and a director of the Company since its inception in 1993. He has also
served as President and Chief Executive Officer of HP Management and as a
director of Conifer Realty since their formation and has recently been appointed
a Vice President of Conifer Realty. Nelson Leenhouts was the founder, and a
co-owner, together with Norman Leenhouts, of Home Leasing, and served as
President of Home Leasing since 1967. He is a director of Hauser Corporation.
Nelson Leenhouts is a graduate of the University of Rochester. He is the twin
brother of Norman Leenhouts.
Richard J. Crossed, 58, has served as Executive Vice President and a
director of the Company and as a director, President and Chief Executive Officer
of Conifer Realty since January 1, 1996. He served as President and Chief
Executive Officer of Conifer Development, Inc. and C.O.F. (formerly Conifer
Realty, Inc.) (collectively, "Conifer") from 1985. Before becoming President of
Conifer, he served as Director of Development for Conifer. Mr. Crossed is a
director of the St. Joseph's Villa and is active in many housing organizations.
He has served on the New York State Housing Turnkey Task Force and New York
State Low-Income Housing Tax Credit Task Force. Mr. Crossed is a graduate of
Bellarmine College.
Amy L. Tait, 39, has served as Executive Vice President and a director
of the Company since its inception in 1993. She has also served as a director of
HP Management since its formation. Mrs. Tait joined Home Leasing in 1983 and has
had several positions, including Senior and Executive Vice President and Chief
Operating Officer. She currently serves on the M & T Bank Advisory Board and the
boards of the United Way of Rochester and GeVa Theatre. Mrs. Tait is a graduate
of Princeton University and hold a Masters degree in Business Administration
from the William E. Simon Graduate School of Business Administration of the
University of Rochester. She is the daughter of Norman Leenhouts.
Burton S. August, Sr., 82, has been a director of the Company since
August, 1994. Mr. August is currently a director of Monro Muffler Brake, Inc., a
publicly traded company where Mr. August served as Vice President from 1969
until he retired in 1980. Mr. August is also a trustee emeritus of Rochester
Institute of Technology, a trustee of Strong Museum and a trustee of the
Otetiana Council Boy Scouts of America.
William Balderston, III, 70, has been a director of the Company since
August, 1994. From 1991 to the end of 1992, he was an Executive Vice President
of The Chase Manhattan Bank, N.A. From 1986 to 1991, he was President and Chief
Executive Officer of Chase Lincoln First Bank, N.A., which was merged into The
Chase Manhattan Bank, N.A. He is a director of Bausch & Lomb Incorporated and
Rochester Gas and Electric Corporation, as well as a Trustee of the University
of Rochester. Mr. Balderston is a graduate of Dartmouth College.
Alan L. Gosule, 57, has been a director of the Company since December,
1996. Mr. Gosule has been a partner in the law firm of Roger & Wells LLP, New
York, New York, since August, 1991 and prior to that time was a partner in the
law firm of Gaston & Snow. He serves as Chairman of the Rogers & Wells LLP Tax
Department and Real Estate Securities practice group. Mr. Gosule is a graduate
of Boston University and its Law School and received a LL.M. from Georgetown
University. Mr. Gosule also serves on the Boards of Directors of 15 funds of the
Northstar Mutual Funds, the Simpson Housing Limited Partnership, F.L. Putnam
Investment Management Company and CORE Cap, Inc. Rogers & Wells LLP acted as
counsel to Coopers & Lybrand LLP in its capacity as advisor to the State
Treasurer of the State of Michigan in connection with its investment of
retirement funds in Home Properties of New York, L.P. (the "Operating
Partnership") and Mr. Gosule was the nominee of the State Treasurer under the
terms of the investment agreements relating to that transaction.
Page 3
Leonard F. Helbig, III, 52, has been a director of the Company since
August, 1994. Mr. Helbig has served as Executive Managing Director of the Asset
Services and Financial Services Groups and a Director of Cushman & Wakefield
since 1984. He joined Cushman & Wakefield in 1980 and is also a member of that
firm's Executive and National Management Committees. Mr. Helbig is a member of
the Urban Land Institute, the Pension Real Estate Association and the
International Council of Shopping Centers. Mr. Helbig is a graduate of LaSalle
University and holds the MAI designation of the American Institute of Real
Estate Appraisers.
Roger W. Kober, 64, has been a director of the Company since August,
1994. Mr. Kober is currently a director of Rochester Gas and Electric
Corporation where he was employed from 1965 until his retirement on January 1,
1998. From March, 1996 until January 1, 1998, Mr. Kober served as Chairman and
Chief Executive Officer of Rochester Gas and Electric Corporation. He is also a
member of the Board of Trustees of Rochester Institute of Technology. Mr. Kober
is a graduate of Clarkson College and holds a Masters Degree in Engineering from
Rochester Institute of Technology.
Clifford W. Smith, Jr., 51, has been a director of the Company since
August, 1994. Mr. Smith has been the Clarey Professor of Finance of the William
E. Simon Graduate School of Business Administration of the University of
Rochester since 1988. He has written numerous books, monographs, articles and
papers on a variety of financial, capital markets, risk management and
accounting topics and has held a variety of editorial positions on a number of
journals. Mr. Smith is a graduate of Emory University and holds a Doctor of
Economics from the University of North Carolina at Chapel Hill.
Paul L. Smith, 62, has been a director of the Company since August, 1994.
Mr. Smith was a director, Senior Vice President and the Chief Financial Officer
of the Eastman Kodak Company from 1983 until he retired in 1993. He is currently
a director of Canandaigua Brands, Inc., Performance Technologies, Incorporated
and BioWorks, Inc. He is also a member of the Board of Trustees of the George
Eastman House, GeVa Theatre and Ohio Wesleyan University. Mr. Smith is a
graduate of Ohio Wesleyan University and holds an MBA Degree in finance from
Northwestern University
The Board of Directors and Its Committees
Board of Directors. The Company is managed by a Board of Directors
composed of eleven members, a majority of whom are independent of the Company's
management (the "Independent Directors"). The Board of Directors met five times
in 1997. Each of the directors attended at least 75% of the meetings of the
Board of Directors and any committees of which the director served during 1997.
Audit Committee. Paul Smith, Roger Kober, Alan Gosule and Leonard
Helbig form the Audit Committee of the Board of Directors. The Audit Committee
recommends the engagement of independent public accountants, reviews the scope
of the audit engagement and any other services, reviews the independent public
accountants' letter of comments and management's responses to those comments,
approves other professional services provided by the independent public
accountants, reviews the independence of the independent public accountants,
reviews any major accounting changes made or contemplated, reviews the adequacy
of the Company's internal accounting controls. The Audit Committee consists
solely of Independent Directors. It met twice during 1997.
Compensation Committee. Burton August, William Balderston, Alan Gosule
and Clifford Smith form the Compensation Committee of the Board of Directors.
The Compensation Committee establishes remuneration levels for officers of the
Company, reviews significant employee benefit programs and establishes and
administers executive compensation programs, including bonus plans, stock option
and other equity-based programs, deferred compensation plans and any other cash
or stock incentive programs. The Compensation Committee consists solely of
Independent Directors and met twice during 1997.
Page 4
The Board of Directors does not have a standing nominating committee.
The entire Board of Directors considers Board composition and nominees,
performing the function of a nominating committee.
Compensation of Directors
In 1997, the Company paid its directors who are not employees of the
Company annual compensation of $10,000 plus $1,000 per day for attendance (in
person or by telephone) at Board and committee meetings. Directors of the
Company who are employees of the Company do not receive any compensation for
their services as directors. All directors are reimbursed for their expenses
incurred in attending directors' meetings. Pursuant to the Company's Stock
Benefit Plan, each non-employee director was granted options to purchase 3,500
shares of Common Stock immediately following the annual meeting of stockholders
in 1997 and will be granted options to purchase 3,500 shares immediately
following the annual meeting of stockholders in 1998 and 1999. The options have
an exercise price equal to the fair market value of the Company's Common Stock
on the date of grant. Subject to stockholder approval of Proposal 4 regarding
the annual stock grants to Directors (the "Directors' Stock Grant Plan"), in
lieu of an increase in the cash compensation paid to Independent Directors, the
Board has approved the grant to each Independent Director of an additional 150
shares of Common Stock effective January 1, 1998. The Board shall determine the
number of additional shares to be awarded to Independent Directors as of the
first of the following calendar years.
Page 5
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid during 1995,
1996 and 1997 to the Company's two Co-Chief Executive Officers and the other
four most highly compensated executive officers (collectively the "Named
Executives").
Summary Compensation Table
Long-Term
Compensation
Annual Awards
Compensation Shares
---------------------- Underlying
Name and Principal Position Year Salary Bonus Options
- - -------------------------------------------- ------- -------- ------- -------------
Norman P. Leenhouts
Chairman and Co-Chief Executive Officer 1995 $132,000 0 0
1996 145,200 $ 59,702 7,338 sh.(2)
1997 159,720 143,109 15,000 sh.(3)
Nelson B. Leenhouts
President and Co-Chief Executive Officer 1995 $132,000 0 0
1996 145,200 $ 59,702 7,338 sh.(2)
1997 159,720 143,109 15,000 sh.(3)
Richard J. Crossed 1996(1) $145,200 $ 59,702 7,338 sh.(2)
Executive Vice President 1997 159,720 143,109 15,000 sh.(3)
Amy L. Tait 1995 $ 87,917 0 0
Executive Vice President 1996 103,000 $ 42,351 5,206 sh.(2)
1997 110,725 99,210 10,000 sh.(3)
David P. Gardner 1995 $ 73,500 0 0
Vice President, Treasurer and Chief Executive 1996 86,000 $ 18,564 2,174 sh.(2)
Officer 1997 91,000 40,768 5,000 sh.(3)
Ann M. McCormick, Esq. 1995 $ 71,000 0 0
Vice President, General Counsel and Secretary 1996 84,000 $ 29,996 2,123 sh.(2)
1997 90,000 42,336 5,000 sh.(3)
- - ----------------
(1) Mr. Crossed was not employed by the Company in 1995.
(2) These options were granted under the Company's Stock Benefit Plan in
connection with the purchase of the Company's common stock under the
Director, Officer and Employee Stock Purchase and Loan Program described
below. The options are exercisable for ten years at $20.50 per share and
vest over five years.
(3) These options were granted under the Company's Stock Benefit Plan and are
exercisable for ten years at $26.50 per share.
Page 6
Option Grants in Fiscal Year 1997
The following table sets forth certain information relating to the
options granted with respect to fiscal year ended December 31, 1997. The columns
labeled "Potential Realizable Value" are based on hypothetical 5% and 10% growth
assumptions in accordance with the rules of the Securities and Exchange
Commission. The Company cannot predict the actual growth rate of the Common
Stock.
Option Grants In Last Fiscal Year*
Individual Grants
-----------------------------------------------------------
Percent of Potential Realizable Value
Number of Total Options at Assumed Annual Rates of
Shares Granted to Exercise Stock Price Appreciation For
Underlying Employees in or Base Option Term
Options Fiscal Price Expiration ----------------------------
Name Granted Year ($/sh) Date 5% 10%
---- ---------- ------------- -------- ---------- -- ---
Norman P. Leenhouts 15,000 12.87% $26.50 10/28/2007 $249,976 $699,387
Nelson B. Leenhouts 15,000 12.87% $26.50 10/28/2007 $249,976 $699,387
Richard J. Crossed 15,000 12.87% $26.50 10/28/2007 $249,976 $699,387
Amy L. Tait 10,000 8.58% $26.50 10/28/2007 $166,651 $466,258
David P. Gardner 5,000 4.29% $26.50 10/28/2007 $ 83,325 $233,129
Ann M. McCormick 5,000 4.29% $26.50 10/28/2007 $ 83,325 $233,129
- - ------------
* Stock appreciation rights were not granted in 1997
Page 7
Option Exercises and Year-End Option Values
No options were exercised by the Named Executives in 1997. The following
table sets forth the value of options held at the end of 1997 by the Company's
Named Executives.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values(1)
Number of Shares
Number of Underlying Unexercised Value of Unexercised in-the-
Shares Options at Fiscal Year-End Money Options at
Acquired on Value -------------------------- FiscalYear-End (2)
Name Exercise Realized ------------------------------
----------- -------- Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Norman P. Leenhouts 0 0 89,467 sh. 20,871 sh. $730,310 $ 49,574
Nelson B. Leenhouts 0 0 89,467 sh. 20,871 sh. $730,310 $ 49,574
Richard J. Crossed 0 0 89,467 sh. 20,871 sh. $730,310 $ 49,574
Amy L. Tait 0 0 53,841 sh. 39,364 sh. $439,262 $322,929
David P. Gardner 0 0 9,435 sh. 12,739 sh. $ 76,596 $ 64,192
Ann M. McCormick 0 0 9,425 sh. 12,698 sh. $ 76,529 $ 63,918
(1) Stock appreciation rights were not granted in 1997.
(2) Based on the closing price of the Common Stock on the NYSE on December 31,
1997 of $27.1875 less the per Share exercise price of the options.
Employment Agreements
Norman and Nelson Leenhouts entered into employment agreements with the
Company prior to its initial public offering providing for an initial term of
five years commencing August 4, 1994. The agreements provide for the employment
of Norman P. Leenhouts as Chairman of the Board and Co-Chief Executive Officer
of the Company at an annual base salary of $120,000 and Nelson B. Leenhouts as
President and Co-Chief Executive Officer of the Company and President and Chief
Executive Officer of HP Management at an annual base salary of $120,000. The
base salaries under each employment agreement automatically increase by 10% each
year starting January 1, 1995. In addition, the employment agreements also
provide that if employment is terminated by the Company or not renewed without
cause, or terminated by the executive for good reason at any time, then the
executive is entitled to receive a severance payment equal to the executive's
annual base salary and incentive compensation for the preceding year multiplied
by two or the number of years remaining of the initial term, whichever is
greater. The employment agreements for Norman and Nelson Leenhouts have been
amended to provide that they will receive incentive compensation pursuant to the
Company's Incentive Compensation Plan as it may be revised by the Compensation
Committee from time to time, rather than as originally provided in the
employment agreements. For 1997, the formula contained in their Employment
Agreements would have resulted in higher bonuses.
Pursuant to their respective employment agreements with the Company,
Norman and Nelson Leenhouts are each subject to a covenant not to compete with
the Company during the term of his employment and, if either is terminated by
the Company for cause or resigns without good reason, for two years thereafter.
The covenants
Page 8
prohibit Norman and Nelson Leenhouts from participating in the
management, operation or control of any multifamily residential business which
is competitive with the business of the Company, except that they, individually
and through Home Leasing and its affiliates, may continue to own and develop the
properties managed by HP Management. The Leenhoutses have also agreed that any
commercial property which may be developed by them will be managed by HP
Management subject to the approval of the outside members of the Board of
Directors.
Richard J. Crossed also entered into an Employment Agreement with the
Company, effective January 1, 1996. The terms of that agreement are
substantially the same as the employment agreements entered into by Norman and
Nelson Leenhouts as described above. The initial term is for five years and
identical termination provisions are provided. In his employment agreement, Mr.
Crossed has agreed not to compete with the Company during the term of his
employment and, if he is terminated by the Company for cause or resigns without
good reason, for three years thereafter.
Incentive Compensation Plan
The Company's incentive compensation plan (the "Incentive Plan") for
officers and key employees of the Company was amended for 1997 to provide that
eligible officer and key employees may earn a cash bonus ranging from 0% to 100%
of base salary based on increases in the Company's Funds from Operations ("FFO")
per Share. The 1997 Incentive Plan provides for a bonus pool to be established
as follows:
Percent of Growth
Growth in FFO/Share Contributed to Bonus Pool
------------------- -------------------------
First 2% 0%
Next 1% 20%
Next 1% 30%
Next 1% 40%
Growth Over 5% 50%
A factor is applied to each eligible participant's salary, ranging from
1% to 10%, to determine the split of the bonus pool. The factor applied to the
salaries of Norman and Nelson Leenhouts, Richard Crossed and Amy Tait is 10%,
with the maximum bonus payable to them being 100% of their base salary. The
factor applied to the salaries of David Gardner and Ann McCormick is 5%, with
the maximum bonus payable to them being 50% of their base salary.
Director, Officer and Employee Stock Purchase and Loan Program
In August 1996, the Board of Directors approved a Director, Officer and
Employee Stock Purchase and Loan Program (the "Stock Purchase Program").
Pursuant to the Stock Purchase Program, each officer and director of the Company
was eligible to receive loans for the purchase of Common Stock under the
Company's Dividend Reinvestment, Stock Purchase, Resident Stock Purchase and
Employee New Stock Purchase Plan ("DRIP") and receive options to purchase Common
Stock under the Company's Stock Benefit Plan. The 1996 phase of the Stock
Purchase Program provided for loans up to a formula amount for each officer
based on salary and bonus category and up to $60,000 for each independent
director. The Company loaned approximately 50% of the purchase price and
arranged loans from a commercial bank, guaranteed by the Company, for the
balance. The 1996 phase of the Stock Purchase Program also provided for the
issuance of stock options to purchase .25 shares of Common Stock at the fair
market value on the date of issuance ($20.50) for each share of Common Stock
purchased. With respect to the 1996 phase of the Stock Purchase Program,
eighteen officers purchased 190,345 shares of Common Stock and received 47,592
options to purchase Common Stock at an exercise price of $20.50 vesting over
five years. The six independent directors purchased an aggregate of 18,198
shares of Common Stock and received options to purchase 4,554 shares of Common
Stock for $20.50 per share vesting over five years. The Company loaned the
directors and officers an aggregate of $2,063,469 maturing on August 31, 2016
with simple interest at 7%. The Company also guaranteed bank loans totaling
$2,033,180 repayable from the quarterly dividends on the stock and the proceeds
of
Page 9
any sale of the stock and agreed to pay the commercial lender an interest
rate differential equal to .94% per annum of the outstanding loans in order to
bring the interest rate on the commercial portion of the loan to 7%. The Company
guarantee has subsequently been returned by the commercial lender and is no
longer in effect.
In October, 1997, the Board of Directors approved an additional loan
pursuant to the Stock Purchase Program. The 1997 loans were made on
substantially the same basis as the 1996 loans with the Company loaning
approximately 50% of the purchase price and arranging loans from a commercial
bank for the balance. The primary difference was that: (i) no Company guarantee
was provided to the commercial lender; (ii) no options were issued in connection
with the 1997 phase of the Stock Purchase Program; and (iii) interest on the
Company loans is to be paid currently from one-half of the dividends on the
stock rather than accruing as was the case with the 1996 phase of the Stock
Purchase Program. The Company agreed to pay the commercial lender an interest
rate differential payment on each loan equal to .84% per annum of the
outstanding balance in order to bring the interest rate on the commercial
portion of the loan down to 6.7%, the dividend yield on the Company's common
stock on the date that the loan was closed. The interest rate on the Company
portion of the loan was also 6.7%. With respect to the 1997 portion of the Stock
Purchase Program, 21 officers purchased 157,302 shares of Common Stock and 5 of
the Independent Directors purchased 12,380 shares in the aggregate. The Company
loaned the directors, officers and employees an aggregate of $2,262,283 maturing
on the earlier of the maturity of the 1996 phase of the Stock Purchase Program
or November 30, 2005.
In Proposal No. 5, the Company is seeking shareholder approval for the
issuance of up to 500,000 shares of Common Stock on terms similar to the Stock
Purchase Program. If such approval is received, the Company in the future will
be able to loan one hundred percent of the amount necessary to purchase up to
500,000 shares of Common Stock to eligible officers and employees and 50% of the
amount to non-employee directors under the current Federal Reserve Board margin
rules.
New Plan Benefits
The following table sets forth the information relating to all grants
of stock to be made pursuant to the Directors' Stock Grant Plan and to all
benefits which will be granted pursuant to the proposed Director, Officer and
Employee Stock Purchase and Loan Program if approved by the stockholders. Each
of the plans are described below.
Director, Officer and Employee
Directors' Stock Grant Plan Stock Purchase and Loan Plan
------------------------------- -------------------------------
Name and Position Value $ Shares Value $ Shares
- - ----------------- ------- ------ ------- ------
Named Executives, as a Group (1) (1) (2) (2)
Non-Employee Directors as a Group $28,546.88 (3) 1,050 sh. (2) (2)
Other Employees as a Group (1) (1) (2) (2)
(1) The proposed plan is for grants solely to non-employee directors.
(2) The proposed plan is to issue shares, subject to the discretion of the
Board of Directors or a committee thereof, on an annual basis. The number
of shares which may be available for purchase by any director, officer or
employee for 1998 and any subsequent year and the terms and conditions of
any loans with respect thereto has not yet been determined. The Company
cannot predict whether any eligible participant will elect to purchase
shares which may be offered.
(3) Based on the closing price of the Company's Common Stock on December 31,
1997 ($27.1875), the last trading date prior to the effective date of the
grant.
Paage 10
Performance Graph
The following graph compares the cumulative return on the Company's
Common Stock since its initial public offering in August 1994 through December
31, 1997 to the cumulative return of the NAREIT All Equity REIT Index and the
Standard and Poor's 500 Index for the same period. The total return assumes that
dividends were reinvested quarterly and is based on a $100 investment on August
1, 1994. Stockholders should note that past performance does not predict future
results.
[graph inserted here]
8/4/94 12/31/94 12/31/95 12/31/96 12/31/97
Company Common Stock $100 $104.65 $100.25 $143.32 $186.55
NAREIT All Equity REIT Index 100 98.45 113.49 153.51 184.60
S&P 500 Index 100 101.53 139.54 171.58 228.84
Page 11
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors establishes
performance criteria, reviews and administers compensation and benefits for
executive officers of the Company and broad-based compensation plans for the
other officers and employees generally. The Compensation Committee consists only
of Independent Directors. The objectives of the Company's compensation program
as adopted by the Compensation Committee are as follows: to enhance stockholder
value by attracting and retaining highly capable employees who are motivated to
reach the Company's operating and financial goals, to encourage ownership of the
Company's stock and to link compensation to the performance of the Company and
to total stockholder returns in order to align interests of executives and other
employees with those of its stockholders. The compensation program for the
Company's executive officers has three components: base salary, annual incentive
compensation under the Incentive Plan, and awards under the Company's Stock
Benefit Plan. In evaluating compensation, the Compensation Committee looks at
both the performance of the Company and stockholder returns, taking into account
such factors as general market conditions. It is the Committee's policy that
executive compensation should be deductible to the Company for federal income
tax purposes. The Committee will annually consider compensation decisions in
light of the limit on deductibility under Section 162(m) of the Internal Revenue
Code and related regulations.
Salary. For the five-year period beginning on August 4, 1994 and ending
August 4, 1999, the base salaries for the Company's Co-Chief Executive Officers,
Norman and Nelson Leenhouts were established in employment agreements
("Employment Agreements"), dated August 4, 1994, with base salaries starting at
an annual level of $120,000 for 1994 and increasing by 10% annually over the
preceding year. Effective on his joining the Company on January 1, 1996, Richard
Crossed entered into an employment agreement on essentially the same terms as
those of the Leenhoutses' Employment Agreements.
The Committee reviewed the recommendations of the Co-Chief Executive
Officers for proposed salaries for the other executive officers and the other
key officers of the Company for 1998 in light of the responsibilities and
personal performance of such officers and the compensation of persons with
similar responsibilities in other entities located in the geographic regions in
which the Company operates. The Committee acknowledged and considered that those
geographic regions have broadened.
The Committee expects to make an annual review of salaries of the other
executive officers and other key officers of the Company in light of those
factors and others relevant to the compensation objectives of the Company at the
time of review.
Incentive Compensation. The Incentive Plan provides cash bonuses based
on increases in the Company's Funds From Operations. The Incentive Plan,
originally adopted in 1994, has been amended in each subsequent year. The
Employment Agreements for the Leenhoutses have been amended to provide that they
will receive their incentive compensation pursuant to the Incentive Plan rather
than as originally provided in their Employment Agreements. For 1997, the
formula contained in their Employment Agreements would have resulted in higher
bonuses. The Compensation Committee determined that the two Co-Chief Executive
Officers were entitled to have the maximum factor of 10% applied to their
salaries for purposes of determining their share of the bonus pool. One-half of
the Co-Chief Executive Officers' bonus was made nondiscretionary and one-half
payable in the discretion of the Committee.
The Committee expects to continually review the Plan as it applies to
1998 and future years. Some changes to the Plan, as well as to awards for 1998,
may result.
Stock Compensation. Initial awards of stock options under the Company's
Stock Benefit Plan were made at the time of the Company's initial public
offering. All of the initial stock options were granted with an exercise price
of $19.00, the initial public offering price of the Company's Common Stock.
Norman and Nelson Leenhouts were each granted immediately exercisable options to
purchase 88,000 shares of Common Stock. Effective January 1, 1996, Richard J.
Crossed was also granted immediately exercisable options to purchase 88,000
shares of common stock at an exercise price of $19.00 per share. Amy Tait was
awarded options to purchase 88,000 shares of Common Stock, at an exercise price
of $19.00 per share, vesting over five years. The balance of the awards, to
Page 12
executive officers and other employees, vest 20% per year.
The Compensation Committee reviewed the number of options granted to
the Co-Chief Executive Officers and other executive officers in light of the
other elements of their compensation and their overall equity interest in the
Company's business, principally through ownership of units of limited
partnership interest in the Operating Partnership, and determined to encourage
officers to acquire additional Common Stock and options.
The Compensation Committee therefore recommended and the Board of
Directors approved an additional phase of the Stock Purchase Program. In
November, 1997 and pursuant to the Stock Purchase Program, each of the Named
Executives purchased the maximum number of shares available to them with the
provided loans: each of the Co-Chief Executive Officers and Mr. Crossed
purchased 23,962 shares of Common Stock; Amy L. Tait purchased 16,612 shares of
Common Stock; David P. Gardner purchased 6,826 shares of Common Stock; and Ann
M. McCormick purchased 6,751 shares of Common Stock. The purchase price for the
Common Stock so purchased was 97% of the "Market Price" of the Common Stock. For
purposes of the Stock Purchase Program, "Market Price" is the average of the
high and low prices on the New York Stock Exchange for the five trading days
preceding the date of the purchase, which is the same basis as provided in the
Company's DRIP.
In addition, the Compensation Committee recommended and the Board of
Directors approved the issuance of 116,500 additional options to purchase Common
Stock to certain officers and employees of the Company at the option price of
$26.50 per share, which was the closing price on the New York Stock Exchange for
a share of the Company's Common Stock on October 28, 1997, the date of the
grant. As of October 28, 1997, each of the Named Executives received additional
options which vest 20% per year and expire in ten years. Each of the Co-Chief
Executive Officers and Mr. Crossed received 15,000 additional options; Amy L.
Tait received 10,000 additional options; and each of David P. Gardner and Ann M.
McCormick received 5,000 additional options.
If the proposed Director, Officer and Employee Stock Purchase and Loan
Plan is approved by shareholders (see Proposal 5, below), the Compensation
Committee expects to recommend to the Board of Directors that the Named
Executives be permitted to purchase some portion of the 500,000 shares reserved
for issuance, at the fair market value at the time of issuance, to be purchased
with a 100% loan from the Company. The Compensation Committee has not made any
determination with respect to the number of shares available to each of the
Named Executives in 1998 at this time.
The Compensation Committee believes that such ownership ties the
interests of senior executives closely with those of stockholders to provide
them greater incentive to manage the Company to increase stockholder returns.
Respectfully submitted,
The Compensation Committee
Burton S. August, Sr.
William Balderston, III
Alan L. Gosule
Clifford W. Smith, Jr.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
During the fiscal year 1997, the Compensation Committee was comprised
of Burton S. August, Sr., William Balderston, III, Alan L. Gosule and Clifford
W. Smith, Jr. None of them have ever been an officer of the Company or any of
its subsidiaries. Each of the Compensation Committee members as well as each of
the other independent directors other than Paul L. Smith, participated in the
Company's Stock Purchase Program on November 10, 1997 and purchased 2,476 shares
of Common Stock through the Company's DRIP for $26.6629 per share (3% below the
five-day average market value as provided in that plan). The purchases were
financed 50% by a loan from the Company due on the earlier of the maturity of
the 1996 note under the Stock Purchase Program or November 30, 2005 and 50% by a
loan from a commercial bank arranged by the Company. Both loans bear interest
Page 13
at 6.7% and the Company agreed to pay the commercial lender an interest rate
differential equal to .84% per annum of the outstanding loan in order to bring
the interest rate to 6.7%.
STOCK BENEFIT PLAN
General
The Company adopted its 1994 Stock Benefit Plan (the "Stock Benefit
Plan") for the purpose of providing persons responsible for the future success
of the Company, including directors, officers, regional managers and on-site
property managers, with increased motivation and incentives to exert their best
efforts on behalf of the Company by enlarging their personal stake in its
success. The number of employees participating in the Stock Benefit Plan is
approximately 90. The Stock Benefit Plan limits the number of shares of Common
Stock issuable pursuant to the Plan to 1,000,000 shares, of which options to
purchase 755,448 shares have, to date, been granted to employees and are
currently outstanding. In 1997, the number of shares issuable to non-employee
directors under the Plan was increased by 100,000 to 154,000, of which 83,054
have been issued. Each non-employee director who continues to serve will receive
awards of 3,500 options exercisable for five years at the fair market value on
the date of grant after the annual meeting of shareholders in 1998 and 1999. The
3,500 options granted to each of the non-employee directors following the 1997
annual meeting have an exercise price of $22.75 per share. The number of shares
reserved under the Stock Benefit Plan is subject to adjustment upon certain
recapitalizations and other corporate transactions. The following summary of the
Stock Benefit Plan is qualified in its entirety by reference to the full text of
the Stock Benefit Plan, copies of which may be obtained from the Secretary of
the Company.
The Board of Directors may amend, suspend or discontinue the Stock
Benefit Plan at any time except that certain specified amendments must be
approved (at a meeting held within twelve months before or after the date of
such amendment) by the holders of a majority of the issued and outstanding
shares of capital stock of the Company entitled to vote. The proposed amendments
to the Stock Benefit Plan allow the Board of Directors to amend the Stock
Benefit Plan unless the Board determines that applicable laws or rules of
governmental entities or regulations of the New York Stock Exchange or similar
bodies require stockholder approval for such amendments to preserve the benefits
of the Plan for the Company and the participants. The Stock Benefit Plan may not
be amended to adversely affect awards outstanding prior to the amendment.
Employee Awards
The Stock Benefit Plan provides for the grant of "incentive stock
options" within the meaning of Section 422 of the Code, non-statutory stock
options, stock appreciation rights and restricted stock awards to employees of
the Company. The Stock Benefit Plan is administered by the Compensation
Committee of the Board of Directors, none of the members of which will
participate in employee awards under the Stock Benefit Plan. The Compensation
Committee determines the persons to be granted options, the number of shares
subject to each option, whether or not such option is a non-statutory or
incentive stock option, the exercise price and exercise schedule, the manner in
which payment may be made and whether such persons will have the right to
receive cash or shares in lieu of exercising their options. The exercise price
may not be less than 100% of the fair market value of the Company's Common Stock
on the date of grant. The Compensation Committee may grant an option holder the
right to elect to receive cash or shares in an amount equal to the excess of the
fair market value of the shares subject to an incentive or non-statutory option
over the exercise price for such shares, which right can be exercised instead of
(but not in addition to) its related incentive or non-statutory option (a stock
appreciation right). There is no limit on the number of non-statutory options
that may be granted to any one individual under the Stock Benefit Plan, provided
that the grant of the options may not cause the Company to fail to qualify as a
REIT for federal income tax purposes. An optionee may, with the consent of the
Compensation Committee, elect to pay for the shares to be received upon exercise
of his or her options in cash, shares (including shares issuable upon exercise
of an option) or any combination thereof. Options may not be exercisable for
more than a ten-year period. Options generally terminate three months after the
optionee's termination of employment from the Company for any reason other than
death or disability, and are not transferable by the optionee other than by will
or the laws of descent and distribution.
Awards of restricted stock will consist of shares of Common Stock which
may be subject to forfeiture and
Page 14
restrictions on transfer as determined by the
Compensation Committee. In general, a participant who has been granted
restricted stock will have the benefits of ownership in respect of such shares,
including the right to vote such shares and to receive dividends and other
distributions thereon from the date of grant, subject to the restrictions
imposed in the grant or as set forth in the Stock Benefit Plan.
Director's Options
Under the Stock Benefit Plan, the initial non-employee directors of the
Company were granted a non-statutory option to purchase 3,000 shares in
connection with their initial election to the Board and received grants of
options to purchase 3,000 shares immediately following the stockholders'
meetings in 1995 and 1996. The exercise price for each option grant is 100% of
the fair market value of the Company's Common Stock on the date of grant. Each
director's option has a five-year term. Pursuant to changes to the Stock Benefit
Plan approved by the stockholders at the 1997 Annual Meeting, the Board approved
additional awards to each director of options to purchase 3,500 shares of Common
Stock immediately following the annual meeting of stockholders in each of 1997,
1998 and 1999 at an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant. (The exercise price for the options
granted in 1997 is $22.75 per share.) In addition, the directors (other than Mr.
Gosule) were each issued options to purchase 759 shares of Common Stock at
$20.50 on August 12, 1996 in connection with their purchases of Common Stock
under the Stock Purchase Program.
Page 15
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of February 24, 1998
regarding the beneficial ownership of shares of Common Stock by (i) directors,
nominees and Named Executives of Home Properties, and (ii) directors, nominees
and executive officers of Home Properties as a group, and (iii) each person
known by the Company to be the beneficial owner of more than a 5% interest in
the Company. The table also includes information relating to the number and
percentage of shares of Common Stock and partnership units of the Operating
Partnership ("Units") beneficially owned by the persons included in (i) and (ii)
above (such Units are exchangeable into shares, or cash at the election of the
independent directors of the Company). In preparing this table, the Company has
relied on information supplied by its officers, directors, Nominees and certain
stockholders, and upon information contained in filings with the SEC.
Name and Address Number of Shares Percentage of Number of Shares/ Percentage of
of Beneficial Owner Beneficially Owned Outstanding Shares(2) Units Owned Shares/Units
------------------- ------------------ --------------------- ----------- ------------
Norman P. Leenhouts.................... 142,182(1) 1.44% 411,342(1)(3) 4.0 %(4)
Nelson B. Leenhouts.................... 135,622(1) 1.38% 404,534(1)(3) 4.0 %(4)
Richard J. Crossed..................... 144,281(5) 1.46% 386,849 (5) 3.8 %(4)
Amy L. Tait............................ 96,929(6) * 110,672(6) 1.1%(4)
Burton S. August, Sr................... 36,661(8) * 40,907(7)(8) *
William Balderston, III................ 19,750(7) * 19,750(7) *
Alan L. Gosule......................... 3,688(9) * 3,688(9) *
Leonard Helbig, III.................... 20,393(7) * 20,393(7) *
Roger W. Kober......................... 19,414(7) * 19,414(7) *
Clifford W. Smith, Jr.................. 23,491(7) * 23,491(7) *
Paul L. Smith.......................... 14,685(10) * 14,685(10) *
David P. Gardner....................... 24,955(11) * 28,461 (11) *
Ann M. McCormick....................... 24,667(12) * 26,969 (12) *
All executive officers and directors
as a group (13 persons)................ 706,718(13) 6.95%(13) 1,511,155 (3)(13) 13.8%(15)
Page 16
Name and Address Number of Shares Percentage of
of Beneficial Owner Beneficially Owned Outstanding Shares
------------------- ------------------ ------------------
Capital Growth Management....................... 317,000(16) 3.25%
Limited Partnership
One International Place
Boston, MA 02110
Miller Anderson & Sherrerd...................... 482,292(17) 4.94%
One Tower Bridge
West Conshohocken, PA 19428
and
Morgan Stanley Dean Witter Discover & Co.
1585 Broadway
New York, NY 10036
Palisade Capital Management L.L.C............... 987,400(18) 10.12%
1 Bridge Plaza, Suite 695
Fort Lee, NJ 07024
FMR Corp........................................ 603,800(19) 6.19%
82 Devonshire St.
Boston, MA 02106
State Treasurer, State of Michigan.............. 1,666,667(20) 14.60%
Bureau of Investments
Department of Treasury
Treasury Building, Box 15128
Lansing, MI 48901
- - ----------
* Less than 1%
(1) Includes 89,467 shares which may be acquired upon the exercise of currently
exercisable options by each of Norman and Nelson Leenhouts.
(2) Assumes that all options included with respect to the person have been
exercised. The total number of shares outstanding used in calculating the
percentage assumes that none of the options held by any other person have
been exercised.
(3) Includes Units owned by Home Leasing and Leenhouts Ventures. Norman
Leenhouts and Nelson Leenhouts are each directors, officers and 50%
stockholders of Home Leasing and each owns 50% of Leenhouts Ventures.
Includes 50,000 Units owned by the respective spouses of each of Norman and
Nelson Leenhouts as to which they disclaim beneficial ownership.
(4) Assumes that all options included with respect to the person have been
exercised and all Units included with respect to the person have been
exchanged for shares of Common Stock. The total number of shares
outstanding used in calculating the percentage assumes that none of the
options held by any other person have been exercised and that none of the
Units held by any other person have been exchanged for shares.
(5) Includes 89,467 shares which may be acquired upon the exercise of currently
exercisable options. Also includes Mr. Crossed's proportionate share of
Units owned by Conifer and its affiliates.
(6) Includes 53,841 shares which may be acquired upon the exercise of currently
exercisable options. Also includes 5,654 shares owned by Mrs. Tait's spouse
as to which she disclaims beneficial ownership. Mrs. Tait shares voting and
dispositive power with respect to 2,548 Units with her spouse.
(7) Includes 12,652 shares which may be acquired upon the exercise of currently
exercisable options.
(8) Includes 12,500 shares owned by immediate family members of Mr.
August as to which he disclaims beneficial ownership.
(9) Includes 3,500 shares which may be acquired upon the exercise of currently
exercisable options.
(10) Includes 9,652 shares which may be acquired upon the exercise
of currently exercisable options.
(11) Includes 9,435 shares which may be acquired upon the exercise of currently
exercisable options.
(12) Includes 9,425 shares which may be acquired upon the exercise of
currently exercisable options.
(13) Includes 417,514 shares which may be acquired upon the exercise of
immediately exercisable options.
(14) Assumes that all exercisable options included with respect to all listed
persons have been exercised.
(15) Assumes that all exercisable options included with respect to all listed
persons have been exercised and that all Units included with respect to all
listed persons have been exchanged for shares of Common Stock.
(16) Based on a report on Schedule 13G, dated February 11, 1997,
reflecting that Capital Growth Management Limited Partnership has shared
dispositive and sole voting power with respect to shares held in client
accounts, as to which Capital Growth disclaims beneficial ownership.
(17) Based on a report on Schedule 13G, dated February 11, 1998 filed jointly on
behalf of Miller Anderson & Sherrerd and Morgan Stanley Dean Witter
Discover & Co., reflecting that the two Investment Advisors have shared
voting and dispositive power with respect to 482,292 shares.
(18) Based on a report in Schedule 13G, dated December 10, 1997, reflecting that
Palisade Capital Management, L.L.C. holds the shares on behalf of clients
Page 17
in accounts over which Palisade has sole voting and dispositive power.
(19) Based on a report on Schedule 13G dated February 14, 1998, filed jointly on
behalf of FMR Corp., Edward C. Johnson 3d and Abigail P. Johnson reflecting
that FMR Corp. has shared voting and dispositive power with respect to all
of such shares and sole voting power with respect to 117,200 of such
shares.
(20) Based on a report on Form 13D, dated January 6, 1997, reflecting that the
State Treasurer, State of Michigan and the individual members of the
Michigan Department of Treasury's Bureau of Investments, which manages the
investments for four state-sponsored retirement systems: Public School
Retirement System, State Employees' Retirement System, Michigan State
Police Retirement System and Judges' Retirement System acquired a Class A
Limited Partnership Interest in the Operating Partnership which is
convertible, at the option of the State of Michigan, into 1,666,667 shares
of common stock, subject to adjustment, over which the State Treasurer
would have sole voting and dispositive power.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires the Company's executive officers and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the New York Stock Exchange. Officers,
directors and greater than 10% stockholders are required to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1997, all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% beneficial owners were satisfied.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Directors and executive officers of the Company received loans from the
Company of 50% of the purchase price of shares of Common Stock purchased by them
in connection with the Stock Purchase Program described above and commercial
bank loans for the balance. As of March 17, 1998, the indebtedness to the
Company of each of the Named Executives is: each of Messrs. Leenhouts and
Crossed - $643,643, Mrs. Tait - $451,380, Mr. Gardner - $186,981 and Mrs.
McCormick - $183,743.
Home Leasing, in consideration of a portion of the Units and cash received
by it in connection with the formation of the Company, assigned to HP Management
certain management contracts between it and certain entities of which it is a
general partner. As a general partner of those entities, Home Leasing
Corporation (and, indirectly, Norman and Nelson Leenhouts) has an ongoing
interest in such management contracts. In addition, Conifer assigned to the
Company and its affiliates certain management contracts between Conifer and
entities in which it is the general partner. As a general partner, Conifer (and
indirectly, Richard Crossed) has an ongoing interest in such management
contracts.
Page 18
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed the accounting firm of Coopers & Lybrand LLP to serve as independent
auditors of the Company for the fiscal year ending December 31, 1998. Coopers &
Lybrand LLP has served as the Company's independent auditors since its
commencement of operations and is considered by the management of the Company to
be well qualified. A representative of Coopers & Lybrand LLP will be present at
the Annual Meeting, will be given the opportunity to make a statement if he so
desires and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF COOPERS & LYBRAND LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR
THE 1998 FISCAL YEAR.
PROPOSAL 3
APPROVAL OF AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED ARTICLES OF INCORORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK
The Company's Amended and Restated Articles of Incorporation (the
"Articles") currently authorizes the issuance of an aggregate of 30,000,000
shares of Common Stock, par value $.01 per share and 10,000,000 shares of Excess
Stock, par value $.01 per share and 10,000,000 shares of Preferred Stock, $.01
per share. On February 3, 1998, the Board of Directors approved and adopted,
subject to the approval and adoption by the stockholders, a Certificate of
Amendment to the Articles (the "Amendment") which increases the number of
authorized shares of Common Stock to an aggregate 50,000,000 and the aggregate
number of authorized shares to 70,000,000. No other change to the Articles of
Incorporation would result from the Amendment.
If approved and adopted by the stockholders at the Annual Meeting, the
Amendment will become effective upon the filing thereof by the Maryland
Department of State. A filing is expected to occur within 30 days following the
Annual Meeting.
The Board of Directors has considered in the past and will continue to
consider various means of broadening the ownership of the Common Stock and
enhancing its marketability. The Board has also considered and will continue to
consider the possibility of acquiring properties through the issuance of Common
Stock, and the advisability of increasing stock ownership and meeting part of
the Company's future capital requirements through additional public offerings of
Common Stock. The Company also expects to continue to acquire some properties
through issuance of limited partner units and to respond to requests for
liquidity of these units by issuing shares of Common Stock in exchange. Any such
future action is, of course, subject to the Company's earnings and financial
condition as well as market conditions and other factors that the Board deems
relevant. Finally the Board believes that stock-based executive and director
compensation provides incentives to management that are in the best interest of
the stockholders.
The Company currently has outstanding approximately 9,755,000 shares of
Common Stock, no shares of Excess Stock are currently outstanding and no shares
of Preferred Stock are currently outstanding. In addition, approximately
9,758,000 shares of Common Stock are currently reserved for issuance under
outstanding option awards, conversion of outstanding Units and the Company's
DRIP. In addition, the Company continues to have available $59,250,000 in
securities under an existing registration statement (assuming a closing price
for the Company's Common Stock on the New York Stock Exchange of $27.00 per
share, this would amount to approximately 2,195,000 shares of Common Stock). All
of that amount may be issuable in Common Stock. If Proposals 4 and 5 (as
described below) are approved by the stockholders, an additional 525,000 shares
of Common Stock will be reserved for issuance under the Directors' Stock Grant
Plan and the Director, Officer and Employee Stock Purchase and Loan Plan.
Accordingly, no more than 7,768,000 shares of Common Stock will be available for
Page 19
issuance for other purposes.
Aside from management's ongoing evaluation of acquisition possibilities and
the Board's belief in the efficacy of stock-based executive compensation, the
Board has no present plans, agreements or understandings, pending or under
discussion for the issuance of any shares of Common Stock except for the shares
reserved for issuance as described above. However, the Board of Directors
considers that in the prudent operation of the Company, it is desirable to have
sufficient authorized but unissued shares of Common Stock available to allow the
Company to take prompt advantage of the market or other conditions in connection
with possible financings or acquisitions, for stock dividends or distributions,
for grants of options and other stock rights, and for other proper corporate
purposes deemed necessary or advisable by the Board of Directors. The Board of
Directors also believes that the availability of additional shares of Common
Stock for such purposes without delay or the necessity for a special meeting of
stockholders (except as may be required by applicable law or regulatory
authorities or by the rules of any stock exchange on which the Company's stock
is listed) will be beneficial to the Company by providing it with the
flexibility required to consider and respond to future business opportunities
and needs as they arise.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
COMPANY'S ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON
STOCK TO AN AGGREGATE, 50,000,000, PAR VALUE $.01 PER SHARE.
PROPOSAL 4
APPROVAL OF THE
DIRECTORS' STOCK GRANT PLAN
The Board of Directors of the Company has approved the Directors' Stock
Grant Plan to pay the Company's non-employee directors additional compensation
in the form of shares of the Company's Common Stock. Under current New York
Stock Exchange policy, the directors' Stock Grant Plan is subject to the
approval of the Company's stockholders.
The purpose of the Directors' Stock Grant Plan is to provide reasonable
compensation to the members of the Board of Directors in order to attract and
retain qualified and knowledgeable individuals and to link the interests of such
directors to those of the Company's stockholders by increasing the ownership by
the directors of the Company's Common Stock. Under the Directors' Stock Grant
Plan, in addition to the cash directors' fees payable by the Company, the
Company would grant to each non-employee director shares of the Company's Common
Stock. Each non-employee director will be granted the number of shares of Common
Stock determined by the Company's Board of Directors from time to time as of
January 1 of each year. The authorization for the issuance of shares of Common
Stock is conditioned upon the approval by the stockholders of the Company, in
accordance with New York Stock Exchange policy, of the issuance of up to 25,000
shares to directors. Subject to stockholder approval of the directors' Stock
Grant Plan and appropriate registration and listing of such shares, the Board of
Directors has approved the grant of 150 shares to each non-employee director,
effective as of January 1, 1998.
The Directors' Stock Grant Plan will be administered by the Company's Board
of Directors. Subject to the provisions of the Directors' Stock Grant Plan, the
Board may, in its discretion, (a) prescribe the form of any stock grant
agreements which may relate to the annual stock awards, including any
appropriate terms and conditions applicable to these awards, and make any
amendments to such agreements or awards; (b) interpret the directors' Stock
Grant Plan; (c ) make and amend rules and regulations relating to the Directors'
Stock Grant Plan; and (d) make all other determinations necessary or advisable
for the administration of the Directors' Stock Grant Plan. The Board's
determinations are conclusive and binding.
The Directors' Stock Grant Plan may be amended, modified or terminated by
the Board of Directors, except as otherwise required to cause the Plan to comply
with Securities and Exchange Commission rules, or other applicable laws or
regulations. Except as required by law, no amendment, modification or
termination of the Directors' Stock Grant Plan may, without the written consent
of a director to whom any award shall theretofore have been granted, adversely
affect the rights of such director to the shares of Common Stock previously
awarded.
Page 20
Copies of the Directors' Stock Grant Plan may be obtained from the
Secretary of the Company.
The affirmative vote of a majority of the shares of Common Stock
represented at the Annual Meeting in person or by proxy is required for the
approval of the proposed Directors' Stock Grant Plan, provided that the total
vote cast on the proposal represents over 50% of all votes entitled to be cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
DIRECTORS' STOCK GRANT PLAN.
PROPOSAL 5
APPROVAL OF THE COMPANY'S
DIRECTOR, OFFICER AND EMPLOYEE STOCK PURCHASE AND LOAN PLAN
The Board of Directors of the Company has determined that it is in the
best interests of the Company to encourage the Company's directors, officers and
key employees to increase their ownership of the Company's Common Stock and to
facilitate that acquisition by loaning those individuals up to 100% of the
purchase price of that Common Stock. The Board has approved the Director,
Officer and Employee Stock Purchase and Loan Plan (the "New Stock Purchase
Plan") which provides for the sale and issuance, from time to time as determined
by the Board of Directors, of up to 500,000 shares of the Company's Common Stock
to the directors, officers and key employees of the Company for consideration of
not less than 97% of the "Market Price" of the Common Stock . For purposes of
the New Stock Purchase Plan, "Market Price" will be the average of the high and
low prices on the New York Stock Exchange for the five trading days preceding
the date of the purchase, which is the basis as provided in the Company's DRIP.
The New Stock Purchase Plan provides that the plan's Administrator (the Board of
Directors, the Board's Compensation Committee or other Board committee) may
provide for the Company to loan the individuals up to 100% of such purchase
price (or such lesser amount as may be permitted under Regulation G of the
Federal Reserve Board - currently 50% of the fair market value of the Common
Stock for non-employee directors, or other applicable rules) in non-recourse
loans. The loans may be secured by the Common Stock and may bear interest at a
rate equal to the dividend rate on the Common Stock in effect at the date of
issuance with the principal repayable over not more than twenty years or earlier
upon the termination of employment of an employee or service of a director,
other than in the event of a change of control, or upon thesale of the
underlying Common Stock.
In the event of a change in control of the Company (as defined in the New
Stock Purchase Plan), outstanding loans under the New Stock Purchase Plan shall
not become due and payable but shall continue in accordance with their terms,
unless determined otherwise by a resolution of the Administrator adopted prior
to and specifically relating to the occurrence of such change in control.
The Administrator of the New Stock Purchase Plan may, in its discretion:
(a) determine the number of shares of Common Stock available in each year for
purchase pursuant to the New Stock Purchase Plan; (b) determine the levels of
officers and employees eligible to participate in the New Stock Purchase Plan;
(c ) set the terms and conditions of all loans under the New Stock Purchase Plan
for the purchase of stock and the loan documentation relating thereto, including
any pledges of the Common Stock acquired under the New Stock Purchase Plan, in
each case in compliance with Regulation G promulgated by the Federal Reserve
Board, as amended form time to time; (d) interpret the New Stock Purchase Plan;
(e) make and amend rules and regulations relating to the New Stock Purchase
Plan; and (f) make all other determinations necessary or advisable for the
administration of the New Stock Purchase Plan. The Administrator's
determinations will be conclusive and binding.
The New Stock Purchase Plan may be amended, modified or terminated by the
Board of Directors, except as otherwise required to cause the New Stock Purchase
Plan to comply with Securities and Exchange Commission rules, or other
applicable laws or regulations. Except as required by law, no amendment,
modification or termination of the New Stock Purchase Plan may, without the
written consent of a participant to whom any award shall theretofore have been
granted, adversely affect the rights of such participant under any existing
subscription to
Page 21
purchase or loan.
The affirmative vote of a majority of the shares of Common Stock
represented at the Annual Meeting in person or by proxy is required for the
approval of the proposed issuance of additional shares of Common Stock provided
that the total vote cast on the proposal represents over 50% of all votes
entitled to be cast.
Copies of the Director, Officer and Employee Stock Purchase and Loan Plan
may be obtained from the Secretary of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO ISSUE UP TO
500,000 SHARES OF THE COMPANY'S COMMON STOCK FROM TIME TO TIME PURSUANT TO THE
COMPANY'S DIRECTOR, OFFICER AND EMPLOYEE STOCK PURCHASE AND LOAN PLAN.
OTHER MATTERS
Solicitation of Proxies
The cost of solicitation of proxies in the form enclosed herewith will be
paid by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.
Stockholder Proposals
A stockholder proposal submitted pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934, as amended, for inclusion in the Company's
proxy statement and form of proxy for the 1999 annual meeting of stockholders
must be received by the Company by November 25, 1998. Such a proposal must
comply with the requirements as to form and substance established by the
Securities and Exchange Commission for such a proposal to be included in the
proxy statement and form of proxy, and the proponent or a representative of the
proponent must attend the Annual Meeting to present the proposal.
Incorporation By Reference
The Company's financial statements for the years ended December 31, 1997
and 1996, the supplemental financial information and management's discussion and
analysis of financial condition and results of operations contained in the
Company's Annual Report on Form 10-K (File No. 1-13136) filed with the
Securities and Exchange Commission are incorporated herein by reference. Copies
may be obtained from Rebecca Fountain, Home Properties of New York, Inc. 850
Clinton Square, Rochester, New York 14604 or from the Securities and Exchange
Commission over the Internet at its Web site (http:\\www.sec.gov).
Other Matters
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO
THE COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED
PROXY CARD TODAY.
Page 22
HOME PROPERTIES OF NEW YORK, INC.
REVOCABLE PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS MAY 5, 1998
The undersigned hereby appoints Norman P. Leenhouts and Nelson B.
Leenhouts or each of them, as Proxies with full power of substitution to
represent the undersigned and to vote all Common Stock of Home Properties of New
York, Inc. which the undersigned would be entitled to vote at the 1998 Annual
Meeting of Stockholders of the Company to be held on May 5, 1998 and any
adjournment thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
FOR WITHHOLD
all nominees AUTHORITY
listed (except to vote for
as marked all nominees
to the contrary) listed
PROPOSAL ONE- Nominees: Norman P. Leenhouts
To elect the following Nelson B. Leenhouts
persons as directors to Richard J. Crossed
serve until the next Amy L. Tait
annual meeting of stockholders and until their Burton S. August, Sr.
successors have been elected and have quailfied. William Balderston, III
(Instruction: To withhold authority to vote for any individual Alan L. Gosule
nominee, write that nominee's name on the space provided below.) Leonard F. Helbig, III
Roger W. Kober
____________________________________________________ Clifford W. Smith, Jr.
Paul L. Smith
FOR AGAINST ABSTAIN
PROPOSAL TWO - To ratify the appointment of Coopers
& Lybrand LLP as independent auditors for 1998.
PROPOSAL THREE - To approve the amendment to the
Articles of Incorporation to increase the authorized
shares of Common Stock, par value $.01 per share, to an
aggregate of 50,000,000 shares.
PROPOSAL FOUR - To approve the issuance of up to
25,000 shares of Common Stock to directors in payment
of a portion of annual directors' fees.
PROPOSAL FIVE - To approve the issuance of up to 500,000
shares of Common Stock to directors, officers and key employees
pursuant to the Company's Director,
Officer and Employee Stock Purchase and Loan Plan.
This proxy, when properly executed, will be voted in the manner directed
thereon. If no direction is made, it will be voted "FOR" proposals 1, 2, 3, 4
and 5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof,
including the election of a person designated by the Board of Directors as a
director in the place of a nominee who is unable to serve.
Please mark, sign, date and return this proxy card using the enclosed envelope.
Mark here for address change:---------------------------------------------------
Signature: ---------------- Signature ----------------- Dated-----------, 1998
(signature if held jointly)
NOTE: (Please sign as name appears above. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.)
DIRECTORS' GRANT STOCK PLAN
This Home Properties of New York, Inc. Directors' Stock Grant Plan
(the "Plan") is effective as of January 1, 1998.
1. PURPOSE
The purpose of the Plan is to enable Home Properties of New York, Inc.
(the "Company") to attract and retain outside directors and provide them with an
incentive to maintain and enhance the Company's long-term performance record. It
is expected that this purpose will be enhanced by granting eligible directors
shares of common stock annually in connection with their regular fees as
directors of the Company.
2. ADMINISTRATION
The Plan shall be administered by the Company's Board of Directors (the
"Board"). Subject to the provisions of the Plan, the Board shall possess the
authority, in its discretion, (a) to prescribe the form of any stock grant
agreements which may relate to the annual stock awards, including any
appropriate terms and conditions applicable to these awards and to make any
amendments to such agreements or awards; (b) to interpret the Plan; (c) to make
and amend rules and regulations relating to the Plan; and (d) to make all other
determinations necessary or advisable for the administration of the Plan. The
Board's determinations shall be conclusive and binding. No member of the Board
shall be liable for any action taken or decision made in good faith relating to
the Plan or any award granted hereunder.
3. ELIGIBLE DIRECTORS
Members of the Board of Directors of the Company who are not also
employees of the Company or its subsidiaries are eligible to participate in this
Plan.
4. SHARES AVAILABLE
An aggregate of 25,000 shares of the Common Stock (par value $.01 per
share) of the Company (subject to substitution or adjustment as provided in
Section 6 hereof) shall be available for the grant of awards under the Plan.
Such shares may be authorized and unissued shares.
5. TERMS AND CONDITIONS OF STOCK GRANTS
Each stock grant awarded under the Plan shall either be an outright
grant of stock or subject to such terms and conditions as the Board of Directors
may determine. Any stock grant awarded subject to terms and conditions shall be
evidenced by a stock grant agreement in such form as the Board shall approve
from time to time, which agreement shall conform with the Plan and the following
terms and conditions:
(a) Number of Shares. An eligible director who begins Board service at
any time during the year shall receive a pro rata grant to cover
the partial year remaining until the first of the next year. The
number of shares subject to such grant shall be multiplied by a
fraction the numerator of which is the number of full or partial
months in the period commencing on the first day of the month
following the new Board member's appointment or election and
ending on the next following date when new members are elected to
the Board and the denominator of which is 12. Any fractional share
shall be rounded up to the next highest whole number of shares.
(b) Vesting. All shares shall be fully and immediately vested at the
date of grant.
(c) Restriction on Transferability. The Board may establish
restrictions on the transferability of the shares awarded under any
annual grant. Such restrictions may include a provision that the shares
granted (including additional shares obtained through dividend
reinvestment) of the Company may not be sold, gifted or otherwise
transferred while the director remains on the Board of the Company
unless the Board in its sole and absolute discretion determines
otherwise. All other shares granted to an eligible director of the
Company or of a subsidiary are free of transfer restrictions under the
terms of this Plan. Upon termination of a director's service to the
Company, any restrictions on transferability shall terminate
immediately (subject to any restrictions imposed under the securities
laws).
6. ADJUSTMENT OF SHARES
In the event of any change in the Common Stock of the Company by reason
of any stock dividend, stock split, recapitalization, reorganization, merger,
consolidation, split-up, combination, or exchange of shares, or rights offering
to purchase Common Stock at a price substantially below fair market value, or of
any similar change affecting the Common Stock, the number and kind of shares
authorized under Section 4, and the number and kind of shares which thereafter
are subject to an award under the Plan shall be adjusted automatically
consistent with such change to prevent substantial dilution or enlargement of
the rights granted to, or available for, participants in the Plan.
7. NO EMPLOYMENT RIGHTS
The Plan and any awards granted under the Plan shall not confer upon
any director any right with respect to continuance as a director of the Company,
nor shall they interfere in any way with any right the Company may have to
terminate the director's position as a director at any time.
8. AMENDMENT AND DISCONTINUANCE
This Plan may be amended, modified or terminated by the Company's Board
of Directors, except as otherwise required to cause the Plan to comply with
Securities and Exchange Commission Rule 16b-3 or any successor rule, as it may
be amended from time to time, or other applicable laws or regulations. Except as
required by law, no amendment, modification, or termination of the Plan may,
without the written consent of a director to whom any award shall theretofore
have been granted, adversely affect the rights of such director under such
option.
Approved by Shareholders: _______________, 1998
DIRECTOR, OFFICER AND EMPLOYEE STOCK PURCHASE AND LOAN PLAN
This Home Properties of New York, Inc. Director, Officer and Employee
Stock Purchase and Loan Plan (the "Plan") is effective as of January 1, 1998,
provided that it is approved by the shareholders of the Company as required by
the New York Stock Exchange and under Regulation G promulgated by the Federal
Reserve Board.
1. PURPOSE
The purpose of the Plan is to enable Home Properties of New York, Inc.
(the "Company") to encourage directors, officers and employees to acquire
additional shares of the Company's Common Stock which will provide them with an
incentive to maintain and enhance the Company's long-term performance record.
2. ADMINISTRATION
The Plan shall be administered by the Company's Board of Directors, or
the Compensation Committee or other committee of the Board of Directors (the
"Administrator"). Subject to the provisions of the Plan, the Administrator shall
possess the authority, in its discretion, (a) to determine the number of shares
of Common Stock available in each year for purchase pursuant to the Plan; (b) to
determine the levels of officers and employees eligible to participate in the
Plan; (c) to set the terms and conditions of all loans under the Plan for the
purchase of stock and the loan documentation relating thereto, including any
pledges of the Common Stock acquired under the Plan, in each case in compliance
with Regulation G promulgated by the Federal Reserve Board, as amended from time
to time; (d) to interpret the Plan; (e) to make and amend rules and regulations
relating to the Plan; and (f) to make all other determinations necessary or
advisable for the administration of the Plan. The Administrator's determinations
shall be conclusive and binding. No member of the Board shall be liable for any
action taken or decision made in good faith relating to the Plan or any award
granted hereunder.
3. ELIGIBLE DIRECTORS, OFFICERS AND EMPLOYEES
Members of the Board of Directors of the Company who are not also
employees of the Company or its subsidiaries are eligible to participate in this
Plan. During each calendar year, the Administrator shall determine the officers
and employees eligible to purchase shares of Common Stock under the Plan.
4. SHARES AVAILABLE
An aggregate of 500,000 shares of the Common Stock (par value $.01 per
share) of the Company (subject to substitution or adjustment as provided in
Section 6 hereof) shall be available under the Plan. Such shares may be
authorized and unissued shares or treasury shares.
5. TERMS AND CONDITIONS OF STOCK PURCHASES AND LOANS
(a.) Number of Shares. Annually, the Administrator may determine to
provide the directors, officers and certain employees with the opportunity to
purchase shares of the Company pursuant to this Plan. The Administrator shall
determine the number of shares of stock to be available for purchase by the
non-employee directors, the executive officers and such other employees as the
Administrator may determine.
(b.) Purchase Price. The Administrator shall determine the purchase
price for each of the shares to be sold pursuant to the Plan, which shall be not
less than 97% of the market price of the Common Stock, based on the average of
the daily high and low sale prices of the Common Stock on the New York Stock
Exchange for the period of five trading days ending on the applicable January 1
(the "Purchase Price").
(c.) Loan of Purchase Price. The Administrator may determine to
loan participants up to 100% of the aggregate Purchase Price for the shares to
be purchased by each participant, subject to any limitations imposed by law
including, without limitation, the provisions of Regulation G, promulgated
by the Federal Reserve Board, as in effect from time to time (which,
as of the date hereof, limit loans to non-employee directors to 50% of the
Purchase Price). The Administrator shall establish the terms and conditions of
the loans, which shall be non-recourse and secured by a pledge of the shares
of Common Stock purchased with the proceeds thereof and such other collateral
as the Administrator may determine. The terms shall include the interest
rate and payment terms and shall provide that the loan is due and payable
in full not more than twenty years after the date when made and earlier upon
sale of the Common Stock acquired with the proceeds of the loan or upon the
termination of service to the Company of the director, officer or employee,
except if such termination is as a result of or related to a change in control
of the Company as described in Section 8 or as otherwise provided at any time
by the Administrator. Upon delivery by the participant of a duly executed
promissory note, and any portion of the Purchase Price payable in cash, and
the pledge agreement, in such form as the Administrator may determine, the
shares of Common Stock will be fully paid and non-assessable.
(d.) Restriction on Transferability. The Administrator may
establish restrictions on the transferability of the shares purchased under this
Plan.
6. ADJUSTMENT OF SHARES
In the event of any change in the Common Stock of the Company by reason
of any stock dividend, stock split, recapitalization, reorganization, merger,
consolidation, split-up, combination, or exchange of shares, or rights offering
to purchase Common Stock at a price substantially below fair market value, or of
any similar change affecting
the Common Stock, the number and kind of shares
authorized under Section 4, the number and kind of shares which thereafter are
subject to purchase, including any shares of Common stock pledged to secure a
loan, under the Plan shall be adjusted automatically consistent with such change
to prevent substantial dilution or enlargement of the rights granted to, or
available for, participants in the Plan.
7. EMPLOYMENT RIGHTS
The Plan and any awards granted under the Plan shall not confer upon
any director any right with respect to continuance as a director of the Company,
nor shall they interfere in any way with any right the Company may have to
terminate any individual's service to the Company at any time.
8. CHANGE OF CONTROL
(a) Notwithstanding other provisions of the Plan, in the event of a
change in control of the Company (as defined in subsection (b) below),
outstanding loans under the Plan shall not become due and payable but shall
continue in accordance with their terms, unless determined otherwise by a
resolution of the Administrator adopted prior to and specifically relating to
the occurrence of such change in control.
(b) For purposes of this section, "change in control" means:
(1) there shall be consummated
(i) any consolidation or merger of the Company in
which the Company is not the continuing or surviving
corporation or pursuant to which any shares of the
Company's common stock are to be converted into cash,
securities or other property, provided that the
consolidation or merger is not with a corporation
which was a wholly-owned subsidiary of the Company
immediately before the consolidation or merger; or
(ii) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions)
of all, or substantially all, of the assets of the
Company (other than to one or more directly or
indirectly wholly-owned subsidiaries of the Company);
or
(2) the shareholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company; or
(3) any person (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended),
directly or indirectly, of
30% or more of the Company's then outstanding common stock,
provided that such person shall not be a wholly-owned
subsidiary of the Company immediately before it becomes such
30% beneficial owner; or
(4) individuals who constitute the Company's Board of
Directors on the date hereof (the "Incumbent Board") cease for
any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date
hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least
three quarters of the directors comprising the Incumbent Board
(either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a
nominee for director, without objection to such nomination)
shall be, for purposes of this clause (4), considered as
though such person were, and shall be deemed to be, a member
of the Incumbent Board.
9. AMENDMENT AND DISCONTINUANCE
This Plan may be amended, modified or terminated by the Company's Board
of Directors, except as otherwise required to cause the Plan to comply with
Securities and Exchange Commission Rule 16b-3 or any successor rule, as it may
be amended from time to time, or other applicable laws or regulations. Except as
required by law, no amendment, modification, or termination of the Plan may,
without the written consent of a participant to be affected, adversely affect
the rights of any participant under any existing subscription to purchase Common
Stock or loan with respect thereto under this Plan.
Approved by Shareholders: _______________, 1998